Welfare

Does Socialism Work for Sweden? That's the Wrong Question

Living the Nordic American dream.

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Sweden
Dreamstime

When outspoken socialist Sen. Bernie Sanders was in the presidential race, he often expressed his dream to turn the United States into a Nordic-type social democracy like the one in Denmark. Hillary Clinton dismissed his comments by claiming that the United States isn't Denmark. But the truth is that at the center of her political platform is an extensive set of Nordic-like government interventions, including paid sick leave, paid parental leave, subsidized child care, and a more generous safety net—and higher taxes.

So what's the appeal of Nordic democracies for U.S. Democrats? Writing in The Atlantic, Anu Partanen (a Finn living in the United States) claims that Nordic nations "offer their citizens—all of their citizens, but especially the middle class—high-quality services that save people a lot of money, time, and trouble."

Partanen admits that Sanders' socialist framing of the policies does the model a disservice. As "a proud Finn" with an American passport, she insists that these policies aren't socialist in nature, saying they don't go against free markets and they aren't about big government; they're about smart government.

We're to believe that Nordic government programs—such as free college, free graduate school, and nearly free health care, all paid for with higher consumption taxes—don't involve trade-offs in the form of lower wages as they do everywhere else.

Don't believe it, says Nima Sanandaji, a researcher who grew up in Sweden. His new book, Debunking Utopia: Exposing the Myth of Nordic Socialism, is a balanced and comprehensive analysis of Nordic public policies, including their home runs and failures. In particular, it nicely lays out the human and social cost of the welfare state.

Welfare policies have the same effects in Nordic countries as they do in other countries. As Nordic people have been asked to pay higher and higher taxes in exchange for the welfare payouts, their incentives to work less and capture government or mandatary company handouts have evolved to the point of undermining the countries' economic foundations. Sanandaji has a lot of data, including some showing how Nordic workers have a stronger tendency to call in sick during sporting events. Maybe the most extreme example is a 41 percent increase of sickness among men in Sweden during the 2002 World Cup, up from 7 percent during the 1988 Winter Olympics.

Work ethics and a higher tolerance for collecting undeserved benefits have developed slowly, but the data show that over time, "Nordic people have changed their attitudes as social democratic policies have made it less rewarding to work hard and more rewarding to live off the government."

To be sure, Nordic countries are at the forefront of gender equality, as we're often reminded, and government programs such as paid family leave for both men and women and generous child care handouts help women balance their home life and work life. However, as Sanandaji asks, why are there so few Nordic women at the top? Data from the International Labour Organization show that in the United States, the share of female managers is 43 percent, as opposed to 28 percent in Denmark, 30 percent in Finland, 32 percent in Norway and 36 percent in Sweden.

Though it's true that Nordic women participate in the labor force at higher rates than other countries, studies show that broad-based welfare policies tend to limit their ability to reach the top. That's partly because they're overrepresented in public-sector monopolies where wages are flat and rise based on seniority rather than individual achievement.
The truth is that Nordic nations were always leading in the fight for women, long before the welfare state came along. They also became comparatively rich when economic policy was dominated by free markets and small government in the 19th century and early 20th century. Unfortunately, the big welfare state policies, starting in the 1960s, have hampered their economic performance.

Finally, Sanandaji writes, "Nordic countries have more generous welfare systems than the United States, but change has indeed taken place." In recent years, they've tempered the damage of their big-government policies by scaling back their welfare states and setting limits on their fiscal burdens. Their governments have adopted more work incentives, lowered taxes and allowed for more flexibility when hiring and firing workers. They've opened their public schools and health care to more competition, and Sweden partially privatized its pension system. They may not be free market quite yet, but they're no socialist—or even liberal—utopia, either.

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  1. However, as Sanandaji asks, why are there so few Nordic women at the top?

    People went and asked the women themselves.

    It turned out they didn’t want to be. They had what they wanted out of life without the stress of clawing their way to the top of the heap, so it wasn’t worth the effort.

    The “Norwegian Paradox” about reduced female participation in the fields Feminists screech after is quite literally a direct result of womens’ choice. The reason there are a higher proportion of female engineers in India than Norway is because those women in India need the money. They don’t have the luxury of picking what they’d like to do, so they pick what they have to do.

    1. Most people probably enjoy leisure time after all.

      1. One would think. I could certainly enjoy calling off work to watch a big sports game.

    2. Push, obviously it has nothing to do with that and everything to do with cis white male rape culture patriarchy… Or something

  2. Get a fresh cup and sit back. It is 40 minutes well spent if you are interested in this subject.

    https://www.youtube.com/watch?v=p5LRdW8xw70

  3. Nothing makes leftists swoon like high taxes. After all, government is us and we are government. So that is money we pay to ourselves! The more we pay, the better off we are.

