Tuesday, March 13, 2018

We’ve all been guilty of projecting some kind of utopian fantasy on the Nordic countries

Americans are not just a few policy changes away from becoming happy Norwegians or Finns
writes Jim Geraghty in National Review.
Washington Post columnist Elizabeth Bruenig links to, but does not mention by name, my morning newsletter item responding to her original column declaring, “It’s time to give Socialism a try.” In her response, she writes, “I hadn’t named the Nordic countries in my piece, but my opponents were quick to discard them from the conversation.” Perhaps a longer discussion about why America shouldn’t try to become like the Nordic countries — and would fail if it tried — is in order.

1) The Nordic system kills innovation, and the United States’ adopting it would have dire consequences for the world economy.

As Daron Acemoglu, an eminent economist at MIT, wrote in 2013:
In our model (which is just that, a model), U.S. citizens would actually be worse off if they switched to a cuddly capitalism. Why? Because this would reduce the world’s growth rate, given the U.S.’s oversized contribution to the world technology frontier. In contrast, when Sweden switches from cutthroat to cuddly capitalism (or vice versa), this does not have an impact on the long-run growth rate of the world economy, because the important work is being done by U.S. innovation.
2) Most of what American progressives envy about the Scandinavian countries existed before they expanded their welfare state, and America’s voices on the left are mixing up correlation with causation.

As Nima Sanandaji, a Swedish author of Kurdish origin who holds a Ph.D. from the Royal Institute of Technology in Stockholm, wrote in 2015:
Many of the desirable features of Scandinavian societies, such as low income inequality, low levels of poverty and high levels of economic growth predated the development of the welfare state. These and other indicators began to deteriorate after the expansion of the welfare state and the increase in taxes to fund it.
3) At its biggest, most far-reaching, and invasive form in the late 20th century, the Nordic model crushed startups and the growth of new companies. “As of 2000,” Johan Norberg writes, “just one of the 50 biggest Swedish companies had been founded after 1970.”

4) It’s easier to get people to buy into a collectivist idea when everyone has a lot in common. As Robert Kaiser, an associate editor of the Washington Post, wrote after a three-week trip to Finland in 2005:
Finland is as big as two Missouris, but with just 5.2 million residents, it’s ethnically and religiously homogeneous. A strong Lutheran work ethic, combined with a powerful sense of probity, dominates the society. Homogeneity has led to consensus: Every significant Finnish political party supports the welfare state and, broadly speaking, the high taxation that makes it possible. And Finns have extraordinary confidence in their political class and public officials. Corruption is extremely rare.
5) That collectivism is driven, in part, by taking away choices from people. In Finland there are no private schools or universities. As Pasi Sahlberg, director of the Finnish Ministry of Education’s Center for International Mobility, said in 2011: “In Finland parents can also choose. But the options are all the same.”

6) Having all of your needs handled by the state does not cultivate a sense of responsibility, independence, motivation, or gratitude. Here’s Kaiser again:
I was bothered by a sense of entitlement among many Finns, especially younger people. Sirpa Jalkanen, a microbiologist and biotech entrepreneur affiliated with Turku University in that ancient Finnish port city, told me she was discouraged by “this new generation we have now who love entertainment, the easy life.” She said she wished the government would require every university student to pay a “significant but affordable” part of the cost of their education, “just so they’d appreciate it.”
7) Some might argue that the quasi-socialist system of Nordic countries eliminates one group of problems but introduces new ones. But in some cases, these countries have the same problems as the United States, only worse — the problems are simply not discussed as openly. As British journalist Michael Booth argues:
We’ve all been guilty of projecting some kind of utopian fantasy on them. The Nordic countries are, for example, depicted as paragons of political correctness, yet you still see racial stereotypes in the media here — the kind of thing which would be unthinkable in the U.S. Meanwhile, though it is true that these are the most gender-equal societies in the world, they also record the highest rates of violence towards women — only part of which can be explained by high levels of reporting of crime.
8) If the government is paying for everything, why is Denmark’s average household debt as a share of disposable income three times that of the United States? Meanwhile, the household-debt share in both Sweden and Norway is close to double that of the United States. The cost of living is particularly high in these countries, and the high taxation means take-home pay is much less than it is under our system.

9) Nordic-system evangelists would have you believe that citizens of freer-market countries are stressed while those living under generous social-welfare systems are happier and more relaxed. If American-style capitalism is depressing and dehumanizing, why are Iceland, Denmark, Sweden, Finland, and Norway not that far behind us, ranking in the top twelve countries for antidepressant use? Is it just the long winters? Why are their drug-related deaths booming? Isn’t it possible that a generous, far-reaching welfare state depletes people’s sense of drive, purpose, and self-respect, and enables them to explore chemical forms of happiness?

