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19.6.2006

Why the Swedish welfare state works in Sweden

Tags: Uncategorized — Author: @ 3:09 pm

Johan Norberg gives three reasons why the welfare state may “work” in Sweden [and Finland] but not in other countries…

TO SAY that other countries should emulate the Swedish social model is about as helpful as telling an average-looking person to look like a Swedish supermodel. There are special circumstances and a certain background that limit the ability to imitate. In the case of the supermodel, it is about genetics. In the context of economical and political models, it is about the historical and cultural background.

Gunnar and Alva Myrdal were the intellectual parents of the Swedish welfare state. In the 1930s they came to believe that Sweden was the ideal candidate for a cradle-to-grave welfare state. First of all, the Swedish population was small and homogeneous, with high levels of trust in one another and the government. Because Sweden never had a feudal period and the government always allowed some sort of popular representation, the land-owning farmers got used to seeing authorities and the government more as part of their own people and society than as external enemies. Second, the civil service was efficient and free from corruption. Third, a Protestant work-ethic–and strong social pressures from family, friends and neighbors to conform to that ethic–meant that people would work hard, even as taxes rose and social assistance expanded. Finally, that work would be very productive, given Sweden’s well-educated population and strong export sector. If the welfare state couldn’t work in Sweden, the Myrdals concluded, it wouldn’t work anywhere.

  • http://finnsense.blogspot.com finnsense

    I’ve been saying that for ages and the start of Norberg’s piece is indeed sensible. He goes on to repeat a lot of twaddle dismissed as far back as 2002, not that Timbro would take any notice.

    Neverthless, his point can also be extended to refer to the US. No other rich country on earth could get away with as harsh a system as exists in the US. The US is a country of people that have only the thinnest of loyalties to one another. People went and go to the US to take a risk in search of a better life. This means they are accustomed to putting up with much greater inequalities than more homogenous nations. However, such a system cannot go on forever. One people born and bread in the US feel they don’t have a decent chance of rising up the ladder, there will be a backlash. Given the state of education and public infomration in the US that could take a very long time though.

    The US does need to find it’s own way to create meritocracy but sadly there aren’t a lot of ideas flying around. Of course making health care universal would help but the divisions in society are so stark and so geographical that I wouldn’t know where to begin.

  • Helsinkian

    That’s quite bizarre stuff coming from Norberg. After all, he himself believes in a model that he thinks works everywhere (in theory), regardless of historical and cultural background.

    I sincerely think that different models may work in different places (and there is more than one model that may work in one place) but libertarians generally tend to believe libertarianism is the answer at all times, everywhere. In any case, the Swedish welfare state as it was originally conceived was a combination of welfarism and capitalism.

    I think Norberg often writes like a Swedepundit. It will be really interesting to read him if the conservatives win the next elections, since he’s going to bash them just as vehemently as he does with the social democrats for keeping alive a model that enjoys support across the political spectrum in Sweden.

    “If the welfare state couldn’t work in Sweden, the Myrdals concluded, it wouldn’t work anywhere.”

    Knowing that Swedes made that statement one could imagine there is just a little bit of national pride involved in there. Anyway, Norberg has spent quite a lot of his time claiming the welfare state does not work in Sweden, so I don’t get it why he bothers with arguments of this type.

    If you tell a libertarian that it’s stupid to say that libertarianism should be exported to other countries just because it works in one country (assuming we can call, say, Hong Kong, for the purposes of this debate a libertarian dream country and Hong Kong people don’t even have full democratic rights…), don’t expect the libertarian to answer: “Yeah, I know that Hong Kong has a history and a culture like no other country.”

  • http://www.finlandforthought.net Phil

    One people born and bread in the US feel they don’t have a decent chance of rising up the ladder, there will be a backlash.

    This is one of the biggest things that outsiders don’t understand about the U.S., there’s this overwhelming attitude amongst lower income people that they can succeed if they want to. They see and talk to plenty of people who have pulled themselves out of a bad position, bad neighborhood, bad lifestyle etc.. And when these people don’t succeed, they know what actions they did themselves which kept them down. People may blame this person and that government etc, but deep down they know that it was their decisions and their actions which led them to where they are.

    I haven’t witnessed this same sense of optimism in Finland. Maybe it’s because Americans can often be so unrealistically optimisitic and Finns can be so unrealistically pessimistic. Or maybe it’s because being poor in Finland is nicer than being poor in the U.S., so poor Finns don’t have as much desire to move themselves up the ladder. Or maybe it’s because Finns can’t indeed move themselves up the ladder, or there’s not a big enough cheese at the end of the rope. With collective bargaining, high taxes, low wages …the system makes sure people move up the ladder VERY slowly.

