# Does Nordic Social Capitalism Work? **URL:** \ **Category:** Great Debates\ **Created:** [October 12, 2013, 2:23am UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043 "2013-10-12T02:23:37Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Nava](https://avatars.discourse-cdn.com/v4/letter/n/da6949/32.png) [@Nava](https://boards.straightdope.com/u/Nava)\ **Post date:** [October 15, 2013, 7:10am UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/41 "2013-10-15T07:10:41Z")
> [@filmstar-en](#): > > Nordic countries tend to have a culture that puts great store by co-operation, social responsibility, consensus and the importance of the community over the individual. I guess that comes from Protestantism and a climate that requires people to pull together just to get through the winter. If “Protestantism” was a factor, it would be one in the US as well, and they’re the opposite. At the very least, we need to look at it in terms of which specific Protestantism. ---
**Author:** ![Red\_Wiggler](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/red_wiggler/32/13190_2.png) [@Red\_Wiggler](https://boards.straightdope.com/u/Red_Wiggler)\ **Post date:** [October 15, 2013, 12:37pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/42 "2013-10-15T12:37:08Z")
> [@filmstar-en](#): > > Nordic countries tend to have a culture that puts great store by co-operation, social responsibility, consensus and the importance of the community over the individual. I guess that comes from Protestantism and a climate that requires people to pull together just to get through the winter. > > That makes them very easy to govern and a natural fit for nation state with an efficient economy. They tend to pull in the same direction, have clever people doing responsible jobs and dim people doing simpler tasks. They disapprove of politicians feathering their own nests, have progressive taxes and get good services in return and seem to prefer meritocracy rather than nepotism and cronyism. Concepts that have countries like the US and UK aspire to but seldom seem to reach. > > All of this is admirable in social and economic terms but…and there is always a catch…they lose creativity, innovation and cultural diversity. They are ruled by the priorities of home and hearth and the culture stifles personal expression. They cut down tall poppies. Discourage risk takers and individualism and Art and Culture adhere to the orthordox and the safe. > > Yes Nordic Social Capitalism works, but it comes at a cost that means no Hollywood, no Silicon Valley, no Broadway, no Rock and Roll, no Internet startups… Though recently they have been making great strides in dark and sinister detective fiction that explores the netherworld of murder and violence lurking beneath the calm stoic exterior. > > You win some, you lose some. Is this an internal or external observation? If external, I’d enjoy hearing a response from a native. ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [October 15, 2013, 2:37pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/43 "2013-10-15T14:37:34Z")
> [@Evil\_Captor](#): > > Redistribution is absolutely useful and proper when the economy gets out of whack as it is now, with the one percent owning 65% of the wealth in this country. Companies and the uber wealthy are swimming in cash, they are storing it overseas to avoid taxation which does NO ONE in America good but them. In a properly managed economy we’d raise taxes, take legal actions agaisnt the board of directors and CEOs of corporations that hide money overseas, and spend the money on programs to get middle class jobs going again. Middle class people spend money, which gets the economy going. The wealthy hide money, which stifles economic growth. Trickle down economics and laissez faire capitalism are proven failures. I agree. > [@bldysabba](#): > > You seem to think companies and the uber wealthy are literally like Scrooge McDuck. Swimming in cash is the one thing the wealthy would like to do the least because it means they’re getting poorer by the minute. People with money like to invest their money to make more. If they’re not investing in the USA, that is a signal of a problem. The USA is better off trying to identify and fix the problem than to declare it will hunt down the people who want to take their money elsewhere. And yet, they pretty much are sitting on their cash like a dragon sits on its hoard. People don’t spend money unless they have to. Suppose I own a company and have a few million lying about that I’m not using. Do I think, ‘Say, I’ll invest in my business! I’ll buy new machines, and I’ll hire more workers!’ No. Presumably I am producing just the right amount of my product. There is no need to upgrade the equipment to make more of it, and there is no need to hire more workers. If people would buy more of my product, then I’d need to make more. If I need to make more, then it makes sense to increase my production through hiring and buying more equipment. So how do I get people to buy more of my product? It’s something everybody wants, and the quality is as good as or better than it needs to be. It seems that as much as people want to buy it, they can’t justify the expense in their budget. For example: Why should I buy a new iPhone, when I have a cheap phone that does what I need it to do? I can make calls, and I can receive calls. I can get on the Internet if I want to. (But why should I pay for a data plan, when I can just wait and look stuff up on my computer?) I’d _like_ an iPhone and a data plan, and I wold find the additional features useful. But budgetarily it doesn’t make sense to spend four or five times as much on a phone, and double my monthly subscription. If I had more money, then I’d buy the product and the service. If I bought the product and the service, then that increases the demand for them ever so slightly. If enough people slightly increase the demand, more people will have to be hired to meet the demand, and companies would have to invest more in production, research, and development. So the way to get people to buy more of my product is for people to have more money to spend. One way to do that is to increase government spending so that the government can hire people. This leads to higher demand for non-government products and services, which leads to more hiring, which leads to more money in people’s pockets. But that takes revenue. As **Evil Captor** noted, trillions of dollars are being sat on – much of it offshore – and is doing no one any good. The companies won’t spend it because they don’t need to. The government can’t put a portion of it to use, because it is taxed so little. (Some major corporations make billions of dollars _and_ they get a tax refund.) The people can’t use it to drive the economy because it doesn’t belong to them. And so it sits. > [@Nava](#): > > If “Protestantism” was a factor, it would be one in the US as well, and they’re the opposite. At the very least, we need to look at it in terms of which specific Protestantism. It has been my observation that many people who proclaim their Christianity the loudest, are ones who fail to follow the teachings of Jesus. They have the ‘Protestant work ethic’, but forget charity. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [October 15, 2013, 3:03pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/44 "2013-10-15T15:03:51Z")
