August 1, 2015

SHATTERED FANTASY: Sorry Leftist Americans, Your Swedish Utopia Does Not Exist: It’s time to kill the myth about the superiority of the Nordic welfare state model.

As a Swede living in the U.S., one of the most common reactions when I tell people where I am from is the question of why I would ever leave Sweden in the first place. Many Americans seem to truly believe that life in the Scandinavian countries is superior to that in virtually all other places on earth, and that the Nordic welfare state model is the magical formula that explains it all. Sen. Bernie Sanders of Vermont recently echoed these beliefs when he said that he wants America to be more like Scandinavia, where both incomes and equality are higher, the middle class stronger, both education and health care are publically funded, and even graduate school is free.

Sanders is not alone. The Scandinavian countries are regularly praised for their income equality, quality of life, gender equality, maternal care and many other traits, not just by leftist politicians and activists, but also by left-leaning economists like Paul Krugman. The Scandinavian model, they believe, is the ultimate proof that you can combine a high-growth economy with a generous welfare state.

The problem is that much of the praise is wrong. . . .

During the decades before, between 1870 and 1936, Sweden had enjoyed the highest economic growth in the entire industrialized world. Moreover, in the most intense period of “third-way” policies of market socialism, between the 1970s and 1990s, Sweden’s economic performance was exceptionally low. This period, however, was an exception: for most of its modern history, Sweden has been anything but a socialist mecca. The government has usually pursued free-market policies and free trade. If anything, high taxes and extensive social policies have hindered Scandinavian economic performance, which would most likely have been much higher without them.

Instead, Sanandaji shows, the root of Scandinavian success can largely be found in culture. These countries, and Sweden in particular, have historically had remarkably high levels of social trust, family values, a strong sense of work ethic, and social cohesion. The notion of the “Protestant work ethic” goes back far longer than the modern welfare state. Scholars like Max Weber, Sanandaji shows, long ago noted that the Protestant countries of northern Europe had an overall higher living standard and economic success than most. The often-celebrated equality of Scandinavian countries, too, began well before the welfare state was developed.

Again, these traditions and values by no means came with the welfare state. Sanandaji shows that these Scandinavian values follow people as they move abroad, even for generations: Americans of Scandinavian descent, whose ancestors left way before modern welfare states were established, tend to carry many of their norms with them. The median incomes of Americans with Scandinavian heritage is 20 percent higher than average income in the U.S. as a whole, and poverty rates in this group is roughly half of that of average Americans.

Yes, I believe that when Milton Friedman was told that poverty didn’t exist among Swedes, he responded that it was also unknown among Swedes in America.

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