  • http://www.finlandforthought.net Phil

    libertarians generally tend to believe libertarianism is the answer at all times, everywhere

    I think that’s true for all the ideologies. I’d say that some aspects of libertarianism/liberalism would work everywhere, but not all of it.

  • m

    “I think that’s true for all the ideologies.”

    That’s what differentiates ideologies from the real life. Applying some ideology as a sole answer to a factual real life situation (as opposed to morality for example) is inviting trouble. We all remember communism, right?

  • Helsinkian

    Phil: it’s incredible how many Finns of the World War II generation moved up the ladder. Basically, the whole country moved from poor to rich between the time that the war generation rebuilt the country after the war and the time that they started enjoying their well-earned pensions. This didn’t mean just the country as a whole getting richer, also social mobility, moving up the ladder, increased.

    You say there might not be enough cheese at the end of the rope but many people in the young generation in Finland (more than before in Finnish history) were born with a lot of cheese. Getting from relatively well-off to very rich is just not as attractive as getting from poor to somewhere. There are still many really poor Americans who are hungrier for success, since they have so little cheese to begin with.

    It’s also funny how your assessment of social mobility in Finland is pretty much the polar opposite of mjr’s latest post:

    http://stockholmslender.blogspot.com/2006/06/nordic-dream.html

    Ideology explains pretty much why these two assessments of the situation (liberal vs. libertarian in the American senses of the word) are so different.

  • Helsinkian

    Hong Kong is often cited as an economy (not society, knowing that HK does not enjoy full political freedom) that is much closer to a libertarian ideal than most countries in Europe. According to James Bartholomew (a post written in 2005), there are signs that they are increasingly copying the welfare state model:

    http://www.thewelfarestatewerein.com/archives/2005/03/what_patten_did.php

    “Hong Kong is still one of the few places where the welfare state has not been too pervasive and where, as a result, there has been a wonderful growth in prosperity and relatively little societal breakdown. But it is on a slippery slope.”

  • winter

    Phil

    You hit the nail on the head.

    In the USA you get the OPPORTUNITY to go up the ladder. One just has to want to go down that path.

    In the EU there is very little opportunity to become rich, as the welfare state will suck you dry, so why try?

  • Markku

    Helsinkian:

    “Getting from relatively well-off to very rich is just not as attractive as getting from poor to somewhere. There are still many really poor Americans who are hungrier for success, since they have so little cheese to begin with.”

    If you read Finnpundit, it will be obvious to you how extremely American the man has become. For him, producing value to be sold on the free market is basically like a religious duty. Finnpundit doesn’t value the opportunity to consume goods. For him consumption is a sacrifice, so the opportunity to consume is not what drives him in his quest to succeed economically.

    Indeed, American attitudes to productivity have been greatly influenced by America’s historical religious backround. Among the founders of a America there were alot of Calvinists. Calvinism is mutation of Christianity where economic success is seen as a sign of being on the path to salvation. (Calvin believed in predestination.)

    More details on Calvinism in early America:

    http://www.reformed-theology.org/html/issue06/calvin.htm

    I once read a very interesting book by the title Russia as it is, transformation of a lose-lose society. It was a very interesting analysis of the deepstructure of Russian culture by a Russian Jewish author who emigrated to the USA in late 1970s.

    Orthodox Christianity has a totally different kind of value system from Calvinism. Orthodox Christianity is much closer to original early Christianity in that devout Orthodox Christians seek to follow Christ like Peter did. Russians are much more willing to calmly accept suffering, tyranny, and injustice than Westerners. They tend to respect strong and harsh leaders and have no respect for democratic leaders. Russians worshipped Stalin despite the fact that killed Russians, too, by the millions. They behave as if a tyrant who oppresses the people were doing them a favor by giving the a chance to seek salvation in the genuine Orthodox way. Self-sacrifice is considered holy in Russia. Soldiers fallen for the motherland are declared saints etc. In Russia there’s a religious view that suffering in this life purifies the soul.

    There is a huge cultural gap between Russia and the social democratic Norden. Social democracy has clear cultural roots in Evangelic-Lutheranism. Evangelic-Lutherans always talk about how God’s mercy is upon everyone and that nobody can ever possibly earn it. It cannot and needn’t be earned. The welfare state as an implementation of the idea that God’s mercy is universal and cannot be earned is logical.