The Nordic countries have some of the best governments in the world. They have a very high degree of social trust. This means low levels of crime and corruption. This means low levels of welfare fraud and benefit abuse. Social trust is very highly correlated with economic prosperity. You can see the benefits in this thread. People accusing republicans of wanting to ruin public education with reforms that have already been tried and succeeded in Scandinavia. There is a downside to this. All the social cohesion tends to let government grow and take over the economies of these countries. While the size of governments in these countries have shrunk from the highs of the early 90s they are still large by american standards. There is good evidence that the high levels of governments spending have retarded the economies of the Nordic countries. In the late 19th century about half of Sweden’s population moved to the US. If you compare the standards of living between Swedes in Sweden and Swedish Americans. The Swedish Americans are about 55% [richer](http://super-economy.blogspot.com/2010/01/dynamic-america-poor-europe.html). After WW2 Sweden had one of the best economies in the world since it was one of the few countries not destroyed by the war and had made alot of money trading with the warring nations. By the late 1960s Sweden was the third richest nation in the world. Then they started to raise taxes and spending. By 1988 their tax burden as a percentage of GDP was 55%. The nationalized the steel industry Their economy stagnated and by 1993 they had fallen to the 14th richest country on earth. Since 1992 Sweden has cut its government debt in half, deregulated the economy, lowered spending and taxes. Other commentators have already noted it Pension reforms and education reforms. The result is that Sweden’s economy has recovered and since the reforms the economy has grown at a slightly higher rate than the rest of the world. One problem for Sweden is immigration. Immigrants to Sweden have workforce participation rate of 50%. Immigrants from the middle east are incarcerated at 6 times the native rate and immigrants from africa are incarcerated at 11 times the native rate. ---
**Author:** ![naita](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/naita/32/5862_2.png) [@naita](https://boards.straightdope.com/u/naita)\ **Post date:** [October 15, 2013, 3:19pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/45 "2013-10-15T15:19:11Z")
> [@filmstar-en](#): > > Nordic countries tend to have a culture that puts great store by co-operation, social responsibility, consensus and the importance of the community over the individual. I guess that comes from Protestantism and a climate that requires people to pull together just to get through the winter. > > That makes them very easy to govern and a natural fit for nation state with an efficient economy. They tend to pull in the same direction, have clever people doing responsible jobs and dim people doing simpler tasks. They disapprove of politicians feathering their own nests, have progressive taxes and get good services in return and seem to prefer meritocracy rather than nepotism and cronyism. Concepts that have countries like the US and UK aspire to but seldom seem to reach. > > All of this is admirable in social and economic terms but…and there is always a catch…they lose creativity, innovation and cultural diversity. They are ruled by the priorities of home and hearth and the culture stifles personal expression. They cut down tall poppies. Discourage risk takers and individualism and Art and Culture adhere to the orthordox and the safe. > > Yes Nordic Social Capitalism works, but it comes at a cost that means no Hollywood, no Silicon Valley, no Broadway, no Rock and Roll, no Internet startups… Though recently they have been making great strides in dark and sinister detective fiction that explores the netherworld of murder and violence lurking beneath the calm stoic exterior. > > You win some, you lose some. > [@Red\_Wiggler](#): > > Is this an internal or external observation? If external, I’d enjoy hearing a response from a native. Most of the main elements of Nordic Social Capitalism applies to the rest of Europe as well. No Hollywood, no Silicon Valley, no Broadway etc. aren’t the result of NSC, it’s the result of having a culture with a few million potential consumers rather than several hundred million. When aiming for a larger market there are lots of success stories. Abba, A-ha, Volvo, Saab, Nokia, Opera, and those are just the ones off the top of my head. The differences are not large enough to make sweeping generalizations like filmstar-en does. One could make a case that we’re so comfortable we don’t take risks, innovate and build to get filthy rich and never have to be hungry again, but a good social safety net also means we can try and fail without worrying we won’t even be able to afford medical care and housing. ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [October 15, 2013, 3:36pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/46 "2013-10-15T15:36:01Z")
> [@Johnny\_L.A](#): > > I agree. > > And yet, they pretty much are sitting on their cash like a dragon sits on its hoard. People don’t spend money unless they have to. Suppose I own a company and have a few million lying about that I’m not using. Do I think, ‘Say, I’ll invest in my business! I’ll buy new machines, and I’ll hire more workers!’ No. Presumably I am producing just the right amount of my product. There is no need to upgrade the equipment to make more of it, and there is no need to hire more workers. If people would buy more of my product, then I’d need to make more. If I need to make more, then it makes sense to increase my production through hiring and buying more equipment. > > So how do I get people to buy more of my product? It’s something everybody wants, and the quality is as good as or better than it needs to be. It seems that as much as people want to buy it, they can’t justify the expense in their budget. For example: Why should I buy a new iPhone, when I have a cheap phone that does what I need it to do? I can make calls, and I can receive calls. I can get on the Internet if I want to. (But why should I pay for a data plan, when I can just wait and look stuff up on my computer?) I’d _like_ an iPhone and a data plan, and I wold find the additional features useful. But budgetarily it doesn’t make sense to spend four or five times as much on a phone, and double my monthly subscription. If I had more money, then I’d buy the product and the service. If I bought the product and the service, then that increases the demand for them ever so slightly. If enough people slightly increase the demand, more people will have to be hired to meet the demand, and companies would have to invest more in production, research, and development. So the way to get people to buy more of my product is for people to have more money to spend. One way to do that is to increase government spending so that the government can hire people. This leads to higher demand for non-government products and services, which leads to more hiring, which leads to more money in people’s pockets. But that takes revenue. > > As **Evil Captor** noted, trillions of dollars are being sat on – much of it offshore – and is doing no one any good. The companies won’t spend it because they don’t need to. The government can’t put a portion of it to use, because it is taxed so little. (Some major corporations make billions of dollars _and_ they get a tax refund.) The people can’t use it to drive the economy because it doesn’t belong to them. And so it sits. I’d like to see a cite that this actually is a systemic issue of some sort, first of all. Once again, you ignore the fact that if people are just sitting on their money and leaving it unproductive, they are _losing_ money. Secondly, if companies sit on large amounts of cash without explaining why they’re doing it, that means they don’t know what to do with it, and that means the money will flow away from them soon enough, there is no need for a policy response. If any company has large amounts of cash at present and sit around doing nothing with it - no investments, no new product development, you can bet that company isn’t going to last long. There is no policy intervention required here at all. Nor, if there was a need, should the response be “Oh since they’re not using their money, lets take it from them and give it to other people so they can consume it”. It should be to figure out why companies are preferring to sit on cash than invest in your country, and then to fix those problems. ---
**Author:** ![amanset](https://avatars.discourse-cdn.com/v4/letter/a/8dc957/32.png) [@amanset](https://boards.straightdope.com/u/amanset)\ **Post date:** [October 15, 2013, 3:41pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/47 "2013-10-15T15:41:42Z")
> [@Martin\_Hyde](#): > > That’s actually already been addressed further up in the thread. Roughly 80% of Sweden are people with Swedish background, 20% have some other background (that 20% would include the 14% of total population that are foreign born immigrants.) That is extreme homogeneity, really by any definition. You have one group that makes up 80% of the country, I think the largest group in the United States is probably under 20%, and even then you only get there by “aggregating groups.” Yes it had, I answered the question as I read it. Sorry. Still, you are incorrect, the 20% figure relates to people born abroad or have both parents from abroad. Mixes don’t figure in the figures at all. You can see the figures here: [http://www.scb.se/Pages/TableAndChart\_\_\_\_26041.aspx](http://www.scb.se/Pages/TableAndChart ____ 26041.aspx) 20.1% have a “foreign background” which is defined in the footnotes as: > [@](#): > > 1. Foreign background include foreign-born and swedish-born with two foreign-born parents. Thus if I have a child with a Swede, despite me being British my child would not be included in that statistic. It also excludes anyone that is a third generation immigrant and beyond. I’m not denying that compared to some countries Sweden may be seen as somewhat homogenous, what I am saying is that it is not as homogenous as you’d expect. ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [October 15, 2013, 4:00pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/48 "2013-10-15T16:00:48Z")
> [@bldysabba](#): > > I’d like to see a cite that this actually is a systemic issue of some sort, first of all. Once again, you ignore the fact that if people are just sitting on their money and leaving it unproductive, they are _losing_ money. Secondly, if companies sit on large amounts of cash without explaining why they’re doing it, that means they don’t know what to do with it, and that means the money will flow away from them soon enough, there is no need for a policy response. If any company has large amounts of cash at present and sit around doing nothing with it - no investments, no new product development, you can bet that company isn’t going to last long. There is no policy intervention required here at all. Nor, if there was a need, should the response be “Oh since they’re not using their money, lets take it from them and give it to other people so they can consume it”. It should be to figure out why companies are preferring to sit on cash than invest in your country, and then to fix those problems. [The $5 Trillion Stash: U.S. Corporations’ Money Hoard Is Bigger Than the GDP of Germany](http://www.theatlantic.com/business/archive/2012/07/the-5-trillion-stash-us-corporations-money-hoard-is-bigger-than-the-gdp-of-germany/260006/) > [@](#): > > Reuters’ David Cay Johnston points out this week, American companies may be hoarding more cash than most of us had previously realized – about $5 trillion worth… > > Obviously, the precise amount of money sitting on the sidelines may have changed by now. But there’s no reason to assume it’s grown appreciably smaller, which is a problem. As Michael Mandel of the Progressive Policy Institute has written, lagging business investment is one of the chief problems slowing down our recovery. Companies are letting money sit idle, accruing minimal interest, rather than spending it on new equipment or offices… > > How do we coax corporations to spend more? Johnston suggests enforcing tax penalties on companies that hold excessive cash reserves. In the meantime, companies are going to keep stuffing cash into their mattresses until the economy calms down. ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [October 15, 2013, 4:10pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/49 "2013-10-15T16:10:55Z")
