Should Uncle Sam Chase a Scandinavian Model?

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When American progressives dream their future vision of America, no place entices them more than the sparsely populated countries of Scandinavia. After all, here are countries that remain strongly democratic and successfully capitalist, yet appear to have done so despite enormously pervasive welfare systems.

Paul Krugman, the current high priest of progressive economics, approves of Sweden's high level of spending on benefits as an unadulterated economic plus. He says that Sweden, unlike other European states like France, thrives despite its high tax rate and notes that, while half of all children are born out of wedlock, those children have far less poverty than American children. Progressive pundit Richard Florida, for his part, claims that Sweden is the most creative place on Earth, just ahead of the U.S.

Some even suggest America should adopt wholesale the Scandinavian system as a policy imperative. The Washington Post praises Sweden as the "rock star" of the financial crisis and lists five ways the U.S. could learn from Sweden. ThinkProgress lauds Sweden's ability to achieve the world's highest rate of "social progress" despite a lower per capita income than the U.S. Writer David Dietz, contributor to PolicyMic, sees countries such as Sweden, Norway and Denmark as models that can guarantee both future economic growth and a way for America "to regain its global edge and cement its economic dominance."

But before we all go out drinking aquavit, shouting "skol" and dyeing our hair blonde, it makes sense to recognize that not only is relatively small, historically homogenous Scandinavia an ill-suited role mode for a megapower like the U.S., but that, in many ways, the Nordic system may be far more limited than its admirers here might acknowledge.

Of course, it's not that there's not something to learn from these or other countries. Certainly Europe's chilly corner seems in much better shape than the rest of the continental mess. Given today's circumstances, recent books extolling the EU as a model such as Stephen Hill's "Europe's Promise" or Jeremy Rifkin's "The European Dream" seem just slightly absurd.

In truth, Scandinavian countries have performed better than the dismal continental norm in large part because, with the exception of recession-wracked Finland, they have stayed out of Euro currency.

But even those outside the Euro-destruct zone are not doing as well as widely asserted. Overall unemployment in Sweden, at 8.4 percent, is also higher than that of the U.S.

Even Norway is underperforming. The last quarter its GDP grew .3 percent, down from an expected .8 percent. As long as mainland Europe is gripped by negative growth and record unemployment, export-oriented Scandinavian countries will continue to struggle.

In addition, not all the reasons for Scandinavia's relative health are those that would warm the heart of U.S. progressives. These countries, led by Sweden, have reformed many aspects of their welfare state, including such things as labor laws, and reduced taxes in ways that make them more competitive – and far less egalitarian than in the past.

Another positive factor for Scandinavia lies in their exploitation of resources, something many progressives, notably green policy aficionados, tend to view with disdain. Sweden exports loads of iron ore to drive its economy and employs massive dams to drive hydropower, which accounts for 42.8 percent of their energy. Norway benefits from a gusher of oil and gas that, producing nearly 2 million barrels of oil per day, making it the 14th largest oil producer in the world despite having a population of 5 million. If anything, Norway can be a model socialist economy because its economic base resembles the Nordic enclave of North Dakota. Overall, the tiny country produces nearly 15 times as much oil per person than the U.S.

There's also the matter of scale. Demographically, Scandinavia's population is microscopic compared to our far vast multi-ethnic Republic. Taken together the four Scandinavian countries – Finland, Denmark, Sweden and Norway – are home to barely 26 million people, far fewer than California and about the same as Texas. These hardy souls are widely dispersed. The population density of Norway and Finland is roughly half that of the U.S., while that of Sweden is one-third less.

Sweden, to put things in perspective, has fewer people than Los Angeles County. Norway and Finland are less populous than Minnesota, which is about the closest thing we have to Scandinavia. The Minneapolis-Saint Paul region, with 3.6 million residents, would be by far the biggest urban area in the region. Overall American Nordics, including those of mixed ancestry, total 11 million, more than the population of Sweden, by far the region's largest country.

Scandinavia's greatest strength may lie in its least political correct asset: its Nordic culture. Scandinavians' traditional interest in education, hard work and good governance serves them well both at home and abroad. It's not socialism that is primarily responsible.

