A Nordic Fantasy

(originally published June 11, 2019)

Bernie Sanders and a plethora of other Democratic presidential candidates are extolling the wonders of Nordic social democracies and telling us that their progressive policies will transform America into an equally wonderous utopia. Okay, let’s take them at their word and see what it will take transform America into a blissful social democratic paradise.

It is very true that the Nordic countries (Finland, Sweden, Norway and Denmark – plus little Iceland: population 343,000) are very wealthy countries with a high level of social services performed by the government. Denmark has been particularly noted as the happiest country on the planet. But there are reasons why these Nordic countries have been so successful.

First, let’s face it. Nordic people are white people, probably the whitest on the planet. The people of these countries are overwhelmingly ethnic European, well over 90 percent. They were even whiter in the heyday of Nordic social democracy than they are now since recently these countries have had a large influx of immigrants and refugees from the Middle East and North Africa.

But I am not talking about white supremacy or privilege here. I am talking about homogeneity. Sweden is about 85% ethnic Swede with other Europeans bringing the white percentage above 90%. Norway is about 83% ethnic Norwegian (I can tell the difference between a Yoruba and a Hausa-Fulani, but I would have a hard time telling a Swede from a Norwegian). This means that they can avoid the Us-vs-Them politics that afflicts us here in America. In the Nordic countries it is basically just Us.

Us-vs-Them in the United States is not limited to ethnicity, it is also the wealthy vs everyone else (or vice versa). It is true that there is less income inequality in the Nordic countries (even though Sweden and Norway have more billionaires per capita than the United States), but that means that they cannot tax the rich to pay for their social welfare benefits. They tax everybody. Their governments get most of their revenue from the Value Added Tax (VAT) which is like a national sales tax. Sales taxes are considered regressive because it is thought that poor people must spend more of their income to live than do wealthier people and those necessary expenditures are taxed. The Nordic countries also have a progressive income tax but the top rate begins at what we would consider middle-class income levels. When there is very few of Them it is much easier for all of Us to pay up.

And the Nordic countries spend very little on defense, which gives them more money to spend on social services. The left progressives in the Democratic party would heartily endorse that concept and, if elected, would greatly reduce defense expenditures in the United States as occurred under President Obama. But the Nordic countries cannot defend themselves as was admitted by Anders Fogh Rasmussen, formerly the Danish Prime Minister and also the Secretary-General of NATO. His country, Denmark spends only 1.15% of its GDP on defense, while Sweden spends 1.04% and Finland spends 1.33%. But the Russian naval base Kaliningrad is only about 320 miles from Denmark’s coast and 185 miles from Sweden’s. Meanwhile Finland shares an 830-mile border with Russia. I think it is also important to remind you that Russia, which spends 4.6% of its GDP on the military, invaded Finland as recently as 1939 (three months after it invaded Poland).

These Nordic countries prosper under American protection. And I am glad that they do. But that does not mean we should emulate them. Or even try to. America is a very different country. Remember that about 1.3 million Swedes emigrated to America in the nineteenth century, that was about a fifth of their whole population at the time. Emigration to the United States was so bad that the Swedes had to create the Swedish Emigration Commission to staunch the flow. The recommendation of the commission? To slow the outflow of Swedish citizens to America, the commission recommended that Sweden become more like America.

And while we’re at it:

As wonderful as the Nordic social welfare system is, some cracks are beginning to appear even after recent reforms that cut back on some of the more unaffordable benefits. Polls have shown that, although most citizens of these countries still support the concomitant high taxes, opposition to the taxes is increasing even as some benefits are being cut back. And the Nordic countries are ageing much faster than the United States, which means even more pressure as there are fewer workers to pay the taxes (just like what is happening to Social Security in the United States) creating an eerie foreshadowing of future benefits cutbacks combined with tax increases.

The recent immigrants have not yet been assimilated (we don’t know if they ever will be) and their impact on these nations is just beginning to be felt. Crime and violence are still low by international standards but are rising, especially in areas with a large immigrant population such as Malmo, Sweden. Although there may be good reasons why recent immigrants are not in the workforce (such as a lack of language skills) their low participation increases the burden on the native working population.

In recent voting anti-immigrant parties that favor restrictions on asylum seekers such as the Danish People’s Party, Sweden Democrats, the True Finns and the Progress Party (Norway), have increased their share at the polls and in some cases are now junior partners in government. In the case of Sweden, the Sweden Democrats won a block of seats large enough to prevent the traditional center-left and center-right parties from forming a government. In Denmark, the left-leaning Social Democrats parroted the Danish Peoples Party’s anti-immigrant policies stating that restricting immigration was necessary in order to save that country’s social welfare system.

And while the fiscal condition of the Nordic countries is good (they tax instead of borrow), the same cannot be said of the citizens who incur household debt at much higher levels than in the United States. Apparently, the Nordic citizens do not want to have their lifestyles overly constrained by their tax burden.

And finally, the social welfare system has taken its toll on economic growth. The Nordic countries were already wealthy when they created their social welfare system but economic growth in Sweden slowed compared to other advanced economies according to a study by Professor Asar Lindbeck (Swedish economic growth in an international perspective, Swedish Economic Policy Review, 2000). Economic growth in socialist systems slows as funds are diverted to social and not economic purposes. While the Nordic countries feature a dynamic private sector, funds diverted to social welfare purposes are not available for R&D and reinvestment (or defense).

America cannot fall back on ethnic solidarity to create its political system. We are much too diverse. But we must find common ground, or we will devolve into a sputtering Tower of Babel with political identities of all stripes. This common ground is provided by the principles on which America was founded. The Enlightenment principles written down by John Locke and others are timeless and universal. The social contract between citizens based on those principles is the edifice of trust that allows immigrants and others to find common ground. The Founding Principles is the bond that makes us Us, and not a bunch of Thems.