Seeing Double: Stop Trying to Copy Scandinavia
As a dual citizen of Denmark and the U.S., few things make me happier than seeing American politicians praising Scandinavia. Figures like Bernie Sanders have held up the Nordic economic system as a model for socialist progress in America and the world. “I think we should look to Denmark and Sweden and Norway and see what they’ve accomplished for their working people,” Sanders said in 2016. It’s not hard to see the appeal. The Nordic countries, Denmark, Norway, Sweden, Finland and Iceland, are some of the happiest, least corrupt and most economically-equitable countries in the world. But success alone is no reason to copy an economic system. In fact, Americans often mischaracterize the Nordic economic model and falsely assume that we can replicate it in the United States. If America does adopt Scandinavian policies, however, progressives might be horrified at the result.
Contrary to popular belief, Nordic countries operate competitive capitalist economies. In a 2015 address in the United States, Danish Prime Minister Lars Løkke Rasmussen said, “I know that some people in the United States associate the Nordic model with some sort of socialism. Therefore, I would like to make one thing clear: Denmark is far from a socialist-planned economy. Denmark is a market economy.”
The Nordic economic system is very different from the platform Sanders espouses. No Nordic country mandates a minimum wage law, while Sanders has made a $15 wage a central part of his campaign. Unlike American progressives, who favor more restrictions on international trade, Nordic countries also encourage free global trade. The estate tax, which makes up a central part of Sanders’ economic plan, is nonexistent in Sweden, Norway and Finland.
Nordic countries are actually in some ways more friendly to big corporations than the United States. Studies have shown that businesses undergo less regulation in Nordic countries than in America. The average corporate tax rate in Scandinavia is 21 percent, compared to the 35 percent or higher rates endorsed by progressives in the United States.
While it is true that Nordic countries offer excellent public health care, education and other services, income taxes are also extremely high — and not just for the very rich. Nearly half of Danish households pay a 60 percent income tax, which is more than twice the average income tax paid by the top half of the population here in the United States. Nordic countries have also struggled to incorporate the recent influx of immigrants and refugees into their economic systems, and these groups don’t enjoy the same economic opportunities granted to locals.
American progressives have a very selective vision when they look at the Nordic model. Focusing on the government-granted benefits while misrepresenting the sources of wealth that make these benefits possible is bad policy.
At this point, you might think that I’m advocating adopting the whole Nordic model instead of just pieces, but that’s not true. I believe that the whole Nordic model is a red herring for American economists. Nordic countries operate under completely different conditions than in America, and shockingly, their policies are designed to suit themselves, not the United States.
The Nordic economic model only functions because Scandinavian countries are small. Sweden, the largest of them, has a population of only 10 million, smaller than the population in North Carolina, and makes up about 4 percent of the landmass of the United States. Smaller economies make it easier for governments to practice oversight while making it harder for corruption and tax evasion to fester in the shadows.
Scandinavian countries are also ethnically and culturally homogenous. Over 87 percent of Danes, for instance, are ethnically Danish, and 76 percent are Lutheran. The sort of discrimation that has so harmed America’s economy is far less prominent in Scandinavian countries. As a result, modern Scandinavia has never had to deal with major economic inequality, even before the creation of the Nordic system. Creating a flourishing and equitable economic system is far easier when you’re working off an already homogenous society like those in Scandinavia. In America, we don’t have that privilege.
Nordic culture is very different from that of America. The small population and town-based social structure have led to a strong sense of community and public good. Scandinavians typically don’t try to build up their fortunes because the social and economic advantages of wealth are not as great as those in the United States. Scandinavians are far more accepting of government taxation because centuries of political stability have created a trust in the government absent almost everywhere else in the world. In contrast, American grassroots movements — from the Boston Tea Party to the 2010 Tea Party movement — have recurrently risen up against government tax policies. Nordic policies would not be popular or trusted in the U.S., which would decrease their effectiveness.
Economic models depend on culture and people, two things that are difficult to transplant. Despite coming from a Scandinavian family, I have far more in common with Americans than my family back in Europe. Nordic principles would have to change almost beyond recognition in order to work in the United States.
Instead of trying to copy the Nordic model, American progressives should focus on developing their own economic policies, based on America’s own material and cultural strengths. Simply seeing Denmark as a socialist paradise and copying its most appealing policies is misguided and thoughtless for the United States.