After all, America's Scandinavians, although largely the descendents of poor immigrants also are pretty successful, earning more on average than their counterparts back home.

A Scandinavian economist, for example, once stated to Milton Friedman: "In Scandinavia, we have no poverty." To which the caustic Nobel Prize winner replied: "That's interesting, because in America among Scandinavians, we have no poverty, either." Indeed, the poverty rate for Americans with Swedish ancestry is only 6.7 percent, half the U.S. average which is on par with the poverty rate at home.

Yet these cultural attributes, notes Swedish based commentator Nima Sanandaji, now appear to be eroding in part because of rising immigration. Long highly homogeneous, the Nordic countries – notwithstanding their liberal kumbaya rhetoric – are facing huge problems absorbing immigrants. Despite populations that are more than 90 percent native, there is growing unease about concentrations of largely Muslim immigrants around large cities like Copenhagen, Malmo and Stockholm.

These immigrants are not doing remotely as well as those counterparts in the U.S. or Canada. Unemployment rates can reach as high as 80 percent among African and Middle Eastern immigrants in Scandinavia.

In May, there was a major riot in Stockholm's heavily Muslim, dense and highly planned inner suburbs. Many immigrants do not seem to embrace the Scandinavian ethos that having strong welfare system available does not mean people should take undue advantage of it.

More troubling still, notes Sanandaji, who is of Swedish-Kurdish ancestry, many young Scandinavians also seem to be rejecting the old Nordic social compact. Increasing numbers of people under 40 are retiring early, citing disabilities and sickness.

These trends point to serious problems for countries whose birthrates, despite widely praised natalist policies, are dropping and generally are below ours. With immigration growing ever more unpopular, further demographic decline in the Nordic countries seems inevitable.

As a result, the Scandinavian welfare state faces challenges arguably far worse than those here at home. The Bank of Finland, for example, warns that an aging population and large public debt would cause a "risk that Finland will drift onto a path of fading economic growth, persistently high unemployment and deteriorating public finance."

To be sure, America faces many of these same problems, but it seems silly to look for solutions in a region of the world that is not only fundamentally different but also faces equal, or even greater challenges. Rather than adopt solutions forged in the Nordic cold, American progressives would do better to hone their prescriptions to meet the illnesses of the very different patient here at home.

Joel Kotkin is executive editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared at The Orange County Register.



















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Scandinavian Model

"Euro destruct zone"...sigh, Really? Talk about putting your prejudices out there. Anyway:

"These countries, led by Sweden, have reformed many aspects of their welfare state" Well, yes. And? The article makes it sound like the Scandinavian countries have decided to go for the American model wholesale. Whereas these countries, like every other coutry, is constantly trimming sails to adjust course a little left or right. Its not really relevant if Sweden turns ten yards to the right when the US is fifty miles further right.

"Norway benefits from a gusher of oil and gas..." Norway doesn't actually SPEND any of the oil income, its all saved up in a sovereign wealth fund. Norways setup is run of non-oil income.

"There's also the matter of scale" The economics of scale means that the advantage lies with the bigger entity. That is why Wall-mart outcompetes mom-and-pop stores. The fact that the Scandinavians can run their model at such a small scale is quite a strong argument in favor of its robustness.

"That's interesting, because in America among Scandinavians, we have no poverty, either." Well, if you use Scandinavians in the US as a basis for comparison, you are using a group who mainly know who their ancestors were back 100 years, and geographically exclude the worst areas in the US. Pick out a similarly advantaged group of Swedes to compare to, and see what happens:)

There is probably a reason why the Scandinavian nations have the highest rate of startups in the world...a most people peg the welfare as that reason:

http://www.inc.com/magazine/20110201/in-norway-start-ups-say-ja-to-socia...

Another view of Minneapolis.

For a useful take on Minnesota's Metropolitan Council, see Katherine Kersten's column in the Sunday (8/4/13) Minneapolis Star-Tribune.

