What to Look For in the Nordic Model

Nima Sanandaji, New Geography, September 20, 2012

The Nordic nations, and Sweden in particular, are seen by many as the proof that it is possible to combine innovative and entrepreneurial economies with high tax rates. It is often argued that nations such as the US can gain the attractive social features of Denmark, Sweden, Norway and Finland—such as low crime rates, high life expectancy, and a high degree of social cohesion—simply by expanding the welfare state. An in depth analysis, however, shows that this line of reasoning is flawed.

To begin with, one should remember that free-markets have been at the core of the Nordic success stories. Sweden, for example, was an impoverished nation before the 1870s; one indication of that was massive emigration to the United States. As a capitalist system evolved out of the agrarian society, the country grew richer. Property rights, free markets, and the rule of law, in combination with large numbers of well-educated engineers and entrepreneurs, created an environment in which Sweden enjoyed an unprecedented period of sustained and rapid economic development. {snip}

However, during the late 1960s, policies steered sharply to the left and the overall tax burden rose significantly. The Swedish economist Magnus Henrekson has shown that the effective marginal tax rate (marginal tax plus the effect of inflation) that was levied on Swedish businesses could be more than 100 percent of the profits. The sharp left turn in Swedish economic policy did indeed affect entrepreneurship. Sten Axelsson, another Swedish economist, has shown that the period between the end of the 19th century and the beginning of the First World War was a golden age for the founding of successful entrepreneurial firms in Sweden. After 1970, the establishment of new successful firms almost stopped. The experiment of following a middle way between socialism and capitalism was not only unsuccessful, but also short-lived. In the 1990s and onward, a range of market reforms were implemented, paving the way for new entrepreneurial firms.

Taxes still remain high in the Nordic nations, particularly in Denmark and Sweden. The high tax pressures create high costs for the societies. {snip} Many entrepreneurs relocate their businesses to other countries in order to avoid Sweden’s high taxes. {snip}

So how come the Nordic nations are so prosperous? A key reason is that they, particularly since the 1980s, have compensated for high tax regimes by implementing a range of market reforms. These reforms range from Flexicurity—a combination of strategies to provide flexibility for employers and security for workers—in the Danish labor market, to partial abolition of rent-control in Finland, to school vouchers and partial privatization of the pension system in Sweden. Indeed, the Nordic nations have risen sharply in both the Heritage/WSJ and the Frasier Institute indexes of economic freedom over the years.

It is also important to realize exactly why the Nordic nations have been able to implement large welfare states, and what the benefits have been. The cultural and economic systems in the Protestant Nordic nations have historically given rise to very strong norms related to work and responsibility. Coupled with uniquely homogeneous societies, these norms made it possible to implement larger welfare states in the Nordic nations than those in other industrialized countries. Since the norms relating to work and responsibility were so firmly rooted, Nordic citizens were not as likely as other Europeans or Americans to try to avoid taxes or misuse generous public support systems. Also, the “one-solution-fits-all” systems of the welfare state are typically less disruptive in a strongly homogeneous social environment, since most of the population has similar norms, preferences, and income levels.

{snip}

Many of the favorable social outcomes in the Nordic nations relate to our unique culture, and the policies cannot simply be copied. {snip}

Clearly, the social success in the Nordic countries is not simply a result of welfare policies, but related to cultural and demographic factors. Therefore it would be difficult, if even possible, to achieve these results in nations such as the US simply by introducing a high tax regime. Why not instead be inspired by the fiscal conservatism and the free-market reforms that make the Nordic nations prosper today?

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  • WmarkW

    Regardless of the details about why Scandinavia’s  specific blend of socialism and capitalism works there; the important point is to realize that in a homogenious nation, the taxpayer/voter/benefactors, the politicians and administrators of the programs, and the beneficiaries, will share a common value system.  So the programs are designed by people who understand the effect benefits will have on behavior, and the voters will support packages that they can reasonably assume will not become moral hazards.

