“In this regard there is no difference between America and Nordic societies. Neither is utopia. Both have their advantages and disadvantages. And neither of them can simply copy the other, since societies are not formed simply through political mandates. Rather, they are formed through the complex interactions between culture and policies.” – Debunking Utopia
“How do you get a small fortune? You start with a big one.” This is a well-known quip used to explain how easily wealth can be whittled away. For the Nordic nations, it is also the story of their descent from riches to rags, a history that is rarely acknowledged by Westerners eager to ideate the Nordics as a perfect example of democratic socialism. Yet, the Nordics learned the hard way, that you must accumulate capital before you can redistribute it away. And once that fortune was lost, a return to the economic and political climate that made the Nordics one of the richest countries in the nineteenth century would need to be revived.
The Nordics, instead, have been repeatedly praised for their third-way socialism, or mixed economy, a so-called compromise between the unfairness of capitalism and the backwardness of collectivism. Sold as a centrist model, it was a case study in the use of enhanced public services, free education, and healthcare, all supported with high taxes. Initially, the Nordic's small homogeneous population and strong cultural qualities made them seemingly adaptable to a larger welfare system. But their luck would only last for so long until the promise of free benefits would upend the social trust that sustained them for so long.
In Nima Sanandaji’s 2021 book, “Debunking Utopia, Sanandaji reveals the real history of the Nordics beginning with the extraordinary creation of wealth through industrialization in the late nineteenth and early twentieth century, supported by a strong work ethic and traditional values. It was the implementation of welfare policies beginning in the 1960s, that then led to a reduced standard of living for all. High taxes in the Nordics did what they have done throughout history, they punished hard work and entrepreneurship, resulting in economic decline.
But these egalitarian policies did not just affect their economy but also contributed to a loss of longstanding cultural traits, a once reliable advantage. Even after the implementation of welfare benefits, these attributes allowed the country to continue to thrive without the fear of shirking or exploitation of the system. But as Ronald Reagan once said, “If you want more of something, subsidize it, if you want less of something, tax it”, and eventually the welfare trap brought with it, high unemployment, overuse of benefits, and economic stagnation as more people were drawn in. By the 1990s, significant market reforms were needed to change course. These included lower taxes, private sector competition, and a significant restructuring of state benefits.
Social democrats often hype parental leave laws in Nordic countries as proof of their progressive bona fides. But when it comes to advancement in the workplace, it is American women who ascend more quickly in management positions, despite the lack of a federal family leave act. In Nordic nations, women tend to choose careers in the public sector controlled by unions, where the meritless deference to seniority, impedes any hope for promotion. Then, with a larger public sector presence, there is less overall economic output, and, in turn, fewer prospects. When looking at statistics for immigrants and women, the United States provides more opportunities than the Nordic countries in both regards.
In fact, one of the sure signs of an altruistic society is the level of success that immigrants can achieve. It was economist Milton Friedman who warned about the dangers of immigration and large welfare states. In the United States, undocumented immigrants are disqualified from receiving federal welfare programs, although blue states are increasingly extending benefits to encourage migration. Instead, without a safety net to rely on, most immigrants must do the work necessary to survive and thrive. Despite smaller welfare benefits, the political system in the United States has been historically superior by allowing more opportunities for more people.
America is a large melting pot of diversity, the opposite of the small and undistinguishable characteristics of the population of the Nordics, drawing immigrants from around the world for the opportunity to prosper. And not only do Americans of Nordic descent outperform Americans of other nationalities, but Americans of Nordic descent outpace their cousins left behind in every category from lower poverty levels to lower unemployment and a higher standard of living. And despite the Nordic’s reputation for long life and healthier lifestyles, generous benefits lure many into early retirement and disability.
Too much welfare corrupts cultural values, creates distrust, and disrupts the family structure. Liberals are wrong about the Nordic system. They were not able to change the laws of economics and avoid the usual outcomes. Most of the Nordics have returned to center-right coalitions in an attempt to return to their once-coveted position as some of the freest and wealthiest nations in the world. Americans would be wise to learn from their mistakes.
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