  4. When the world finally reaches its post-scarcity era, Sweden is going to hit the ground running and the rest of us will fall woefully behind. But it won’t matter because we will have achieved utopia. And that won’t matter because soon after our robot servants will turn on us. So in conclusion, free marketeers and socialists, we’re all wasting our time.

    1. soon after our robot servants will turn on us

      I, for one, will welcome our new robot overlords!

  5. The call in sick part intrigued me. Soccernomics – which to me had a few flaws in it. I digress – mentioned how Norway on a per capita basis was the most dedicated soccer nation. I was always suspicious of the data. Not that I dispute they watch it more but did it really mean they were ‘more mad’ about soccer? Not to me. So perhaps having so much free time in a welfare state had something to do with it?

    1. Soccernomics was definitely flawed, from what I remember. I actually forgot that bit about Norway. I must have dismissed it utterly as being totally ridiculous.

      However, on balance, it’s a worthwhile read.

  6. As I mentioned in the past, and worth mentioning again here, I’m convinced Lilyhammer was a critique (tome?) of the Norwegian welfare state. I especially enjoyed the part where it emasculates men.

    1. I love Lillyhammer and I certainly saw it as a critique of welfare statism but I’d add to that they dealt with the politically correct hivemind, and even issues of immigration.

      1. I gather from comments at Netflix and elsewhere that it has a significant following in Norway.

        From this I gather that some like it because it reinforces their preconceived notions of Americans as violent “cowboys” and others because they can take a joke.

        1. I thought it was a Norwegian show. There are certainly a lot of Norwegians involved in the production.

          I loved it too and the Norwegians I’ve talked to thought it was pretty good.

          1. It started as a collaboration between Netflix and NRK.

            Netflix is now out, apparently, but NRK wants to find a new partner.

  7. The Big Government system is far less harmful for such a homogeneous population than it would be for a country like the US.

    Denmark for instance; population 5.6 million
    Population growth rate is around 0.4% a year
    90% are of Danish descent + around 3% from other Scandinavian countries and Germany
    95% Evangelical Lutherans + 3% ‘other’ Christians

    And as in deRugy’s example, if the population loves soccer (which a very high percentage does), then they could even make it an official holiday. That would only result in very little incremental loss in production

    1. Social trust is higher in homogeneous populations, making the evil enterprise of the state to be less of a tribal cock fight for resources and grievance mongering.

      1. It’s also true that even with some diversity countries with smaller populations are more able to marginalize dissident voices with payoffs to their “cultural leaders” or simply by portraying any dissent as “dangerous criminal subversives” or as “mentally unbalanced individuals”.

      2. I was gonna save this for the lynx, but here it goes. Today I accidentally locked myself out of the house. My wife was going to get back at 7:30, so my 7 year old daughter and I would have to find a way to kill the 2 and a half hours until she got home. I called up one of the mothers in our “circle”. Of course she offered to take us in for a couple of hours. I could have gone to a restaurant or some place to kill the time, but by allowing her to help us out, she was allowed to do something for us. Now I am obliged to thank her and her family in some creative and thoughtful way. This may seem overkill to us in 2016, but this is the way it is across Japan. Respect and allowing others to be respectful is central to this society. It’s taken me two decades to finally get into the swing of how it works here, but when I travel to western countries now, I’m disgusted by how most people act in similar situations. Magnanimous posturing or simply ignoring the plight of others. Allowing millions of “me” into Japan as I existed 20 years ago would’ve been a mistake. And I actually spent the thousands of hours necessary to read and write Japanese and learn the customs.

        1. Why do they mix poop and sex?

        2. Culture is really the thing that vexes all these big government control freaks. They assume that all cultures are the same and that you can turn one country into another by just copy and pasting the laws.

          If they want the US to be like Sweden, they’d have to exterminate the entire population and repopulate it with Swedes. (yea yea, I know, don’t give them any ideas)

    2. Yes, and that darned Protestant work ethic just won’t die even if you shower it with government incentives to quit working.

      1. Except that, in fact, is what has happened in Sweden, Denmark and Norway.

        buzz buzz

        Oh wait, my sarcasmometer just activated. Time to take it in for re-calibration.

  8. Sweden has budgetary rules that limit spending.

    They changed these rules recently (to allow the government to spend more on refugees, really), but the new rule just changes the target for spending and keeps the mechanism for limiting spending in place.

