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Thursday, October 15, 2015
The Scandinavian Socialism Utopia is B.S.
Unlike the U.S., Denmark is moving in the opposite direction of socialism, and this represents a healthy model.
Denmark, like Sweden before it, has been engaged in a long campaign of reforming its famously generous welfare state. The country’s current prime minister is the leader of a center-right party . . .(You might even call it libertarian; its former longtime leader wrote a book bearing the positively Nozickian title “From Social State to Minimal State.” )
Denmark has been marching in the direction exactly opposite socialism for some time. Our friends at the Heritage Foundation rank its economy the eleventh most free in the world, one place ahead of the United States, reflecting Denmark’s strong property rights, relative freedom from corruption, low public debt, freedom of trade and investment, etc.
Don’t tell Senator Sanders, but Denmark’s corporate tax rate is a heck of a lot lower than our own.
This doesn’t mean we want to import the Danish model. As Williamson goes on to point out:
Denmark has a large and expensive welfare state, which Senator Sanders envies. He doesn’t envy the other part of that handshake: Denmark pays for that large and expensive welfare state the only way that you can: with relatively high taxes on the middle class, whose members pay both high income taxes and a value-added tax. [ Denmark has among the highest marginal income-tax rates in the world, with the top bracket of 56.5 percent kicking in on incomes of more than about $80,000].
If Senator Sanders were an intellectually honest man, he’d acknowledge forthrightly that the only way to pay for generous benefits for the middle class is to tax the middle class, where most of the income earners are. Instead, he talks about taxing a handful of billionaires to pay for practically everything. Rhetorically, he’s already spent the entire holdings of the billionaire class many times over.
If one wants the kind of welfare state the U.S. is moving towards, it’s better to have a realistic plan to pay for it than to imagine that the “top 1 percent” can provide the dough. But the best option is to reject that state.
The Danes won’t, but they are moving in the right direction, as it dawns on them that their welfare state is undermining the nation’s work ethic. Even as the American labor force participation rate plummets, don’t expect any such introspection from the Democrats.
The Scandinavian Socialism Utopia is B.S.
A popular argument in support of high taxes is to bring up the success of the Scandinavian socialist system. Liberals like to point out that Scandinavia (Sweden, Finland, Norway, Denmark and Iceland) enjoys a strong economy and high standard of living despite high taxes and a cradle-to-grave welfare system.
If you talk to a liberal about Scandinavia, you’ll often see them make some variation of the following points:
Scandinavian countries rank high in the UN Human Development Index
Scandinavian countries rank among the top in various quality of life indexes
Everyone gets free healthcare and education
Scandinavia has low crime rates
Scandinavia is a shining example of how successful socialism can be if implemented correctly
Scandinavian countries rank well on happiness indexes
If only those stupid, gun-clinging, bible-thumping, mouth-breathing, inbred, bucktoothed, ignorant, racist, backwards redneck hick republicans would just get out of the way, the left could make life fair and equal for everyone. The large-government welfare state works in Scandinavia and it would work here too!
The problem is that the success of Scandinavian socialism is a myth. It’s false. It doesn’t work for them and it wouldn’t work for us.
Below are some facts that show how dubious the whole “socialism is awesome in Scandinavia” claim really is. Use these arguments to quickly rebuke mindless socialists in the course of conversation.
1. Scandinavia isn’t really all that socialist
Scandinavian countries have certain socialist characteristics such as high taxes and extensive welfare systems. However, these countries have relatively capitalistic markets. Scandinavian businesses are mostly free from regulation, nationalization and protectionism.
Let’s look at a few key indicators of free enterprise in Scandinavia.
Ranks higher than the US in business freedom, monetary freedom, investment freedom, financial freedom, property freedom and freedom from corruption.
The overall point here is that Scandinavian countries have fairly capitalistic business environments. It is foolish to point to any Scandinavian country and call it an example of socialism working.
We can also look at government spending as a percentage of GDP. In the “capitalist” United States, government spending is equal to roughly 40% of the national GDP. In the “socialist” Norway, government spending is equal to roughly 46% of the national GDP. (Source.)
It is dishonest to compare Norway to the US and call one an example of successful socialism and the other an example of failed capitalism when both governments spend similar amounts of money on a percentage basis.
2. Scandinavia isn’t actually as prosperous as liberals like to claim
A study by Swedish group Timbro compared the GDP of various European Union nations to those of individual states in the United States. As stated by the study:
“If the EU were a part of the United States of America, would it belong to the richest or the poorest group of states?”
If Denmark were one of the US states, it would rank tenth among the poorest states for per capita GDP.
Finland would come in fifth among the poorest if it were a US state.
Sweden would be the seventh-poorest as a state of the US.
Additionally, the study found that the United States as a whole ranks higher in economic output per person than every European Union nation except for the tax haven economy of Switzerland. Denmark, Sweden and Finland all ranked significantly lower than the United States. Norway was not included in the study as it is not a member of the EU.
Next, the study compared individual US states to various countries in the EU. Once again, individual states ranked higher in economic output per person than each EU country. Only Luxemburg ranked near the top. Most EU nations ranked alongside the poorest states in the US.
So, that does it for economic output. Next, the study took a look at private consumption. Once again, we find that the US as a whole outranks the entire EU, including those Scandinavian countries that are EU member nations.