Aaron Renn, please study the column carefully, for a hint of why even partial accommodation to "regionalism" has a serious credibility problem, which will likely get worse with time, until the inevitable nasty backlash. The bottom line is corruption. Unlike Minnesota, Minneapolis is not Scandinavian--it's just corrupt. In addition to a very poor transparency rating, there are a couple of publicly-funded stadiums to prove it, both rammed through over massive public opposition--the latest one by flagrantly illegal means. (Minnesota law mandates a referendum on expenditures for things like stadium subsidies. The Minneapolis city attorney got around this by simply declaring that the nine-digit handout to the Vikings wasn't an expenditure, since it could be presented as coming from existing revenue. This is how "regionalism" will unfold in the Twin Cities--Ms. Kersten is not imagining things.) This is the way things happen in big cities, where the governments, having purchased a few reliable ideological and racial voting blocs, can afford to be a lot less responsive to the public in general and to economically productive workers with families in particular.

I'm sorry that the more responsive suburban governments are making life hard for Mr. Swenson's architectural firm. They're making life a lot easier for many other businesses, and also for their residents--which is to say, for a skilled labor pool, and for working people with children who will grow up to be the next generation of skilled labor. (That last clause largely excludes even those creative-class urban elites who do have children. Those children will be less likely to grow up to be employable in the STEM fields than will the children of suburbanites. Instead, they will have been raised to follow in their parents' footsteps, in jobs for which funding will no longer exist.)

In any case, I doubt that even the approval-fraught growth of senior citizen housing (Mr. Swenson's specialty) is an indicator of any general economic impetus toward high-density housing in the suburbs. Senior-citizen housing (typically high-density) is a peculiar section of the housing business, for a variety of reasons. For one thing, current demographics entails that the demand will grow regardless of economics, as the population ages. In addition, that demand is not only less amenable to regional centralization than are other types of housing, it is also (relatively) more acceptable to the suburban municipalities. This is because, in Minnesota, Grandma was born on a farm, and perhaps moved, or wants to move, to the suburbs to be close to the kids. Neither she nor the kids will want to see her housed in the city, where life will be less pleasant for Grandma, where the kids can't park when they come to visit, and where Grandma's location (which will not be downtown) is not served by useful mass transit, or by any mass transit in the evenings and weekends when the kids can come to visit. As with other cities, mass transit in the Twin Cities serves solely to get people to and from the downtowns during rush hours. There is, in fact, far less service outside the peak hours than there is in, say, New York City, since Minnesotans with day jobs, as a rule, don't work overtime and often go home at 4:00 or 4:30 (having started at 8:00).

As for economics and density, in Minnesota, as elsewhere, the move back towards the cities was a product of the bad economy and $4.00/gallon gas. As elsewhere, that move has also been frequently exaggerated by groups with interests in "urbanism". Here, the actual numbers are not impressive, and mark a fragile trend at best. With recovery, business and residential construction (still typically low-density) have heated up considerably in the Twin Cities suburbs in the last year. More choice may well mean a move back to the suburbs. Meanwhile, urbanism, the core cities, and the Metropolitan Council have done nothing to improve their credibility with people who are not dependent on government for their incomes. As elsewhere, more people (including the present writer) are working from home, and can more easily afford a livable home (and a more productive home workplace) outside the cities.

In closing, a note about mass transit (and corruption) in Minnesota that may be of interest to New Geography readers. Every few years, the Minneapolis mass transit union goes on strike, making demands that seem quite arrogant to working people who are not government employees. No-one is affected, though, except poor people in Minneapolis itself who don't have cars (and who tend to support the unions). The rest of the Minneapolis metro laughs off the strike and drives to work. The traffic congestion can be bad for those who drive into the city--but the additional drivers due to the strike make little difference. The Metropolitan Council, of course, is doing whatever it can to make driving difficult throughout the metro area. There is no more talk of reining in the unions than there was in Detroit. The state, in fact, has had to take on some of Minneapolis's pension obligations.