    “A bipartisan agreement was struck to lower the surplus target, as measured over an economic cycle, to 0.33 percent of gross domestic product, from the current 1 percent. The accord includes anchoring state debt at 35 percent of GDP”

    http://www.bloomberg.com/news/…..l-stimulus

    Sweden basically has what we would call a balanced budget amendment that requires a budget surplus. If Obama, Bernie, and Hillary want to make the U.S. like like Sweden in that way, maybe we should listen.

  9. I once did a forensic audit of a manufacturer in Sweden. Their costs seemed very high compared with the costs of their plants in the U.S. I was told the individual productivity of a Swedish worker was good but that they had to carry a lot of extra staff because benefits were so good that managers could count on 20+% of the staff being absent each work day.

  10. Here are some statistics about Sweden:

    “Sweden recorded a Government Budget deficit equal to 0 percent of the country’s Gross Domestic Product in 2015. Government Budget in Sweden averaged -0.16 percent of GDP from 1995 until 2015, reaching an all time high of 3.30 percent of GDP in 2007 and a record low of -7 percent of GDP in 1995.”

    http://www.tradingeconomics.co…..ent-budget

    A negative deficit means surplus.

    In the U.S., meanwhile, the government budget deficit reached a high 12.1% of GDP in 2009.

    In Sweden, total outstanding debt currently stands at 43.4% of GDP, mostly due to older debt from before the ’90s rolling over and spending through the downturn in the European economic cycle.

    In the U.S., our outstanding debt is currently 104.2% of GDP.

    To become like Sweden, we need to cut our spending to achieve a surplus and then hold that position steady until half of our outstanding debt is paid down. That’s what Sweden does.

    1. What about tax rates, though?

      1. Those are higher in Sweden.

        Is Obama, Bernie, or Hillary proposing that trade off?

        Are they willing to limit spending so that we have a 1% or 0.33% surplus, and a Debt to GDP ratio of less than 35%?

        Point is that just because Sweden is foolish on taxes and benefits, that doesn’t mean they’re retarded on spending.

        If Obama, Bernie, and Hillary were Swedish politicians proposing the same thing in Sweden that they’re proposing here, the Swedish left might laugh them out of politics for being so reckless.

        1. Somewhat OT, but I wanted to float this with you, Ken. Federal tax revenues were about $3.25 trillion in 2015. When debating with moderate or somewhat centrist folks, I imagine someone could put forward the following proposal: tax revenues of $3 trillion and spending of $2.8 trillion divvied up along these lines:

          -$1 trillion on anti-poverty/welfare spending (which would amount to an average of over $10,300 annually per person in the bottom 25% of the population, including administration costs of 15%; this would amount to an average of $30,900 annually for a family of three in the bottom 25%)

          -$300 billion on defense spending (which would still keep the U.S. at number 1 by far, i.e. 40% more than what the second ranked country, China, spends)

          -$300 billion on interest payments (which buffers for a rise in interest rates, since for 2015 interest expenses were only about $250 billion)

          -$1.2 trillion on anything else — Education, Veterans Benefits, Transportation, Justice/Prisons, Science, Agriculture, etc. (divided between 7 different areas, it would average $171 billion dollars per area; for comparison only $96 billion was spent on Education in 2014 and only $25 billion was spent on Agriculture in 2014)

          1. I feel like this is something a lot of regular people would be open to (although I would prefer something much, much lower than this of course). Even this lavish spending proposed would be a considerable decrease from what we have now and it would give us a balanced budget with a couple hundred billion surplus to begin paying down federal debt. Of course, it would mean replacing Social Security and Medicare with anti-poverty spending for the elderly who are poor, but that seems like a reasonable idea. What are your thoughts, Ken?

            1. Realistically, we have to look at discretionary spending and cut from there because Medicare, Medicaid, Social Security, etc. are all third rails. No one in either party has the political will to cut the growth of those programs–much less actually cut them.

              Currently, those programs along with unemployment cost us about $2.5 trillion right now.

              And our total spending is headed to $4 trillion annually. We’ve been helped out by absurdly low interest rates in large part because the developing world has been faring poorly and Europe has, as well, so since we’re the prettiest horse in the glue factory, everybody thinks our government debt is safe for now.

              Hence, high interest rates aren’t really crowding out other spending either.

              It’s important to remember that governments will not stop spending every penny they can get so long as they can get it. Even Sweden spends every penny it can. Keynes’ whole response to the liquidity trap is predicated on that; i.e., that observation isn’t restricted to fiscal conservatives and supply siders. It’s just that on the left, they see the government spending every penny they can as a feature rather than a bug.