The study also found several other interesting facts: those classified as “low income” in the US live better than those classified as low income in the EU – including Denmark, Sweden and Finland. The US also ranked higher in average dwelling space and domestic appliance ownership (clothes washers, dishwashers, radios, etc.).
3. Scandinavians have lower gross and disposable incomes
People in Scandinavia make less money before taxes and after taxes.
This completely destroys the point that liberals like to make about individuals living better in Scandinavia than they do in the United States. On top of that, Scandinavian countries have some of the highest costs of living in Europe.
4. But money isn’t everything! What about the poor?
It’s clear that the United States outranks Scandinavia in most economic indicators. Americans make more money. But, the ever-empathetic liberal may say that money isn’t everything. More important than how much money people make is how well a country takes care of its poor.
Your liberal friends may claim that the low poverty rates in Scandinavian countries show that its massive welfare systems are working as intended. What’s so bad about everyone making a little less money if we can make a dent in poverty? You know, it’s the old “the rich can afford to pay a little more” argument…
It’s almost impossible to compare poverty levels between the US and various Scandinavian countries due to differences in the definition of “poverty.” There are serious problems with how poverty is determined. For example, some countries only take current income into account and therefore count students and retired wealthy people among the poor.
But having said that, we can generally agree that Scandinavian countries have fairly low poverty levels. Does this mean that the high-tax, big-welfare system is better?
First of all, it is quite a leap to point to tax rates or welfare programs as the single determinant of poverty or prosperity. For example, the extremely capitalistic country of Switzerland has a lower poverty ratethan most Scandinavian countries. Switzerland is a unique example (international tax haven), but the point is that you cannot point to any one factor as the single determinant of poverty rates.
There is zero evidence anywhere in the world that high taxes reduce poverty. Just because a few countries with high taxes have low poverty rates does not mean high taxes are good. There are plenty of counter examples of countries with high taxes and high poverty rates and vice versa.
Look at the United States. The War on Poverty was declared nearly 50 years ago and has pumped roughly 7 trillion tax dollars into combating poverty. At current spending levels, we could just straight up give $27,000 a year to every poor person in the US and they’d be better off.
Look at what all that public spending has accomplished:
High taxes do not help the poor; economic growth does.
We also have to take into account the massive immigrant population in the United States. In a country of 310 million people, 14.5% of the US population is foreign-born. Most other countries with high levels of immigration also have high levels of poverty. There are numerousstudies that show high immigration rates actually do affect a country’s poverty rates.
Sweden is the only Scandinavian country with a foreign-born population comparable to the United States. However, poverty among immigrants in Sweden has been growing rapidly over the past few years. According to this study, immigrant children accounted for 65% of all poor children in Sweden in 2008. By comparison, only 5% of native Swedish children live in poverty.
According to that same study:
“The Swedish model appeared to produce amazing results as long as the country was completely homogeneous and full of Swedes. But the much admired welfare state was unable to deal with even moderate levels of ethnic diversity (still far below the levels of the United States) without a collapse in social outcomes.”
The conclusion we can draw from all this is that the Swedish systemis not responsible for low poverty rates. Other factors, such as homogenous population and the industrious spirit of the Swedes, is responsible. If immigration and government spending continue unchecked in Sweden, the model will eventually become unsustainable.
Note: I got some help from this article in making this point.
5. Norway is backed by big oil
When liberals point to the per-capita GDP of Norway, they forget to mention that much of this is a result of big oil interests. Norway is the largest oil producer and exporter in all of Western Europe. Norway produces roughly 200 barrels of oil per person per year. That puts it at number 5 in the world for per capita oil production. (Source.)
The conclusion we can draw from this is that a significant portion of Norway’s per capita GDP is based on oil revenues. In other words, Norway is successful despite its government, not because of its government.
Incidentally, I find it funny that those same liberals who vehemently vilify big oil are happy to ignore that little fact when pointing to the success of Norway.
6. Scandinavians aren’t as happy as Americans
Liberals (and Scandinavians) love to claim that Scandinavian countries top various “happiness indexes.” They say that Scandinavians are so much happier and more content than Americans for a variety of reasons.
Let’s just ignore all the problems that come with trying to assign a number to “happiness.” Let’s ignore that there is no single definition for happiness. Let’s also ignore how easy it is for left-leaning organizations to manipulate these studies to show what they want to show. Let’s just forget all of that.
Instead, let’s look at suicide rates. Suicide rates are cold, hard numbers not subject to interpretation. You’re either dead by your own hand or not.
Every single Scandinavian country ranks higher than the United States in suicide rates. Every single country. Finland ranks 5th in the world for suicides per 100,000 people. By comparison, the United States ranks 18th.
In a conclusion based on facts and hard numbers, we can see that Scandinavia is not an example of successful socialism by any measure. It’s not a terrible place to live, but it’s clearly not the utopia that liberals love to make it out to be.
The above facts and figures prove that socialism did not make these countries great. These countries have small, homogenous populations, oil money and free markets. These countries do welldespite high taxes, not because of high taxes.
Plus, if you look around the world at true socialisms, you’ll see massive failures. Historically, socialism (and other forms of collectivism) has always resulted in poverty, starvation and widespread death. Scandinavians are fortunate that they don’t yet live in an all-out socialism.
I am far from the first person to write about the Scandinavian socialism myth. Take a look at the following links for even more facts, figures and dismantling of liberals. Most of these links are a little more digestible and well-written than my own monstrosity of a post.