10) I saved the most important reason for last: If the government is to take on a bigger and more powerful role in redistributing wealth, citizens first must be willing to put their faith in the government. But in the United States, public trust is historically low — which goes well beyond President Trump’s implausible “I alone can fix it” boast or Obama’s broken “If you like your plan, you can keep your plan” pledge.
If the government is to take on a bigger role, citizens first must be willing to put their faith in the government. But in the United States, public trust is historically low.
A lot of progressives seem to think that conservatives distrust the government because of some esoteric philosophical theory, or because we had some weird dream involving Ayn Rand. In reality, it’s because we’ve been told to trust the government before — and we’ve gotten burned, time and time again.
Government doesn’t louse up everything, but it sure louses up a lot of what it promises to deliver: from the Big Dig to Healthcare.gov; from letting veterans die waiting for health care to failing to prioritize the levees around New Orleans and funding other projects instead; from 9/11 to the failure to see the housing bubble that precipitated the Great Recession; from misconduct in the Secret Service to the IRS targeting conservative groups; from lavish conferences at the General Services Administration to the Solyndra grants; from the runaway costs of California’s high-speed-rail project to Operation Fast and Furious; from the OPM breach to giving Hezbollah a pass on trafficking cocaine.

The federal government has an abysmal record of abusing the public’s trust, finances, and its own authority. Now some people want it to take on a bigger role? If you want to enact a massive overhaul of America’s economy and government to redistribute wealth, you first have to demonstrate that you can accomplish something smaller, like ensuring every veteran gets adequate care. Until then, if you want to live like a Norwegian, buy a plane ticket.
Adds Ben Shapiro:
The Washington Post columnist [Elizabeth Bruenig] memorably wrote last week that she wished for an upsurge in support for socialism. I critiqued that column. Now she’s written a response to that critique, claiming that I (among others) interpreted her in bad faith for mentioning several countries that have tried socialism and failed, from Venezuela to the Soviet Union, and for pointing out that many of the supposedly socialist countries that socialists so often proclaim as their examples aren’t actually socialist (see, for example, Denmark and Sweden).

 … Finally, she decides on her favorite new socialist paradise: Norway.

 … First off, a huge portion of Norway’s wealth ownership is thanks to their nationalization of their oil industry; like the United Arab Emirates or Venezuela, this gives them an enormous amount of cash to play with (their social wealth fund, worth $1 trillion, was seeded with oil money). The oil industry represents approximately 22% of Norway’s GDP two-thirds of their exports. (It also pays for 36% of the national government’s revenue.) That’s not the extent of their government holdings — Norway also nationalized all German-owned stocks after World War II, which partially explains the state’s high level of ownership of the stock market. Stockholding in companies does not mean the state runs the companies — in fact, the board runs the companies separately, not for the benefit of the state specifically or for the benefit of the workers, as Marx would prefer; Norwegian law requires that all shareholders be treated equally, with no preference for state shareholders. In fact, companies in which the state owns majority stock have even gone into bankruptcy before. The state essentially operates along the lines of so-called “state capitalism.”

Furthermore, Norway is a relatively friendly business climate; Heritage Foundation ranks it 23rd in the world, with the United States ranking 18th.

More than that, it’s important to recognize that the total population of Norway is 5.6 million; the total population of the United States is 323 million. It’s also rather important to recognize the cultural homogeneity of Norway: just 15.6% of the population are immigrants or children of immigrants, and 32% of the population has a higher education degree. Why does that matter? Because if we’re to compare Norway and the United States, we should probably compare Norwegian Americans with Norwegians in Norway. Here’s National Review’s Nima Sanandaji:
It was mainly the impoverished people in the Nordic countries who sailed across the Atlantic to found new lives. And yet, as I write in my book, Danish Americans today have fully 55 percent higher living standard than Danes. Similarly, Swedish Americans have a 53 percent higher living standard than Swedes. The gap is even greater, 59 percent, between Finnish Americans and Finns. Even though Norwegian Americans lack the oil wealth of Norway, they have a 3 percent higher living standard than their cousins overseas.
So, how’s state capitalism working out? Norway has a significantly higher per capita GDP than that of the United States — about $70,600 per year, as opposed to $59,500 in the United States. But a large portion of that per capita GDP is due to oil wealth.

 … Norway is an incredibly expensive country to live: it’s the second-most expensive country to buy food in Europe, and the most expensive to buy alcohol and tobacco. A haircut can cost $50. Vehicles can cost nearly twice as much as in the United States, and food costs vastly more than in the United States. There’s a reason that in 2013, Norway elected a far more conservative government — and they re-elected that government in 2017.

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