    America’s welfare state went off-track, when educated liberals assumed that minorities would act just like they would — not taking more than necessary to become self-sufficient.  The designers didn’t understand how different it was to design entitlements for people who believe society owes them an entire lifestyle, and who hold in contempt the benefactors who empower it.

  • NorthernWind

    Unfortunately Sweden is going down the tubes with a very high immigration rate and anti-Swede government. Finland, Norway, and Denmark all have a better chance of making it since the immigrant populations are much smaller than Sweden and the media and government less hostile in those countries. Sweden is in a bad position.

  • bubo

    I’ve said all along that most white people wouldn’t be upset with  high taxation if they got some benefit in the form of a stable, peaceful society made up of people that looked like themselves.  

    But if whites are continually shaken down to support generations of blacks who hate them, as well as brown immigrants who offer nothing, then things will get very tense.

  • loyalwhitebriton

    A similar situation can be said of Britain. At the end of WWII, when Britain was an almost completely homogenous nation, the people voted in a (radical, as it turns out) Labour government, which promptly nationalised Health, Schools, and ushered in the Welfare State. Most people didn’t mind, because there was a feeling of providing for our own people!

    Perhaps multiculturalism will destroy socialism, and perhaps the most homogenous societies will be the most socialist, or perhaps the most successful homogenous societies will be Social Democrat…who knows?

    All’s I know is this: I would gladly pay more tax to live in an all white Britain – in fact, I’d pay good money for it.

    • Ulick

      “All’s I know is this: I would gladly pay more tax to live in an all white Britain”

      If only people had heeded the advice of proud Englishmen like Mosley, Powell, and this guy…

      http://fotos.fotoflexer.com/b38c5bc5fc390c24f78a4d8b189c3107.jpg

    • How is it that anti-Whites have the right to impose racial engineering in White countries and only White countries? I mean, nobody is imposing multiculturalism, melting pots or diversity enforcement in any African, Asian or Arab countries. Why do people put up with this racial double standard?

  • Stentorian_Commentator

    Amen to the previous commentators.  Once the homogeneity is disrupted, and the shared values no longer shared, their welfare states will go the way of Greece, soon to be followed by many other Eurosocialist states.  In the U.S. the divide has been of long standing, so we are probably ahead of teh curve in seeing its destructiveness.  In a way, the socialism of the nordic countries is more an example of national socialism, or at least it has been while they have been homogeneous.  The same goes for kibbutzim in Israel.  They are examples of national socialism, not leftist socialism.  That is why they have worked. As for us and those like us, where we have a sharp divide on values between those paying and those getting, as one wag put it, democracy is three wolves and a sheep voting on what to have for dinner.

  • potato78

    Nordic Model is only applied to small country with homogeneous people or pale skin color people with the same work and social ethical value.

    1.  High tax/price is ok.
    2. Small jobless people is tolerable.

    The case like US is not applicable.

    Too far diversity is unique international country.

    The way of spending money on military is not sustainable and too many people don’t have to pay tax.  Future money has been squandered.  We used to have a lot of plus, not now anymore.

  • jedsrael

    THE GREAT SLOUGHING OF AMERICA is transpiring right now.

    Whites are waking up to the consequences of minoritization, and they know that the harder they work, the more will be taken from them and reinvested in Diversity Communities. Anything they give to civic institutions will be spent on hiring Diversity.

    Whites are finally saying Hell No, and sadly, all Whites will suffer from the loss of productivity, achievement, and scientific progress.

    We regress from adding to the largess of Diversity. When we build, we build to make Diversity stronger, so we stop building.

    It’s a sad fact, it violates our sense of purpose, but there are certain realities we must face during this  Time of Evil.    America isn’t ours anymore, so stop thinking like it is or will be again.   Isolate, Segregate, and Strengthen for the Hard Survival to Come.

    • The Worlds Scapegoat

       American whites, along with their English, Canadian, and Australian brothers, are cowards. They are more afraid of being called a nazi then they are afraid of genocide. Ironic isn’t it. They would let themselves be killed off rather than be called a killer.

  • Athling

    All European nations have survived wars, economic collapse, famine, and plague. The one thing that will destroy Norway, Sweden, or any nation on earth is racial dissolution.