  • Helsinkian

    In today’s America, there’s this prosperity gospel thing that is often seen as bizarre in Europe. Some say prosperity gospel has it’s roots in the Calvinism of many of America’s founders.

    One teacher of prosperity gospel is Dr. Creflo Dollar:

    http://en.wikipedia.org/wiki/Creflo_Dollar

    “Many of Dr. Dollar’s followers believe that his Rolls Royces, private jet, million-dollar Atlanta home and Manhattan apartment confirm the validity of his ‘prosperity gospel’ teachings.”

    I think many of the Puritans who played such a key role in the founding of America would’ve been absolutely shocked by the ostentatious display of wealth that is connected to a prosperity gospel theology.

    Calvinists are certainly not known of showing off. Just check out Calvinist churches, they are of the least decorated variety. The advocates of US-style capitalism generally think favorably of conspicuous consumption and displays of affluence. Old-style Calvinists only liked the getting rich part, not the letting it show bit that is so common to both prosperity gospel theology and the attitude toward consumption in American society.

  • Helsinkian

    This post was originally about Sweden and indeed Sweden is one of the countries where prosperity gospel has been imported from America.

    Of course, the introduction of prosperity gospel (framgÃ¥ngsteologi, “success theology” in Swedish, as the word “prosperity” wouldn’t sound so good in Swedish ears when related to theology) happened during the yuppie decade of 80s.

    Ulf Ekman brought prosperity gospel (word of faith- based teachings) to Sweden:

    http://en.wikipedia.org/wiki/Ulf_Ekman

    The high point of his career was when he officiated at the wedding of the glitzy schlager singer Carola to a Norwegian prosperity gospel preacher and they sold that wedding video in the free market. In the early 1990s plenty of young Nordics wanted to follow in their footsteps to the quickly growing congregation of Livets Ord (Word of Life).

    During the 1970s Ulf Ekman had been a member of a Communist splinter group called KFML (r), kommunistiska förbundet marxist-leninisterna (revolutionärerna), an offshoot of the pro-Beijing party KFML. These are not to be confused with the pro-Moscow people in KPML and KPML (r).

    It’s kind of funny how he well Ekman adapted from his sectarian communist Maoist youth to the realities of introducing to Sweden the idea of money and showing your having it being equal to divine blessing.

  • http://www.ssi-developer.net/rant/ maca

    Sorry to go off on a tangent here but it’s this statement I have a problem with:

    “a Protestant work-ethic”

    I have to say I dislike when people come out with that line. Are protestants harder workers than everyone else? I think not.
    It’s a tired old cliche which should be put to rest.

    btw, great blog, will be visiting in future.

  • Helsinkian

    Here’s a Swedish Misesian Libertarian Per Bylund having another go at the welfare state:

    http://www.perbylund.com/the_library_howthewelfarestatecorrupted.htm

    “Consequently, most elderly in Sweden either live depressed and alone in their homes, waiting for death to come their way, or they have been institutionalized in public elderly collective facilities with 24/7 surveillance so as to alleviate the burden on the younger working generations. Some of them get to see their grandchildren and relatives only for an hour or two at Christmas, when the families make an effort to visit their ‘problems.’
    But the elderly aren’t the only one’s finding themselves in the periphery of the welfare society while the state is looking after its working population. The same goes for the youngest who are also delivered to the state for public care rather than being brought up and educated by their parents.”

    Basically, Bylund lays all the blame of modern society on the welfare state. It seems that according to him Sweden would be so much better off if all families still had the elderly grandparents living at home and the kids would be home-schooled. Of course he’s writing about Sweden for a US libertarian audience.

  • Helsinkian

    Here are the comments at the mises.org blog for Bylund’s article:

    http://blog.mises.org/archives/005113.asp

    One commenter called “Pike” says:

    “I do wonder why the Swedish Monarch, His Majesty King Carl XVI Gustaf, can tolerate the slow death of his kingdom. Is he blind or is he being forced to accept the inevitable death of his beloved kingdom?

    Let us sit back for 40-50 years then we shall see how Sweden can continue the ‘noble socialist experiment.’ I am very curious about what choices the Swedes will make when the crisis befalls on their hands.

    Long live the King.”

    (This monarchist rhetoric among US Misesians seems to be attributable to the fact that Mises, who was from the city of Lemberg, today Lviv, used to be a loyal supporter of the Austro-Hungarian Empire back in the day, apart from being an economist in the tradition of classical liberalism.)