> [@bldysabba](#): > > I’d like to see a cite that this actually is a systemic issue of some sort, first of all. Once again, you ignore the fact that if people are just sitting on their money and leaving it unproductive, they are _losing_ money. Secondly, if companies sit on large amounts of cash without explaining why they’re doing it, that means they don’t know what to do with it, and that means the money will flow away from them soon enough, there is no need for a policy response. If any company has large amounts of cash at present and sit around doing nothing with it - no investments, no new product development, you can bet that company isn’t going to last long. There is no policy intervention required here at all. Nor, if there was a need, should the response be “Oh since they’re not using their money, lets take it from them and give it to other people so they can consume it”. It should be to figure out why companies are preferring to sit on cash than invest in your country, and then to fix those problems. Here’s a [cite from Forbes:](http://www.forbes.com/sites/robertlenzner/2013/07/16/householdscorporations-and-banks-are-hoarding-14-trillion-cash/) > [@](#): > > The amount of cash in the hands of households, banks and corporations is at an all-time historic high, some $14 trillion in all, as anxious, uncertain citizens, bank execs and corporate treasurers hoard their cash until the future course of Fed policy and the direction of the U.S. economy become clearer. Balance sheets have been repaired and the cash being hoarded just might be the fuel for modest growth accelerating. Note that it’s not just corporations, wealthy individuals are hoarding cash, too. Think Mitt Romney, unwilling to disclose his tax returns because he had a huge pile of cash hoarded overseas. The author cites “uncertainty” as the cause of all the cash hoarding, this strikes me as guesswork at best. We KNOW what middle class people will do with that cash: they will spend it. ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [October 15, 2013, 4:15pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/50 "2013-10-15T16:15:14Z")
> [@amanset](#): > > Yes it had, I answered the question as I read it. Sorry. Still, you are incorrect, the 20% figure relates to people born abroad or have both parents from abroad. Mixes don’t figure in the figures at all. You can see the figures here: > > [http://www.scb.se/Pages/TableAndChart\_\_\_\_26041.aspx](http://www.scb.se/Pages/TableAndChart ____ 26041.aspx) > > 20.1% have a “foreign background” which is defined in the footnotes as: > > Thus if I have a child with a Swede, despite me being British my child would not be included in that statistic. It also excludes anyone that is a third generation immigrant and beyond. > > I’m not denying that compared to some countries Sweden may be seen as somewhat homogenous, what I am saying is that it is not as homogenous as you’d expect. Incorrect on what point? I pulled my numbers from the same website you have linked to but from a different page (that appears to be a year or so out of date.) I said that 20% of the population (roughly) is non-Swedish, and that figure includes the 14% who are foreign born. The most recent official number shows that 15% are foreign born. I said nothing about persons of mixed-ancestry, so there isn’t actually a way I could be incorrect on that number. I don’t know if a dynamically created table can be linked to, but this link is to a table I just created on the website [link](http://www.scb.se/Pages/SSD/SSD_TablePresentation ____ 340508.aspx?layout=tableViewLayout1&rxid=e88d1929-0c48-403b-ab8b-aaec38073645), it reports: Swedish background: 7,633,901 Foreign background: 1,921,992 The total would be 9,555,893. The Swedish background population would be 79.8% of the population. Foreing background population would be 20.1% of the population. The Swedish background population is defined as: _Persons with Swedish background are defined as persons who are Swedish born with two Swedish born parents or Swedish born with one Swedish born parent and one foreign born parent._ My original post said nothing of people of “mixed” parentage, so again, there is no way I could be incorrect on claims about those persons. Sweden does not officially collect any data on ethnicity, but what we do know based on historical immigration figures is the overwhelming majority of that 80% are ethnic Swedes. Sweden does not have a 200 year history of massive amounts of immigration from basically all over the entire world that the United States does. There is no point to continue this quibble, Sweden is white bread compared to the United States, and any doubts about that are based in delusion. The idea that Sweden is more heterogeneous than the United States or even equally so is incorrect, period. ---
**Author:** ![ITR\_champion](https://avatars.discourse-cdn.com/v4/letter/i/c67d28/32.png) [@ITR\_champion](https://boards.straightdope.com/u/ITR_champion)\ **Post date:** [October 15, 2013, 4:51pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/51 "2013-10-15T16:51:31Z")
> [@filmstar-en](#): > > Nordic countries tend to have a culture that puts great store by co-operation, social responsibility, consensus and the importance of the community over the individual. I guess that comes from Protestantism and a climate that requires people to pull together just to get through the winter. > > That makes them very easy to govern and a natural fit for nation state with an efficient economy. They tend to pull in the same direction, have clever people doing responsible jobs and dim people doing simpler tasks. They disapprove of politicians feathering their own nests, have progressive taxes and get good services in return and seem to prefer meritocracy rather than nepotism and cronyism. This deserves to be repeated for emphasis. Different countries have different cultures, and those different cultures play out in the various measures of how good and happy a society is. The culture in Sweden and Finland (and Denmark and Norway too, I assume, though I’ve never been there) strongly encourages personal responsibility for one’s actions and fitting in with the community. Slate recently had an excellent article on the phenomenon called _lagom_ in Sweden: > **[The Single Word that Tells You Everything You Need to Know About the Swedish](https://slate.com/news-and-politics/2013/09/swedens-lagom-the-single-word-that-sums-up-the-swedish-psyche.html)** > > Each Friday, Roads & Kingdoms and Slate publish a new dispatch from around the globe. For more foreign correspondence mixed with food, war, travel,... Different political systems can work to increase or decrease corruption, but personal choices by individuals who hold the power have an effect as well. A bureaucrat with an opportunity to be corrupt either chooses to do so or not do so. Swedish government officials probably have fewer good opportunities for misbehavior, but are also less likely to take those opportunities than officials in most other countries. ---