            2. Given that, I see only two realistic hopes of containing spending. In no particular order:

              1) Starve the beast and cut taxes. They can’t spend money they can’t get. The government will never be so flush with cash that it willingly refuses to spend it, so stop them from getting more money. Prop 13 is a never ending source of frustration to the state of California because it represents a revenue stream that they can never get their hands on. If they could get their hands on that money, they wouldn’t pay down their debt. They’d spend more. Giving drunken sailors more money to spend never stopped them from spending more money. If you want them to stop spending, you have to cut them off.

              This is one of the reasons I support replacing the income tax, the corporate tax on profits, and the capital gains tax with a sales tax on carbon. We would gain the support of environmentalists to help starve the beast with lower revenue. If we can’t get all of the left to help us slash spending for economic reasons, maybe we could get enough of then to help us to it to save the polar bears.

              1. The problem with #1 is that they won’t stop spending on their own pet programs. They’ll just transfer all the hurt to the population at large. Case in point is in Ohio- Kasich may have balanced the budget (well, him and others) but he did so by cutting a LOT of money that flowed to local governments. He cut taxes but not by much. So they brought in just a little less but paid out a LOT less to local governments, who are feeling the brunt of all that. So in essence, there’s still a lot of money going to state coffers but a hell of a lot less flowing back down to the people. But hey- balanced budget right?

                And that’s even assuming they’ll balance the budget. On the federal level I’d see them continuing to accrue debt UNLESS they had your #2 part (which I highly doubt will ever happen with our current lackluster politicians.)

                1. The upside of starving the beast isn’t just about stopping current spending. It also stops spending we would have had–if we hadn’t deprived the government of that revenue.

                  The government will never stop spending every penny it gets.

                  I repeat: the government will never stop spending every penny it gets.

                  There may be some hope that GDP will rise faster than the rate of growth in non-discretionary spending and that will mean more tax revenue, but, even then, yes, the government will always spend every penny it gets.

                  And the only control we have, there, is to limit the pennies it gets through tax cuts. They can’t spend what they can’t get their hands on. They can’t leverage it into debt without consequence either.

            3. 2) Constitutional Amendment to balance the budget.

              Support for Republicans is at an all-time high in the states in terms of the number of governor’s mansions and the number of states where Republicans control both houses of the state legislature. Republicans almost control enough state legislatures to call a convention to propose amendments to the Constitution. If they proposed a balanced budget amendment, they might be able to get it ratified without much support from blue states, too.

              Apart from those two possibilities, I don’t see there being the will to enact real budget discipline.

              I hope I’m wrong about that because I like your idea.

  11. RE: Does Socialism Work for Sweden? That’s the Wrong Question

    We should all appreciate the fine qualities of Nordic socialism and implement it here in this country for the following reasons. First, it raises taxes on the nefarious producing class. Workers in this country make too much money as it is and do not give enough to the lazy. This injustice must stop if we are to be called a fair, just and humane society. The people who are lazy or refuse to find work and stay on the government dole are just expressing their displeasure at the failed capitalist system that refuses to recognize their non-existent contributions to our country. Therefore it is only logical and prudent to give these people more of our hard earned tax dollars so they will not be able to claim our country is intrinsically unfair. Additionally, we should also give more of our tax dollars so they won’t have to pay for their own health/dental care, housing, education and anything and everything else that attracts their fancy. But the best part of Nordic socialism is that it paves the way for the Great Peoples Revolution that we all covet so much. More government means more control over all us little people. More control will quickly evolve into a socialist totalitarian state that our obvious betters want for all of us. Then we will finally have the Stalinist state that hallmark our progress as a true civilized society. I don’t know about the rest of you, but I can hardly wait.

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    1. Do you have franchise openings in Sweden?

    2. This is not an approved socialist enterprise.
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  13. The Swedes, Finns, etc, are so fundamentally different than the average American that any numerical comparison is just flatly stupid. Why not compare Swedes to Greeks? Or Finns to Brazilians. It’s ridiculous. Different social norms, work ethics, expectations, etc, etc, etc.

    Whether or not the Swedish economic/governmental model works or doesn’t work has no relationship to the US economic/governmental model. That said, we have a wonderful front row seat to an amazing experiment in Sweden. How will the Nordic model handle the mass influx of Muslim immigrants?

    Come in, my child, join the party.
    Let me see, you would be from Saudi Arabia. Am I right?
    No, I am Inga from Sweden.
    Sweden? But you’re wearing a Burka.
    Je, for sure, from Sweden.

  14. It’s the right question and the answer is no. They tried it and it started to eat away at their economy so they are still in the process of scaling it back.

