Or is it a myth that people in the Nordic countries are economically successful and that they’re really in shambles?
Well, if you are starting out from US reactionary-right sources of information, you will need to recalibrate for the straight dope.
Simple answer: the Nordic countries are some of the best places to live in the world, in most measurable ways.
Yes they’re good places to live, but be careful not to make too many extrapolations from there. They’re also really small countries(how small? The largest - Sweden - has a population of 9 million. The city of New York alone has 8 million people). They also have highly homogeneous populations (which has been shown to be significant factor in formation of public goods e.g law and order, infrastructure etc.) and the causal direction of their model is not clear, nor is there a very well specified model to begin with. For instance, Sweden has school vouchers, which I’m led to believe most American liberals would otherwise consider to be a no-go.
Moved to Great Debates.
Colibri
General Questions Moderator
Including successful looting-and-raping-and-abduction campaigns on their neighbors?!
Ha! Didn’t think so!
I have a lot of respect for how the Nordic countries work and have read about their governments and economies extensively. The single biggest thing I like about them is how effectively governed they are. A good example for me is Sweden’s previous State pension/retirement system. Much like our Social Security system, Sweden’s system was on a long term demographic collision course.
Sweden does not have a population that is growing, so like many countries they have an aging population. Further, like all OECD countries, they saw significant increases in life expectancy from the time they created their State retirement system and the 1990s. So this created all the same conditions we have with our system: more old people, living longer, in a system designed for neither.
Except Sweden actually fixed the problem. Their politicians sat down, worked out the details, and came up with a system that actually works for them long term. A system that will self-adjust as the population grows older and that doesn’t create the huge unfunded liabilities of the American system.
What they actually did is create two system. So first, they said “everyone older than x retires under the old system.” Then, everyone else went into the new system.
The new system really is ingenious, it has two components:
- A normal pay-as-you-go system. However, it is much better designed than social security, which provides limited rewards for either working longer or making more money. The Swedish system is based on notional accounts and is defined contribution, variable benefit.
16% of your earnings go into a notional account, and a rate of return is provided, this rate of return is based on the wage index which is the real per capita growth rate in wages. So the returns in the notional accounts are thus tied to actual income growth in Sweden. Slower growth in income means lower returns and vice versa, which means that the notional accounts grow with the economy in a way that Social Security benefits do not adjust based on the economy.
When you retire, the sum of the money in your notional account is converted into an annuity. The annuity has a 1.6% growth rate which is considered some sort of expected long term economic growth rate by Swedish economists. In addition, it is adjusted based on how old you are. You can retire as early as 61, and the annuity’s benefit is based off of life expectancy. So at 61 you’ll have a smaller annuity benefit than a person who chooses to work until 70 (and the person who chooses the work until 70 will also most likely benefit from a larger notional account assuming similar income.)
This variable benefit but fixed contribution (as opposed to the fixed benefit, fixed contribution system in the United States) will much more readily adjust for an aging or declining population. It also has a built in “brake” on the returns offered in the notional accounts to protect against a scenario where wage was growing rapidly but population was shrinking rapidly.
- The second component, and this is what is ingenious, is 2.5% of your income most go into a private account. This private account can be invested in investments you choose, limited to government funds and funds that have signed a contract with the Swedish department that oversees this program. This component allows individuals to build a personal savings for their retirement that has the potential to grow with with market itself. It’s a common sense aspect of the plan, and shows how practical the Swedes are about many issues. In the United States the liberals would (and have) scream bloody murder if you start any talk of private accounts for Social Security. [Same as they do with school vouchers–which work very well and I believe are used in Sweden and Finland, Finland commonly ranks #1 in the world in educational metrics.]
Sweden has more legal third-world immigrants than the US per head of population. Norway may have more, but certainly do not have much less. Denmark is a bit behind, and Finland and Iceland well below.
Its not the 1960s.
The numbers and homogenity argument often crops up in discussions about Nordic coutries, but without any real reasoning for why size is relevant.
Yes, but the United States is nowhere near as homogeneous as Sweden. Stats Sweden reports 80% of the population in 2012 are Swedish, the rest foreign.
That’s 80% in one single ethnic group. The United States is (rough estimates) 12-13% black, 15% Hispanic, and then there is no single ethnic group among American whites that is anywhere close to the portion of the population that Swedes are in Sweden. This means less now, as most white Americans are just generic Americans these days, but as recently as the mid-20th century being an Irish or Italian or Jewish or etc American actually had more real meaning in terms of opportunities and integration into society at large.
I don’t know that the homogenity point is that big a part of the discussion in racial and ethnic terms though.
Size is more important, when it comes to political agreements size and geography can be barriers.
Homogeneity probably has a lot to do with accepting the social contract on a national level; if your whole nation is just like you, the idea of everyone taking care of everyone (through high tax rates) is easier to agree with.