    Having the best economic system possible will eventually begin to crumble as the teeming racial aliens allowed into your borders begin planting the seeds of their own culture in what was once homogenous soil.

    In Norway, we see signs of this now …

    • Puggg

      Another Muslim country, like the ones they emigrated from?  They’re about as foolish as our Hispanics, who fled Mexico but want to rejoin Mexico.

      I suspect those Muslims in Norway don’t really want to secede, but are using the threat to con gullible lib whites out of money, consideration, concessions, or what not.

  • The__Bobster

    Those days are part. The UN is working feverishly to turn them into turd world hellholes.

  • Puggg

    Scandinavian-Americans were among the first to set up localized welfare states.  There’s a reason why historically, Minnesota has a bigger welfare state than Mississippi.  As you go from south to north in America, the bigger the welfare state gets.  As you go from south to north in Europe, the bigger the welfare state gets.

    But that’s historically speaking.  Now you have all sorts of non-whites to louse up the equation.

    A welfare state can get too big, and the taxation to support it too onerous, that the tax system slows down the economy.  But, Nordics will always have welfare states for a reason.  The reforms are incremental, not wholesale.

    • A welfare state can get too big, and the taxation to support it too onerous, that the tax system slows down the economy.

      The Laffer Curve.  The theory that tax rates too high discourage economic activity and therefore reduce government tax revenue.

      I don’t think the Laffer Curve is set in stone.  Economics is a social science, and there are social conditions which can shift the Laffer Curve.  For instance, in a homogeneously white Nordic country that has a generous welfare state for tribal reasons, the Laffer Curve at that country will result in a maximized level of government revenue at a higher percentage rate than a Laffer Curve for a polyglot country like ours.  Translating that economic gibberish into readable English, it means that if everyone in Sweden is Swedish, and it is clear that Swedes run everything in society and benefit with every Krona of public expenditure, Swedish taxpayers are willing to tolerate and toil under higher tax rates because they know that people who look like they could be their Swedish grandmothers and also their real Swedish grandmothers will benefit, and Swedish public bureaucracy workers will be paid to administer the programs, no affirmative action black AA hires.  In polyglot countries like ours, white people who make substantial incomes don’t feel the need to do the kind of work it takes to earn generous incomes to pay the higher tax rates if the money’s going to be used by Dy’neshiniqa at the welfare office to give welfare to Booshondia to procreate little Shitaviouses.
      Still, all Laffer Curves sink, and even in a homogeneous Nordic paradise, tax rates can get too high such that it retards the desire to make and earn higher incomes.  Now, some of you might think that a feature and not a bug, (most people who think that are basically losers who are jealous that someone has more than they do), but high incomes generating a disproportionate share of tax revenues is precisely what’s needed if you’re going to run a sustained generous welfare state.  Even Sweden, before it started letting non-whites in, experienced the deleterious effects of being on the wrong side of the Laffer Curve.

    • potato78

       That is why south is always poorer than north everywhere around the world.

      http://www.youtube.com/watch?v=sQMhZwB3TXE

      • IstvanIN

         Blacks and it appears some Mexicans attacking white people.  Yet not one politician can see a hate crime.  They can not see what is in store for us on just a few short years, and I mean worse than what happens now.  Incredible.  And the number of white’s who sing I’d Like to Teach the World to Sing doesn’t seem to diminish.

  • fabius

    Sweden: 15% foreign-born (the US is about 10%). The Welfare State was accepted as long as taxpayers thought the recipients were people just like themselves (ethnic nepotism: see  Frank Salter’s On Genetic Interests). No longer–Sweden is slowly pulling apart, as a growing underclass of second-generation immigrants (mostly the offspring of refugees) wreak havoc on what used to be a model of science-based civilization.

    • potato78

      10% foreign-born is legal immigrants, plus xx% foreign-born is illegal immigrants, plus xx% domestic-born in US within illegal immigrant family is that right? much larger than 15%?

  • JohnEngelman

    Democrats who look forward to the day when whites are in the minority should read and consider this article. Social democracy only works where nearly everyone is white.
           