**Author:** ![Grim\_Render](https://avatars.discourse-cdn.com/v4/letter/g/a87d85/32.png) [@Grim\_Render](https://boards.straightdope.com/u/Grim_Render)\ **Post date:** [October 15, 2013, 9:24pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/52 "2013-10-15T21:24:54Z")
> [@Martin\_Hyde](#): > > I only suspect someone with no sense of scale would believe managing Denmark is the same as managing the United States and it all just easily scales up with population. I suspect you are confusing the concepts of scaling and proportionality. > [@Martin\_Hyde](#): > > Lots of things go into complexity, but size is a very important and major factor. At the simplest level compare a Germanic tribal leader in the year 100 AD and his job versus the job of the Roman Emperor. Anyone who doesn’t think the Roman Emperor’s job was immensely more complex I would argue is being facetious […] But population size and geographical dispersion undeniably make government more complex. I only suspect someone with no sense of scale would believe managing Denmark is the same as managing the United States and it all just easily scales up with population. That is a good summation of why you believe size ought to increase complexity, but it doesn’t actually adress the fact that it doesn’t. In the real, observable world, developed countries scaling from Iceland of 300 000 people to Japan of 125 million, does not seem to show any observable scaling. In fact, while I don’t have the time to do a major comparison, a very brief look at the fraction of population employed in the civil service of developed coutries suggest that the faction is larger the smaller the country is. In other words, the scaling goes the opposite way of what you’re predicting. So I think it is clear that any such effect is so minor as to be overwhelmed by the economics of scale. ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [October 16, 2013, 4:10am UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/53 "2013-10-16T04:10:14Z")
> [@Johnny\_L.A](#): > > [The $5 Trillion Stash: U.S. Corporations’ Money Hoard Is Bigger Than the GDP of Germany](http://www.theatlantic.com/business/archive/2012/07/the-5-trillion-stash-us-corporations-money-hoard-is-bigger-than-the-gdp-of-germany/260006/) > [@Evil\_Captor](#): > > Here’s a [cite from Forbes:](http://www.forbes.com/sites/robertlenzner/2013/07/16/householdscorporations-and-banks-are-hoarding-14-trillion-cash/) Right, there’s prima facie evidence that there’s a cash hoard, and it may require a policy response, though it is not at all clear to me that it necessarily does. Thanks. My views on that policy response still hold though - redistribution is a bad idea, for reasons I’ve already laid out. On matters of rationalisation of offshore loopholes that are also mentioned - I don’t have an opinion, since I’m not familiar with the situation. ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [October 16, 2013, 4:56am UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/54 "2013-10-16T04:56:02Z")
> [@bldysabba](#): > > Right, there’s prima facie evidence that there’s a cash hoard, and it may require a policy response, though it is not at all clear to me that it necessarily does. Thanks. My views on that policy response still hold though - redistribution is a bad idea, for reasons I’ve already laid out. On matters of rationalisation of offshore loopholes that are also mentioned - I don’t have an opinion, since I’m not familiar with the situation. And this is the problem we’re having in the U.S. The Republicans are saying ‘We don’t know what to do. But we don’t want to do anything different from what we’ve been doing.’ You have seen the two cites verifying the hoards. (The link I posted was older, and put the amount at $5 trillion. The other one was newer and put the amount at $12 trillion.) You have said that if there really was a hoard of money, the owners would be investing it. There is, and they’re not. I _think_ we agree that the money has to be spent in order for it to do any good. My view is that if the money is ‘redistributed’ (and that word has a specific meaning for me, which is why I’m not using it), then it is an investment in the country that will return huge profits. Your view seems to be that it is not an investment, and that doing no good is better than… something. The problem as I see it is that some $12 trillion is not being invested. My solution is to invest it. What is your solution? Understand that I am an American living in the United States, and I approach the issue from that angle. Perhaps things are different in India. But from my perspective, I’ve lived through 30 years of ‘trickle down economics’ and I have seen it not work. It can be shown that when income disparity is low, the economy is good. (I have to get up in a bit over six hours, so I don’t have time to search out the graphs.) If there is a hoard of $12 trillion that is not being used, and if the economy is better when the majority of people have more money with which to stimulate it, then an adjustment must be made. ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [October 16, 2013, 6:29am UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/55 "2013-10-16T06:29:28Z")
> [@Johnny\_L.A](#): > > Understand that I am an American living in the United States, and I approach the issue from that angle. Perhaps things are different in India. But from my perspective, I’ve lived through 30 years of ‘trickle down economics’ and I have seen it not work. It can be shown that when income disparity is low, the economy is good. (I have to get up in a bit over six hours, so I don’t have time to search out the graphs.) If there is a hoard of $12 trillion that is not being used, and if the economy is better when the majority of people have more money with which to stimulate it, then an adjustment must be made. Well the corruption of the Indian government is infamous. Government officials in India are really, really, really corrupt and bribable. So I cannot blame blddysabba for not wanting to see the government redistributing the money, as I am sure that whenever the government gets its hands on taxpayer money it disappears down thousands of corrupt government officials’ rabbit holes. But he seems curiously naive about corporations and their tendency to grab cash and hide it. Here in the US we do not have a culture of corruption on the same scale as India, but our corporations have turned into ravening locusts when it comes to money. ---
**Author:** ![A\_nice\_guy\_with\_an\_opinion](https://avatars.discourse-cdn.com/v4/letter/a/76d3ee/32.png) [@A\_nice\_guy\_with\_an\_opinion](https://boards.straightdope.com/u/A_nice_guy_with_an_opinion)\ **Post date:** [October 16, 2013, 6:31am UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/56 "2013-10-16T06:31:42Z")
Are demographics an issue? ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [October 16, 2013, 6:51am UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/57 "2013-10-16T06:51:09Z")