Chasing a Scandinavian Model

As a life long Minnesotan with Swedish ancestry and recent visitor to Sweden and Norway, I find news and opinion about the 'Scandinavian Model' and some comparison to Minnesota to be intriguing. The article seemed to imply that all of the Scandinavian success is attributable to Nordic work ethic and this success is barely hanging on, thanks only to recent privatization of parts of the economy and cutting taxes. Those steps may be helpful and a necessary re-balancing of government services, I doubt very much that many Swedes are willing to totally toss out the public safety net and move toward a 'winner take all economy' as we have been trying to do for years. While recently visiting Stockholm, Goteborg,and seeing much of the Swedish countryside I observed a built environment that was generally comparable in quality and prosperity to what I see around the upper U.S. Midwest including booming North Dakota. In Sweden, the capital Stockholm is thriving while sizable rural areas are in decline. Similarly in Minnesota, the Twin Cities (Minneapolis-St. Paul) were similarly drawing population growth and prosperity from across MN and the Dakotas. The recent ND oil boom has finally reversed 40 plus years of northern prairie depopulation. Our ethanol government insured farm economy with $10,000 per acre land prices is helping to hold up southern and western MN. Sweden has no ethanol push and no oil. But they still have a very high standard of living while consuming far less energy per person or per unit of gdp when compared to Minnesota and especially North Dakota. I suspect the heavily taxed $9+ per gallon gas in Sweden is a factor in both Swedish energy efficiency and in the Swedish rural decline. I believe our Midwest economy would completely collapse under $9 per gallon gas.

There is considerable discussion of suburban development on New Geography. In Minnesota our recent periodic experience with $4+ gas and increased employment insecurity has contributed to slow the Twin Cities urban outward expansion to a crawl. Our Metropolitan Council is less a factor in pushing urban density than is the private sector, such as the senior housing clients of my architectural firm. Our clients are frequently pushing the limits of higher density in suburban infill projects over the zoning requirements and far over what the project's neighbors want. Economy of scale makes this necessary, a larger building can reduce cost per unit by tens of thousands of dollars. A larger project can be advantageous to our company but the long timeline it takes to obtain community approvals is painful and costly.

Stockholm has an attractive range of urban and suburban density, the central city has extensive high quality neighborhoods of five to six story apartment blocks, some mixed use, and many with high value luxury penthouses on the top floor. Check out the Swedish property website Hemnet.se and you can usually find some of these for sale. Stockholm exceeds Minneapolis (City of Lakes) in waterfront public exposure and development. The recently completed Hammerby Sjostad harbor redevelopment surrounds a large formerly industrial harbor with public walks and plazas, then mid-rise housing interspersed with occasional commercial and further inland more mixed use along a new light rail line. The development involved the talents of Stockholm planners and numerous local architectural firms resulting in a very attractive and varied high value urban neighborhood with contemporary architecture. The Stockholm metro area also has extensive suburbs linked to the city both by convenient transit and roadways, giving the population far greater flexibility in travel options compared to our car dependent Twin Cities. Prosperous suburban neighborhoods abound to the east of the City where vast waterways offer many scenic settings for recreational harbor developments, villas (single family), or traditional Scandinavian wood framed fritidshus (loosely translated as free time houses). New villas are still being built.

Since visiting Sweden, a wide range of Swedish news has been of interest to me. Various published economic statistics from sources such as the CIA national statistics or Statistics Sweden indicates that the Swedish economy is producing as much per capita as Minnesota and in the case of the Stockholm area possibly more than the Twin Cities metro area, a part of the U.S. usually known for high productivity. The Swedes do this, even with the 'pervasive welfare system' and worse yet with two to three weeks more vacation and holidays than we have. The earlier comment associating Sweden's single payer health insurance with lack of productivity and inventiveness is quite surprising. One of our local TV stations reported within the last few days about an innovative Swedish prosthetic device which, if it passes the too lengthy U.S. approval process will offer lower leg amputees,including many of our war veterans, an effective option for greater mobility. The Scandinavians lead in many other areas of design, especially architecture and industrial design with award winning projects and products.

Since the article also mentioned Norway, Sweden's neighbor and close cultural relative, I feel compelled to offer my compliments to the Norwegians for greatly exceeding the Swedes in keeping the countryside looking great. With over 1500 miles of driving in fjord country, I cannot recall seeing a single dilapidated farm or city home. Is that North Sea oil money finding its way to the countryside or just old fashioned Nordic hard work? I suspect it's both. The harmony of natural and built landscape up there is something to admire. Personal property rights to erect advertising billboards must have been greatly restricted,helping to create a first class world tourism destination.