    When the War on Poverty made welfare benefits more generous and easier to qualify for during the 1960s millions of blacks quit low wage jobs and went on welfare. They knew the good life was out of reach, so they chose the easy life of welfare. Whites are less likely to behave this way.                                          

    A heterogeneous work force is more difficult to organize into unions than a homogeneous work force.                           

    Contrary to what Karl Marx maintained, loyalties of race, nation, and ethnicity are stronger than loyalties of economic class.

  • If there is a big important job that needs doing send a white man. China, Russia, Japan, Norway, Sweden don’t have blacks which explains why their productivity and quality exceeds America.  America hires blacks then needs to hire whites to do their job.

  • KenelmDigby

    To get a Swedish economy you need Swedish people.
    An ‘economy’ is merely the reflection of a nation’s people in the commercial sphere.

    A simple obvious point, but one which a great many ‘experts’ cannot or will not see.

  • Sherman_McCoy

    I’ve recently begun a course of historical study for myself to attempt to harmonize the various theories that have been formulated to explain why the US economy is where it is today, and what the likely possibilities for recovery might be.  This comes as an inspiration from Murray Rothbard’s works.  What I am shooting for is a series or charts (perhaps) on a timeline with economic performance, demographics, immigration, national debt, historical events (wars, major Supreme court decisions, etc.).

    It is certainly obvious that globalization has pretty much dismantled the ladders of  the upward mobility, as Paul Craig Roberts has put it, but it is only one factor.  The housing bubble was (in my opinion) merely an attempt to disguise what offshoring and importation of cheap labor had wrought on the native American workers.  The economic impact of having to provide “custodial care for a failed race”, as Fred Reed puts it, along with the costs of unnecessary foreign wars, the costs of violent crime committed mostly by minorities (blacks commit over 50% of all violent crime in the US, so it’s pretty easy to assume that adding the Mestizos raises it considerably higher), are all factors.I also contend that Affirmative Action programs and the undeserved praise heaped on any black who can tie its own shoes also provides blacks with underserved incomes with which they finance their own destructive hip-hop thug culture.  And, the more undeserved money they get, the more able they are to seduce unsuspecting brainwashed white females out of our genetic pool.As an aside, Mr. Rothbard’s criticisms of banking’s inflationist excesses (even before the Revolutionary War) lend credence to the ideas that they are also a large part of our current distress.If anyone can recommend authors who have already reconciled my admittedly amateur thoughts, please feel to offer some suggestions.  At this point, I see no cause for hope, except in a post-catartrophic world where whites have segregated themselves from our enemies. 

    • loyalwhitebriton

      Hi Sherman.
                            About your point re banking inflationist excesses, a large part of the problem lies with the sinful practice of “Fractional Reserve Banking”; FRB being a major contributor behind yours and mine inflationary economies.

      A few years ago I read an excellent book on economics which explained FRB and a whole lot more.
      I purchased the book at the time, but you can now download it for free on PDF. Even though the book is written from a UK perspective, our banking and economic systems are so similar that you may find much of interest in there: http://www.kuyper.org/storage/documents/The%20Political%20Economy%20of%20A%20Christian%20Society.pdf

  • jeffaral

    Too much welfare ends up creating a large subclass of white trash, even in the Nordic countries.

  • Tim

    “What to Look for in The Nordic Model”  And my answer was before reading, “Tourquoise eye shadow and a Bolero hat…”

  • potato78

    My solution to solve the third world importation problem.

    If we have to “import” people around the world, then we have to use an index.

    The index can be called “poor country index”.

    The higher index that a country get means more poor of the country is.

    The number importation is inversely proportional to poor country index.

    The more poor a country is, the less people will be imported into US.

    If rich counties could not use up importation quotes, the quote should be expired.

    As time passes by, the problem should be solved using the method.

  • The Worlds Scapegoat

     Isn’t Tiger Woods’ ex-wife from Sweden?

    Gold digger doesn’t equate to high IQ.

    • Dan

      Just because someone has a high IQ doesn’t mean they can’t think or act foolishly.