> [@Johnny\_L.A](#): > > And this is the problem we’re having in the U.S. The Republicans are saying ‘We don’t know what to do. But we don’t want to do anything different from what we’ve been doing.’ You have seen the two cites verifying the hoards. (The link I posted was older, and put the amount at $5 trillion. The other one was newer and put the amount at $12 trillion.) You have said that if there really was a hoard of money, the owners would be investing it. There is, and they’re not. I _think_ we agree that the money has to be spent in order for it to do any good. My view is that if the money is ‘redistributed’ (and that word has a specific meaning for me, which is why I’m not using it), then it is an investment in the country that will return huge profits. Your view seems to be that it is not an investment, and that doing no good is better than… something. > > The problem as I see it is that some $12 trillion is not being invested. My solution is to invest it. What is your solution? > > Understand that I am an American living in the United States, and I approach the issue from that angle. Perhaps things are different in India. But from my perspective, I’ve lived through 30 years of ‘trickle down economics’ and I have seen it not work. It can be shown that when income disparity is low, the economy is good. (I have to get up in a bit over six hours, so I don’t have time to search out the graphs.) If there is a hoard of $12 trillion that is not being used, and if the economy is better when the majority of people have more money with which to stimulate it, then an adjustment must be made. “What is my solution” is a good question. I don’t have an answer because it isn’t a problem I’ve looked at. But that doesn’t invalidate my criticism of the solution you propose. There are reasons why the people who’ve made the money(corporations) are unwilling to put it back into investment. I think it would be worthwhile to explore those reasons and try and solve whatever’s wrong with the investment climate. > [@Evil\_Captor](#): > > Well the corruption of the Indian government is infamous. Government officials in India are really, really, really corrupt and bribable. So I cannot blame blddysabba for not wanting to see the government redistributing the money, as I am sure that whenever the government gets its hands on taxpayer money it disappears down thousands of corrupt government officials’ rabbit holes. You’re right that the Indian government is corrupt. But I’m of the (considered) opinion that it’s the government’s involvement in everything under the sun that has allowed corruption to exist and flourish. The more things the government is supposed to be accountable for - the fewer it actually needs to deliver. That is why I think it is essential that government should perform only those functions that come under the public goods heading. Redistribution is most emphatically not a public good. You’re making one set of people better off by making another set worse off. It is not a productive approach towards policy. > [@](#): > > But he seems curiously naive about corporations and their tendency to grab cash and hide it. Here in the US we do not have a culture of corruption on the same scale as India, but our corporations have turned into ravening locusts when it comes to money. Again - how does it benefit corporations to grab cash and hide it? There already is a disincentive to doing that. In an inflationary economy, which we all live in, you LOSE money when you hide cash. Neither of you are addressing this point. If it is still happening on a large scale, that means there are other issues at hand - like not enough investment opportunities. The cash is merely a symptom, and trying to treat a symptom with what is a problematic treatment(redistribution, for reasons I’ve outlined earlier) just doesn’t strike me as the best idea ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [October 16, 2013, 3:48pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/58 "2013-10-16T15:48:57Z")
> [@bldysabba](#): > > “What is my solution” is a good question. I don’t have an answer because it isn’t a problem I’ve looked at. But that doesn’t invalidate my criticism of the solution you propose. But all you’ve said is that it wouldn’t work in your country. As I said, the problem we’re facing right now is that the Republicans are saying ‘We don’t know what we want, but we _hate_ your plan!’ Simply criticizing, after being shown that something works in other countries (such as the Nordic ones, which are the topic of this thread) and being shown that the antithesis of the Nordic method does not work in this country, is pointless > [@bldysabba](#): > > You’re right that the Indian government is corrupt. But I’m of the (considered) opinion that it’s the government’s involvement in everything under the sun that has allowed corruption to exist and flourish. The more things the government is supposed to be accountable for - the fewer it actually needs to deliver. Except, as pointed out, the Nordic governments are involved in ‘everything under the sun’ and they are _not_ corrupt. Western European governments are involved in ‘everything under the sun’, and they’re not corrupt. Canada isn’t corrupt. The United States is, for the most part, not corrupt. The reason, I think, is that here and in the other countries I mentioned, corrupt officials are prosecuted when they are found out. Being involved in things doesn’t make a government corrupt; being unwilling to prosecute corrupt officials is. > [@bldysabba](#): > > That is why I think it is essential that government should perform only those functions that come under the public goods heading. Redistribution is most emphatically not a public good. You’re making one set of people better off by making another set worse off. It is not a productive approach towards policy. Who gets to decide what is for the ‘public good’? I think most people would agree that education is important. And yet there are elected and non-elected officials who want to change the laws so that instead of public education, children can only get the education their parents can afford. Many of us think that a healthy workforce is a public good. And yet the reason we’re in the current mess is that the Republicans believe people should only be as healthy as they can afford. The ‘public good’ comprises things that one side or the other doesn’t like; but they are still for the public good. > [@bldysabba](#): > > Again - how does it benefit corporations to grab cash and hide it? There already is a disincentive to doing that. In an inflationary economy, which we all live in, you LOSE money when you hide cash. And yet, they’re