  • tim73

    “This is one of the biggest things that outsiders don’t understand about the U.S., there’s this overwhelming attitude amongst lower income people that they can succeed if they want to. They see and talk to plenty of people who have pulled themselves out of a bad position, bad neighborhood, bad lifestyle etc”

    Social mobility is greater in Scandinavian countries than in the US. Americans are just unrealistically optimistic, even in deep denial.

    http://observer.guardian.co.uk/columnists/story/0,,1792399,00.html :

    “…Over the past few decades there has been a fundamental shift in the structure of the American economy. The gap between rich and poor has widened and widened. As it does so, the ability to cross that gap gets smaller and smaller. This is far from business as usual but there seems little chance of it stopping, not least because it appears to be government policy.

    Over the past 25 years the median US family income has gone up 18 percent. For the top one percent, however, it has gone up 200 percent. A quarter of a century ago the top fifth of Americans had an average income 6.7 times that of the bottom fifth. Now it is 9.8 times.

    Inequalities have grown worse in different regions. In California, home to both Beverly Hills and the gang-ridden slums of Compton, incomes for lower class families have fallen by four percent since 1969. For upper class families they have risen 41 percent.

    Between 1980 and 2004 America’s GDP went up by almost two-thirds. But instead of making everyone better off, it has made only a part of the country wealthier, as another part slips ever more into the black hole of the working poor. There are now 37 million Americans living in poverty, and at 12.7 percent of the population, it is the highest percentage in the developed world.”

    Read again: HIGHEST PERCENTAGE in the developed world.

    …”that honest toil is enough to reap the rewards and let even the poorest join the middle class, or maybe even strike it rich. A survey last year showed that such economic mobility (a measure of those people trying to make the Dream come true) was lower in America than Canada, Germany, Norway, Denmark, Sweden and Finland. In fact, the only country doing as bad as America was Britain (food for thought, there).”

  • Turjake

    In contrast to the welfare state, libertarianism has never worked anywhere.

  • Freeridin’ Franklin

    Helsinkian:
    Anyway, Norberg has spent quite a lot of his time claiming the welfare state does not work in Sweden, so I don’t get it why he bothers with arguments of this type.

    It’s the O.J. Simpson argument: “I didn’t kill my wife, but if I did, it was only because I loved her so much”. I don’t know why anyone bothers to take Norberg or anyone at Timbro even half-seriously.

  • Freeridin’ Franklin

    Are protestants harder workers than everyone else? I think not.

    Not necessarily, but according to Protestant theology they’re supposed to be. According to Luther ones secular work was a form of service to God. “The executor servers God best by keeping his axe sharp” or something along the lines.

    This is still reflected in attitudes in über-Protestant countries like Finland, where work is seen as a value in itself, even by completely nonreligious people. Unemployment in such a culture can be a deep personal tragedy, which is all the more reason to do away with the structural unemployment that plagues Finland in particular.

  • http://www.saigonippon.blogspot.com Miriam

    Markku’s already said what I was about to say:”Social democracy has clear cultural roots in Evangelic-Lutheranism. Evangelic-Lutherans always talk about how God’s mercy is upon everyone and that nobody can ever possibly earn it. It cannot and needn’t be earned. The welfare state as an implementation of the idea that God’s mercy is universal and cannot be earned is logical”.
    The weird and unhealthy thing about the welfare state is that mercy and compassion are externalised to the State. We all indirectly love our (unknown) neighbours by paying fairly high taxes, and the receiver of the paid-for-with-taxes help takes it for granted. Lutherans give a lot, but they expect a lot, too, from the State and from God.
    Marxist-Feminist ideas of class go well with the expectations of being subsidised by the State/God for both earthly misfortunes and perceived social injustices. In a pure Nordic social democracy, then, the state has taken the form of a ‘neutral’ and fair God who gives all citizens their fair share.
    Just a couple of thoughts that sprung to my mind.

  • http://www.finlandforthought.net Phil

    Swedish Misesian Libertarian Per Bylund

    Someone’s trying to prove me wrong about those libertarian ideologies named after individuals! :-)

  • http://www.finlandforthought.net Phil

    Read again: HIGHEST PERCENTAGE in the developed world.

    Let’s compare a Mexican immigrant in the U.S. to a Somalian immigrant in Finland and see who’s acheiving more “social mobility”.

    And this article says that 1 in 10 Finnish children live in poverty…
    http://www.finlandforthought.net/2006/03/29/100000-finnish-children-live-below-the-poverty-line/

  • http://finnsense.blogspot.com finnsense

    “Let’s compare a Mexican immigrant in the US to a Somailian immigrant in Finland and see who’s achieving more ‘social mobility’.