Finally, to end this overly long post, I offer my apologies to Norway on behalf of my Swedish cousins for Sweden's behavior during WW2. My father indirectly worked to help you by serving in the U.S. Army Air Corp. I might, however, hope for some compliments for Sweden from U.S. Conservatives, based on the Swedish steel that helped to kill so many Soviets at Kursk, Russia, 70 years ago this month. Was it not better to have put those Bolsheviks out of their misery as , implied in earlier comments, socialism is worse than death? Sweden has an extensive social welfare system, not a socialist economy. As a slightly left leaning Minnesota, I have Sweden, Norway and Denmark to look up to. Where in the world is the conservative national model working to result in widespread prosperity, public health and happiness, and high quality design? I'd like to check it out.

Roland Swenson AIA, LEED AP

Socialism doesn't work well, no matter how good it looks there

Scandinavian style socialism would never translate to the US.

It just can't. The US has far more people, more different kinds of people, a much bigger and varied geography and a far different society.

Plus life in the Scandinavian nations just isn't as good as many think it is. Yeah, its great if you don't like working very hard, its as good as that gets. I guess........

You want your own single family house (or own your own residence) or business, forget about it, it doesn't happen for very many. Or you have an innovative idea or a business idea that will become big? Not going to happen there. There are so many roadblocks put in your path it will never happen. (Why do you think the founder of IKEA moved away?). If you have more aspirations then a lower middle class existence, a socialist nation is a very suffocating place to live. You see the waste and stupidity of a big overreaching government. You see your ideas go unfilled as government bureaucrats wear you down.

You give up so much future potential by having socialism. The computer industry wouldn't have been born in a socialist nation. The auto industry wouldn't have been born in a socialist nation. The next big thing won't be born in a socialist nation. Forget about medical advances, they don't happen in single payer societies.

There needs to be places in the world for those who don't want a huge government. The US is the best place for that. A place without so many limits and so many government people telling you NO to your dreams.

I would say to those who want socialism. Move to a nation with it. Oh wait, they won't take you in. Hmmmmm, I wonder why? Well, I don't wonder. They cannot take you in. They barely function even in places like the Scandinavian countries. Dump lots of new people into them and they collapse like the house of cards they are.

You may think you have a safety net. But that net just isn't that strong. Nothing run by a government is going to be that great. Its just human nature. That's the biggest lie of socialism, that they have your back covered.

A couple of points: First

A couple of points:

First off, the Scandinavian nations are where it is easiest to make it if you have an innovative idea or a business idea that will become big. All of them make up the top of the league in easiest places to make it.

America? America is not just a little bit behind, America is dead last in the developed world here. There has been a lot of discussione about this in the media lately -did you miss it all?

There is a reason places like Norway and Finland have so much higher rates of home ownership than the US, and why Norway and Denmarks has the most business startups per citizen in the world.

It should be blindingly intuitive. The welfare setup means you risk far less, it is easier to get off the ground, and the taxes don't actually change your lifestyle if you make it.

Also, you use the word "socialism" a lot. It doesn't mean what you think it means. "Socialism" is an economic setting where the government owns the businesses. You find it in Cuba and North Korea.

The Scandinavian coutries are quite ferociously capitalist.

What you are talking about is "social policies". Welfare systems, healthcare, pensions. How the money the government makes is spent. A political setting.

I know the two sound similar, but they are not actually related. It is quite possible to have powerful capitalist economies and still spend the taxmoney the system generates on soical policies. Scandinavia is often considered the example of having both dials turned up high.

Top of the world in business startups, social mobility, and strong social safety nets.

But things are not always as they seem

Scandinavian style socialism would never translate to the US.

Though the Social Democrats of Sweden have been out of power since the 2002 elections. The so-called Alliance has ruled since then, without the Social Democrats, the Left (f/k/a Communist) and the Greens.

You want your own single family house (or own your own residence) or business, forget about it, it doesn't happen for very many.