doing it. > [@bldysabba](#): > > Neither of you are addressing this point. If it is still happening on a large scale, that means there are other issues at hand Or your assessment is incorrect. I don’t know if you’re into science at all, but if a hypothesis is unsupported, then it needs to be modified or discarded. > [@bldysabba](#): > > - like not enough investment opportunities. The reason investment opportunities exist is that the investors expect people to buy what they’re selling. If there is a dearth of investment opportunities, then it might be an indication that people aren’t buying. Once again: Businesses do not hire people or invest in their equipment out of the goodness of their hearts. They do it for profit. Businesses are not ‘job creators’. Only when demand increases for a product, does buying new equipment and hiring a larger workforce make sense. Demand will not increase until people have the money to spend. By increasing government expenditures on things you mentioned earlier in the thread, people will be hired and will spend money. The business that they buy from will make money, see higher demand, and make the appropriate hardware/meatware investments. It may sound paradoxical, but higher taxes on money that isn’t being used anyway tends to increase profits. Let me give a historical example. (One of my favourites.) Henry Ford paid people $5/day, which was a much higher rate of pay than other factories were offering. He invested in his factory so that he could mass-produce automobiles, which reduced the cost of them. Suddenly you had thousands of people with money burning holes in their pockets, and a product everybody wanted that was affordable. Paying people the unheard-of rate of $5/day and investing in massive factories cost Ford a lot of money. But I think we can all agree that Ford’s profits were way, _way_ higher than they would have been had he not made the investments. (And those investments would have been tax deductible.) Ford created his own demand. Corporations today want the demand handed to them with out them having to make the investments to create it. ---
**Author:** ![amanset](https://avatars.discourse-cdn.com/v4/letter/a/8dc957/32.png) [@amanset](https://boards.straightdope.com/u/amanset)\ **Post date:** [October 16, 2013, 3:57pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/59 "2013-10-16T15:57:26Z")
> [@Martin\_Hyde](#): > > Incorrect on what point? I pulled my numbers from the same website you have linked to but from a different page (that appears to be a year or so out of date.) I said that 20% of the population (roughly) is non-Swedish, and that figure includes the 14% who are foreign born. > > The most recent official number shows that 15% are foreign born. > > I said nothing about persons of mixed-ancestry, so there isn’t actually a way I could be incorrect on that number. > > I don’t know if a dynamically created table can be linked to, but this link is to a table I just created on the website [link](http://www.scb.se/Pages/SSD/SSD_TablePresentation ____ 340508.aspx?layout=tableViewLayout1&rxid=e88d1929-0c48-403b-ab8b-aaec38073645), it reports: > > Swedish background: 7,633,901 > Foreign background: 1,921,992 > > The total would be 9,555,893. > > The Swedish background population would be 79.8% of the population. > Foreing background population would be 20.1% of the population. > > The Swedish background population is defined as: > > _Persons with Swedish background are defined as persons who are Swedish born with two Swedish born parents or Swedish born with one Swedish born parent and one foreign born parent._ > > My original post said nothing of people of “mixed” parentage, so again, there is no way I could be incorrect on claims about those persons. Sweden does not officially collect any data on ethnicity, but what we do know based on historical immigration figures is the overwhelming majority of that 80% are ethnic Swedes. Sweden does not have a 200 year history of massive amounts of immigration from basically all over the entire world that the United States does. > > There is no point to continue this quibble, Sweden is white bread compared to the United States, and any doubts about that are based in delusion. The idea that Sweden is more heterogeneous than the United States or even equally so is incorrect, period. Because the “roughly 80%” figure is being used to show how homogenous the society is. To quote you: > [@Martin\_Hyde](#): > > Stats Sweden reports 80% of the population in 2012 are Swedish, the rest foreign. > > That’s 80% in one single ethnic group. Which is incorrect. It doesn’t take into account mixes which adds to the ethnic mix. You have clearly described 80% of Sweden as being a single ethnic group when the stats you linked to did not say that. ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [October 16, 2013, 11:40pm UTC](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043/60 "2013-10-16T23:40:05Z")
> [@Johnny\_L.A](#): > > But all you’ve said is that it wouldn’t work in your country. As I said, the problem we’re facing right now is that the Republicans are saying ‘We don’t know what we want, but we _hate_ your plan!’ Simply criticizing, after being shown that something works in other countries (such as the Nordic ones, which are the topic of this thread) and being shown that the antithesis of the Nordic method does not work in this country, is pointless Er, no? I’ve been speaking in general terms, with the example of India given to support what I say. There’re plenty of other examples - every country whose government that has expanded broadly out of the domain of public goods has done badly over time. I believe Puddlegum’s post earlier in the thread even indicates that Sweden has done badly when their government expanded out into private goods. Not knowing what you want and criticising a bad solution can be better than implementing a bad solution. First, do no harm. If a company hoards cash, there’s a negative return. It loses money. This is a disincentive, by definition. If the company is STILL hoarding cash, there is good reason to ask why they’re doing this, rather than deciding to take away the money and giving it to government. > [@](#): > > Except, as pointed out, the Nordic governments are involved in ‘everything under the sun’ and they are _not_ corrupt. Western European governments are involved in ‘everything under the sun’, and they’re not corrupt. Canada isn’t corrupt. The United States is, for the most part, not corrupt. The reason, I think, is that here and in the other countries I mentioned, corrupt officials are prosecuted when they are found out. Being involved in things doesn’t make a government corrupt; being unwilling to prosecute corrupt officials is. As a sidenote: An entire country or a system doesn’t