    I’ve got a better idea. Let’s compare all kinds of people, not just those who might possibly support your argument. And by the way, Somali’s in Finland are refugees. They don’t come here for a better life, they come to escape persecution and warfare.

    Like it or not but social mobility is greater in the Nordic countries than in the US. I would agree that probably more very poor Americans become rich but the rich are by definition a tiny portion of society. I would rather the poor have a much better chance of joining the middle class than have a very few have the chance to get rich.

  • Markku

    Miriam,

    your blog looks very interesting but the colors are absolutely horrifying. White text on a yellow backround is almost invisible. Please do something about it. I’d really like to read your observations on Japanese politics and Japan in general.

  • Åboy

    Phil wrote:
    “This is one of the biggest things that outsiders don’t understand about the U.S., there’s this overwhelming attitude amongst lower income people that they can succeed if they want to.”

    Oh we do understand. You’re talking about the mythical American Dream, which in reality is out of reach for more and more people. Even the americans are slowly starting to realize this:

    http://www.faireconomy.org/press/ufenews/2005/Fading_American_Dream.html
    http://observer.guardian.co.uk/columnists/story/0,,1792399,00.html
    http://www.npr.org/templates/story/story.php?storyId=4662456
    http://www.msnbc.msn.com/id/6857387/site/newsweek/
    http://news.bbc.co.uk/2/hi/programmes/newsnight/4265454.stm
    http://news.bbc.co.uk/2/hi/programmes/from_our_own_correspondent/4159974.stm

  • http://stockholmslender.blogspot.com/ mjr

    I have to say that anecdotal evidence is very nice, but social mobility is actually very easily quantifiable, and it has been measured in countless studies. So, to repeat: if you are born poor in the USA, you are much more likely to stay poor than you would be in the Nordic countries. The main reason being the education system that guarantees much more level playing field than in the US. My reply to Phil’s comments on my blog copy pasted below:
    I think it is an observed fact of human behaviour that we automatically try to make our achievements hereditary, on the other hand abilities vary wildly from generation to other. In equal educational conditions the children of poor can compete very effectively with the children of the wealthy. Unfortunately, if there is not an active force in the society making those educational conditions equal, they will not be equal. In the Nordic countries the state (and our Lutheran-Social Democratic mentality)is such a factor. In the economically liberal US this factor is missing and the playing field is concequently not level and poverty and wealth are thus much more commonly inherited. Very simple really.

  • http://stockholmslender.blogspot.com/ mjr

    Below an article on the grimmish US situation regarding social mobility from that well known communist rag The Economist:

    http://www.economist.com/world/na/displayStory.cfm?story_id=3518560

  • http://www.ssi-developer.net/rant/ maca

    “This is still reflected in attitudes in über-Protestant countries like Finland, where work is seen as a value in itself, even by completely nonreligious people.”

    Having said that I find Finland an easier place to work in (more-relaxed) than the non-protestant country I come from, where we generally work longer hours with less holidays. Just my own perspective from my own work experience. :)

  • prince of dorkness

    And this is Nordberg’s argument AGAINST the welfare state?
    Let’s make everyone hate and distrust everyone else. Let the government be the enemy. Sounds like Russia under Yeltsin. A brilliant success, in Libertarian terms?
    And someone needs a remedial history lesson: no feudal period in Sweden? I thought one phase in the history of Finnish Romany was the abortive attempt by COUNT Peter Brahe to settle them as PEASANTS on his humongous FIEF in what’s now Kainuu. Must be a mistake, we never had feudalism here, so Ritarihuone must be an optical illusion.
    And an honest civil service is bad?

    @maca
    The Protestant work ethic is a tired cliche that maybe meant something when Max Weber used it as a part of a larger theory of history. A fragment of a theory isn’t much good for anything.
    Historically, the Catholic Church as an institution used to be a bit of a drag on change and progress. But not anymore, in terms of material progress at least.

  • Eric

    Sweden’s economy unfortunately can’t be maintained. The amount paid in taxes is already extreme, and the problems it faces makes America’s problems with Social Security look simple by comparison. Their debt compared to the GDP is 50%! There are huge numbers of immigrants coming in who in the name of multiculturalism are not being integrated into Swedish society (around 11% of the population, 20% if you count their kids). Go to http://www.westernresistance.com/blog/archives/002500.html for more info (it’s an English version of a Swedish site).

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