In the municipality of Stockholm, it is almost impossible to get a new single-family detached home built, though substantial numbers were built in the past and are not going to be replaced by apartments. But the government has been encouraging entrepreneurial activities among Swedes.

Or you have an innovative idea or a business idea that will become big? Not going to happen there. There are so many roadblocks put in your path it will never happen. (Why do you think the founder of IKEA moved away?).

There has been a concerted effort to remove many of those roadblocks. And I read in the Swedish media that Ingvar Kamprad is moving back to Sweden.

If you have more aspirations then a lower middle class existence, a socialist nation is a very suffocating place to live. You see the waste and stupidity of a big overreaching government. You see your ideas go unfilled as government bureaucrats wear you down.

The Swedish Social Democrats were in charge for much of the 20th Century, but as I wrote above, have not been since 2002.

And there is one way that the Swedish system benefits people that want to start their own business. They don't lose access to the health care system by quitting a job, since those benefits are not directly attached to employment as they are in the United States.

You give up so much future potential by having socialism. The computer industry wouldn't have been born in a socialist nation. The auto industry wouldn't have been born in a socialist nation. The next big thing won't be born in a socialist nation. Forget about medical advances, they don't happen in single payer societies.

Cell phones owe much of their current popularity to development work done in Sweden and Finland.

I would say to those who want socialism. Move to a nation with it. Oh wait, they won't take you in.

Compared to the U.S., Sweden has a fairly open-door immigration policy.

Hmmmmm, I wonder why? Well, I don't wonder. They cannot take you in. They barely function even in places like the Scandinavian countries. Dump lots of new people into them and they collapse like the house of cards they are.

Where Sweden failed (and failed miserably) was in the 1960's and 1970's construction of large housing "estates" (as they say in Britain) or "projects," as they say in the United States. The so-called Million Programme developments have been a source of (largely suburban) segregation and blight. The article is linked above, but I will link it here for your convenience.

Sweden has the hardiest golden-egg-laying goose, that's all

Great assessment of "the Sweden miracle". Krugman sure is the partisan libbewal hack "economist" of our time. Goodness knows what he ever did to deserve a Nobel. Funny enough, he has come up with some good insights, but he never pushes any point that would get him excommunicated from the libbewal beautiful people. Now he is acting as an apologist for "smart growth", after having noted a few years ago that "the zoned zone" was where house price bubbles took place.

It is ironic that libbewals in fact hate everything that HAS made Sweden successful to the extent that soft socialism has been unable to kill the goose that lays the golden eggs - yet.

As you say; the Protestant culture and its ethics of work, thrift and personal responsibility.

And the dedication to resource extraction, and the hydro dams.

Add to that, the nuclear energy generation.

And the military-industrial-exporter complex, which is far more proportionally significant to the Swedish economy than it is to the US's one.

And the dedication to advanced scientific research and new applications of science for profitable purposes, in contrast to the libbewal gween Luddites who prevail in much of the rest of the first world.

Then there is Sweden's highly profitable neutrality during WW2, acting as arms supplier to both sides.

And the dark history of eugenics, abortions and sterilisation to minimise the numbers of "unfit" members of society, that lasted years after 1945.

Though the Nordics have privatized more than the U.S.

Joel Kotkin wrote:

In addition, not all the reasons for Scandinavia's relative health are those that would warm the heart of U.S. progressives. These countries, led by Sweden, have reformed many aspects of their welfare state, including such things as labor laws, and reduced taxes in ways that make them more competitive – and far less egalitarian than in the past.

Sweden and some of its Nordic neighbors have made the right policy choice by privatizing the operation of their urban, suburban and rural mass transit systems. In Sweden, there is not one transit bus driver or train engineer or trolley conductor that works for the public sector. All of them work for the private sector.

Imagine the screaming and yelling that would take place if the U.S. federal government were to mandate that all transit agencies in the United States use private-sector companies to run and maintain their transit systems?

Politics of corruption vs policy

CP makes a great point about the use of private sector companies to run and maintain transit systems. Public distrust of inefficient and bureaucratic government agency operations and the corresponding union labor corruption that puts almost all public transit systems in the US at an ever increasing operating deficit should not be confused with an objection to the policy goal of providing public transportation.