While, of course, here in the US taxes are money stolen from hard-working, completely self-sufficient individuals to pay for the excesses and shortcomings of those greedy, lazy unworthies over there. You know, them.
sigh
With regards to Finland:
With things like private social security accounts and school vouchers, I think most American liberals wouldn’t have a problem with them if they were being proposed in good faith as a way of improving the system, but in American politics they’re mostly proposed as thinly-veiled attempts to begin dismantling it.
In Sweden the private accounts were actually part of dismantling the system. They were introduced when the system was basically recreated–so the old system was dismantled, but it needed dismantling. People born before 1954 stayed in the defined benefit system, the people born after got the defined contribution (variable benefit) system combined with the private accounts. [The system also has a “minimum income guarantee” to protect lower income people who have reached retirement age–a necessity to any State retirement scheme imo.]
The Swedish private school system is basically identical to what Finland has, except they are more common in number. Basically kids can go to private schools if their parents choose, and the State pays the tuition. There isn’t private tuition like there is here. That’s actually how school vouchers should work, they should cover the cost of tuition. Because they do not as proposed in the United States, they are really just a discount system, and the discount is enough to make private school affordable for middle class Americans but not enough to make it affordable for low income Americans who might get the most relative benefit from them.
Many people often claim that private schools only work in America because they are self-selective, only the best students from wealthier families get in. This means you have the least disruptive students, combined with parents who probably are much more active in their children’s education than the average (because they went through the expense of enrolling them in private school.) But in Sweden, private schools must accept all students that want to go there, so that argument does not hold water. In Sweden private schools are important in terms of innovation, one of the Social Democrat politicians (and a teacher by profession) that pushed for Sweden to open up education to private competition opened one of the first private schools in Sweden when they allowed them in the 1990s. His argument is that they start from the assumption that just because the State does something a certain way, that does not mean it is the best way to do it, so they innovate to try and find more effective ways to educate children. So private (or “independent” may be a better term) schools in Sweden are an important place for new and innovative educational ideas to develop, and some make their way into the rest of the school system as the Swedes are not all troubled with learning from the examples of the independent schools and integrating their ideas into public schooling.
Well, sure, but the people who push those proposals in the US for the most part aren’t really on board with social security or public education in general and see them as steps to wean people off of them. If they were being seriously proposed as ways to remake the systems in a more effective and efficient form, they wouldn’t be a problem.
That’s not really true, most Republicans have no desire to end public education or Social Security.
Unfortunately, they’re being disproportionately influenced by the minority that do indeed have those desires.
Do you include second and third generation immigrants? Different racial, ethnic and religious compositions? Because homogeneity and present immigrant proportions are far from the same thing, let alone legal immigrant populations. Not to mention that most of the institutions that are presently in place in the Nordic countries are from times when they were far more homogeneous than they are now(not that they’re not almost entirely homogenous even now - only 9% of population are from outside the EU). And the rising immigration is seeing also a rise of anti-immigrant sentiment. The far right wing is gaining support in Sweden -
If you don’t think size of the governed is a massive factor in governance, I urge you to consider the matter more thoroughly. Complexity of governance scales with size even in organisations where you have very strong rules and information - like armies. Governance in larger countries is an exponentially complex issue compared to smaller countries.
Yes, people are built like that. But taking care of everyone shouldn’t be the government’s job really. Especially not if everyone cannot agree that everyone else is just like them and that they should be responsible for taking care of them.
It’s not just an issue in the US, and it’s not an entirely unwarranted trust issue either. I’m not American, and I think it’s entirely justifiable to not want taxes to be pure redistribution. Public goods - law and order, infrastructure, primary education, sanitation, vaccination, pollution regulation - these are acceptable and proper areas for government to be involved. What always gets me is that liberals in the US seem very similar to conservatives. They too believe that people should be taking care of their own - just on a slightly larger scale. If they were really true to the principles of helping the needy, the neediest people in the world aren’t even in the US.
But not the economy? :dubious:
That’s a strange way of phrasing something. How do you define ‘the economy’?
If you are including Norway in this, do bear in mind that as well as being small in terms of population (5m) it has salted most of its North Sea Oil and Gas money away into a Sovereign Wealth fund of over $300Billion…at least it was last time I checked. It looks to be heading toward $1Trillion by 2020 which sounds downright embarrassing.
That sort of money buys a lot of social security.
What I find remarkable about these countries is that they have a very high degree of transparency regarding personal finance. It is possible to access websites that show the tax returns of other workers and for politicians they are often published in newspapers. Obviously a very effective means of discouraging corruption and confidence that the tax system is operating fairly.
My guess is that it would be a long, long time before that would be acceptable in the US or the UK.