What is wrong with the Scandinavian model?

I keep running into leftists who think of the Scandinavian welfare model as some holy grail. That everything would be ok if only their country would adopt the way Norway/Sweden/Denmark/Finland (well, Finland is technically a part of Fennoscandia and doesn't belong in the Scandinavia group, but anyway) do business. Now, living in one of these supposed paradises and seeing people suffer in myriad ways from it, I can't help but wonder why. But I would like to know what outsiders consider the biggest problem with it?

I have to admit that apart from some libertarian sources, I've never heard a fundamentally negative view of Scandinavian social democracy. To the contrary, the "Scandinavian way" is being advocated as a model to follow; high union activity, "free education" from cradle to PhD, progressive welfare statism and so on. This is supposed to create great wealth and "social justice" at the same time.

I'm not aware how living standards have developed in the last decade, but when I visited Jutland/Denmark a few years ago, people appeared to be living on a much more humble level than in my home area of Central Europe. Car traffic seemed to be pretty mild, and if somebody drove around, he did so in a compact car or on a motorbike, I didn't notice any SUVs, trucks or any other form of expensive vehicle. Mostly one-story lodges, no pompous buildings anywhere to be seen. Food was pretty expensive, luxury goods like alcohol, tobacco or chocolate even more. It dawned on me that real wage rates in Denmark must be a little below what I was used to.

Plus, people began talking in German and in a decidedly audible way about how they didn't like the EU, the Euro and how everything was forced upon them when I was walking around in shops. I couldn't help feeling segregated. If I compare that to my experiences with Americans, it seems like a difference of night and day. I'm somewhat worried about all that because I sensed a similar caginess in varying degrees whenever state welfare played a major role within a given set of people. It seems like welfarism creates a very collectivist attitude in those connected with it.

Anyway, I wouldn't know all that if I hadn't been there myself. Scandinavia is being presented as the land of milk, honey and high nominal wages around here. Coverage of defects is virtually non-existent.

 All of these countries have much slower growth rates than they otherwise would have due to all the government spending. Saving and investing is what makes an economy grow. I know that Sweden has a pretty high unemployment rate (6.1%), probably due to loads of voluntary unemployment because of welfare. The most successful Scandinavian nation is Norway, but the only reason it is number one is because of the government's chokehold on oil and gas. That probably enables the government to spend much more than it taxes.

The problem with leftists' adoration of Scandinavia is that many of them don't even know which of their policies are working well. They'd really have to go by a case by case basis to show how their system is superior to ours, but they always fail to do so.

Well. Scandinavian countries were the richest from a per capita point of view before the wave of socialism in the sisties and seventies. NOw they lost many positions, except for oil-rich Norway. That's no much of a success... in the last two decades they have reduced public spending to some 60-70% of GDP to 50-60% because the previous levels were untenable. Unlike countries like Italy, corporate taxes are low, bureaucratic time-wasting activities for firms are not many... so they are typically not a bad place to start a business. Scandinavian countries are small and socially homogeneous: any other society achieving the same level of socialization would be prone to free-riding and opportunistic behaviour, causing social inefficiency and unrest... in small countries with strong social ties this may not be a problem. The US, or Italy, or many other countries do not respect this conditions. The only element of social heterogeneity in scandinavian countries is foreign labor: not surprisingly, alien unemployment seems to be about 50%. I suggest the reading of Stefan Karlsson's blog, he is a swedish economist and talks sometimes about these topics.

Everything.

-Jon

Sphairon:

It seems like welfarism creates a very collectivist attitude in those connected with it.

In my experience, the combination of welfarism and unionism breeds a very virulent strain of envy. To the point of anything above average being denounced in knee-jerk fashion. Entrepreneurs and anything related to capitalism are obvious targets, but surprisingly, so is any worker who chooses not to piss his income on alcohol and happens to buy something nice for himself. As is any worker who works for less than others, or receives a better salary than others. So productive laborers are a target as are foreign workers. In all, the atmosphere is downright paranoid and depressing. And, oddly enough, instead of altruistic new socialist men working in harmony for a better future, all you get are bitter and isolated men who see threats not only in their employers, but in their fellow workers.

krazy kaju:

I know that Sweden has a pretty high unemployment rate (6.1%)

Government unemployment numbers are actually very misleading (at least in Finland). There is a vocational training scheme in place that's sole purpose seems to be to clean up the unemployment numbers. "Students" receive increased unemployment compensation if they sign up for a course, but usually these courses are of extremely low quality and don't result in the "student" finding a job (or actually learning a trade). The standard practice is for "students" to just sign up for a new course after they complete or - as is more common - simply quit the former.

My guesstimate is that you can add 2-3% to the official Finnish unemployment figure, which is currently 8.8%.

Libertas est Veritas:

And, oddly enough, instead of altruistic new socialist men working in harmony for a better future, all you get are bitter and isolated men who see threats not only in their employers, but in their fellow workers.

Sounds like Atlas Shrugged

 

 If anyone is interested in how the welfare state has corrupted Sweden read Per Bylunds articles (some of them can be found on this site).

This is one of his best: http://mises.org/story/2190

Libertas est Veritas:

I keep running into leftists who think of the Scandinavian welfare model as some holy grail. That everything would be ok if only their country would adopt the way Norway/Sweden/Denmark/Finland (well, Finland is technically a part of Fennoscandia and doesn't belong in the Scandinavia group, but anyway) do business. Now, living in one of these supposed paradises and seeing people suffer in myriad ways from it, I can't help but wonder why. But I would like to know what outsiders consider the biggest problem with it?

 

I assume that these states have strong welfare rights for their citizens (and residing foreigners as well), which means stuff like health care, subsidies for the unemployed, poorer people, the elderly etc. etc. That's how I have Sweden in memory.

That worked, because most of the Swedish didn't abuse the system in the beginning. Newer info is that the system get's abused more and more and hence becomes less sustainable.

 

 

 

 

It's a vicious circle. The welfare state requires ever more immigrants to stimulate growth, some of which only take from it, further causing it to melt down. Here's a good article on it.

-Jon