  15. The Europeans already destroyed a generation of people to get here. It was called WW2. We would have to dig out of the rubble as well and start from zero, just like they did to get where they are. But make no mistake, we’d have to rip the heart out of our society so that everyone who survived would be thrilled with a sea change that entailed massive taxes, a change in work habits and an absolute lack of any better options to do that.

  16. Christ almighty. With how stupidly we have been doing things in the US, I would ALMOST be ok with a well run socialist bureaucracy over what we have now. The Nordic countries, Germany, and a few others seem to keep their idiocy semi-well executed, and in budget. That’s more than can be said for how we do it in the states.

    One thought that gives me some small amount of comfort is that in 20 years or whatever, if we’re still on the big government track, it might be a lot better orchestrated because of technology and big data… Hence cheaper.

    Also, as much of a capitalist pig as I am at SOME point in the future I can almost see the “basic income” scheme needing to happen, which is also arguably better than the 6000 different programs we have now. I just don’t think enough people are smart enough to do the kind of work that will still exist for humans in a few decades. Automation will be too damn good. Hence we’ll have billions of truly useless eaters. I hope I am wrong on that… But I’ve read too much about AI and robotics to be very optimistic. Best case scenario: We pair up 1 smart person with one total idiot for breeding purposes (husband and wife we can call them), and then it’s just a return to single breadwinner households 🙂

    1. “in 20 years or whatever, if we’re still on the big government track, it might be a lot better orchestrated because of technology and big data… Hence cheaper.”

      The public sector unions would never let that happen. The likely outcome would be workers just sitting around “monitoring” the computer systems that are doing the jobs that they used to do.

    2. So instead of advocating better education for Americans and informing socialist Americans about the truth of free market, your answer is a socialist bureaucracy?

      You realize you are complaining about lazy and dumb Americans and then you don’t want to spend your efforts to inform those same lazy and dumb Americans, which is itself lazy and dumb. I say dumb because socialism will hurt you, so you in effect, purposely hurt yourself.

  17. “A Scandinavian economist once said to Milton Friedman, ‘In Scandinavia, we have no poverty’. Milton Friedman replied, ‘That’s interesting, because in America, among Scandinavians, we have no poverty, either’.”

  18. The article seems to imply that any system of government (capitalism, socialism, democracy, communism, totalitarianism, etc) will work just fine if the officials in charge are both intelligent and benevolent.

    1. That is what some really really believe. Contrary to all historical evidence that this does not work- Ever.

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  21. Nordic countries sometimes say that they are not socialist. As we all know the definition of socialism is the state control of the means of production. Below are lists of government owned businesses in Sweden, Finland and Norway.

    https://en.wikipedia.org/wiki/ List_of_government_enterprises_of_Norway
    https://en.wikipedia.org/wiki/ List_of_government_enterprises_of_Sweden
    https://en.wikipedia.org/wiki/ List_of_Finnish_government_enterprises

    1. damn 50 letters in a row limit.

  22. On 11 March 2018, The Washington Post had an article endorsing socialism entitled _Let’s have a good-faith argument about socialism_ by Elizabeth Bruenig. I commented:

    “Ms. Bruenig, I understand fully that you’re not advocating for the extreme forms of socialism. People advocating for the European/Scandinavian model inevitably fail to acknowledge the role that America has played in making their systems possible. America has done the heavy-lifting of defending Europe and keeping the sea-lanes open for 73 years now. In addition, America has created infrastructure like the world-wide air-traffic-control system, GPS, weather & communications satellites and the internet that Europe benefits from. America does a disproportionate amount of the world’s R&D and funding the UN. America played a major role in creating NATO, the World Bank, the IMF and the WTO. (For Asia the Pacific Tsunami Warning System).

    “Without America, Europe’s parasitic cradle-to-grave-nanny-states, partially built on the backs of U.S. taxpayers, either wouldn’t exist or would be no where near as elaborate as they are. (Or would’ve happened but under Soviet auspices).

    1. “Socialism doesn’t create new wealth, it (forcefully) redistributes existing wealth and inhibits the creation of new wealth. As demonstrated numerous times in the past century, and most recently Venezuela, a socialist system eventually ‘eats itself’ and destroys the engines of wealth-production. Only American largesse has delayed this in Europe.

      “Free Market Capitalism, which should actually be called Free Enterprise, combined with the Industrial Revolution has created *immense* wealth and has lifted *billions* of people out of poverty with more and more uplifted each and every day. I’ve read the figure 150,000 to 200,000 daily.

      “You don’t like inequality? There are two systems in which there is, for all intents & purposes, no wealth/income inequality: hunter-gather and subsistence-agriculture. In those systems everyone is equal in their poverty. In every higher system wealth always concentrates in the hands of a few. That’s not a bad thing, we’re all richer because of it.”

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