just become ‘willing’ or ‘unwilling’ to prosecute corruption. Your ‘analysis’ of corruption is incredibly simplistic. Incentives have to be structurally aligned in a way to prevent corruption. As a basic example - Let’s say a government in a democratic system is responsible only for providing law and order, and it is judged by voters purely on the basis of this. Lets suppose, to this duty, you add the ability to redistribute money from the richest ten percent to the other 90%. So now they’re judged on the basis of law and order, and on how they perform on redistribution. Which system do you expect to be more corrupt? > [@](#): > > Who gets to decide what is for the ‘public good’? I think most people would agree that education is important. And yet there are elected and non-elected officials who want to change the laws so that instead of public education, children can only get the education their parents can afford. Many of us think that a healthy workforce is a public good. And yet the reason we’re in the current mess is that the Republicans believe people should only be as healthy as they can afford. The ‘public good’ comprises things that one side or the other doesn’t like; but they are still for the public good. There’s a bit of a disconnect here. I’ve been using ‘public good’ in a technical sense, and I tried to explain in my earlier posts what that means, although you seem to have skipped reading that. Economics gets to define the framework for deciding what is and what is not a [public good](http://en.wikipedia.org/wiki/Public_good). Luckily for us, that’s already been done by Paul Samuelson. Goods that are non-rival and non-excludable are public goods. We can quibble about how you decide what comes under that framework, but I’m happy to let that be an empirical question, as long as the framework is followed. According to my reading, primary education upto high school can easily be classified as a public good. So can what I call public health - sanitation, vaccination, education and measures to prevent spread of communicable disease. Primary healthcare(basic stuff to take care of common communicable diseases like the flu, and other similar things) is something of an edge case. Tertiary care - advanced care requiring high expenditure per patient - is most decidedly a private good. > [@](#): > > Or your assessment is incorrect. I don’t know if you’re into science at all, but if a hypothesis is unsupported, then it needs to be modified or discarded. And I did modify my hypothesis - the disincentive that losing money by holding cash provides is perhaps not enough at the current time to prevent them from hoarding cash. This does not take away from the fact that losing money IS a disincentive, or that companies lose money when they hold cash. It just means that there are clearly other reasons that mean companies are willing to overlook this disincentive. > [@](#): > > The reason investment opportunities exist is that the investors expect people to buy what they’re selling. If there is a dearth of investment opportunities, then it might be an indication that people aren’t buying. Once again: Businesses do not hire people or invest in their equipment out of the goodness of their hearts. They do it for profit. Businesses are not ‘job creators’. Only when demand increases for a product, does buying new equipment and hiring a larger workforce make sense. Demand will not increase until people have the money to spend. By increasing government expenditures on things you mentioned earlier in the thread, people will be hired and will spend money. The business that they buy from will make money, see higher demand, and make the appropriate hardware/meatware investments. It may sound paradoxical, but higher taxes on money that isn’t being used anyway tends to increase profits. > Let me give a historical example. (One of my favourites.) Henry Ford paid people $5/day, which was a much higher rate of pay than other factories were offering. He invested in his factory so that he could mass-produce automobiles, which reduced the cost of them. Suddenly you had thousands of people with money burning holes in their pockets, and a product everybody wanted that was affordable. Paying people the unheard-of rate of $5/day and investing in massive factories cost Ford a lot of money. But I think we can all agree that Ford’s profits were way, _way_ higher than they would have been had he not made the investments. (And those investments would have been tax deductible.) Ah. This must be that science thing you speak of. Apparently it’s done by badly distorted anecdote. [Here.](http://www.forbes.com/sites/timworstall/2012/03/04/the-story-of-henry-fords-5-a-day-wages-its-not-what-you-think/) > [@](#): > > So, if creating that blue collar middle class that could afford the cars wasn’t why Ford brought in his $5 a day wages, what was the reason? > Actually, it was the turnover of his staff. > … > In 1913, Ford hired more than 52,000 men to keep a workforce of only 14,000. > > … > > It’s also not true that the offer was of $5 a day in wages. It was all rather more complicated than that: > > The $5-a-day rate was about half pay and half bonus. The bonus came with character requirements and was enforced by the Socialization Organization. This was a committee that would visit the employees’ homes to ensure that they were doing things the “American way.” They were supposed to avoid social ills such as gambling and drinking. Women were not eligible for the bonus unless they were single and supporting the family. > > … > > And as a final nail in the coffin of the argument that it was done so that the workers could afford the cars, there’s this. > > Car production in the year before the pay rise was 170,000, in the year of it 202,000. As we can see above the total labour establishment was only 14,000 anyway. Even if all of his workers bought a car every year it wasn’t going to make any but a marginal difference to the sales of the firm. > > We can go further too. As we’ve seen the rise in the daily wage was from $2.25 to $5 (including the bonuses etc). Say 240 working days in the year and 14,000 workers and we get a rise in the pay bill of $9 1/4 million over the year. A Model T cost between $550 and $450 (depends on which year we’re talking about). 14,000 cars sold at that price gives us $7 3/4 million to $6 1/4 million in income to the company. > > It should be obvious that paying the workforce an extra $9 million so that they can then buy $7 million’s worth of company production just isn’t a way to increase your profits. It’s a great way to increase your losses though. [Previous page](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043.md?page=2) [Next page](https://boards.straightdope.com/t/does-nordic-social-capitalism-work/671043.md?page=4)