Scandinavian Unexceptionalism: Culture, Markets and the Failure of Third-Way Socialism

New research debunks the myth that high taxes and a large welfare state are responsible for the success of the Nordic region

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Summary:

  • Left-leaning pop stars, politicians, journalists, political commentators and academics have long praised Scandinavian countries for their high levels of welfare provision and for their economic and social outcomes. It is, indeed, true that they are successful by most reasonable measures.
  • However, Scandinavia’s success story predated the welfare state. Furthermore, Sweden began to fall behind as the state grew rapidly from the 1960s. Between 1870 and 1936, Sweden enjoyed the highest growth rate in the industrialised world. However, between 1936 and 2008, the growth rate was only 13th out of 28 industrialised nations. Between 1975 and the mid-1990s, Sweden dropped from being the 4th richest nation in the world to the 13th richest nation in the world.
  • As late as 1960, tax revenues in the Nordic nations ranged between 25 per cent of GDP in Denmark to 32 per cent in Norway – similar to other developed countries. At the current time, Scandinavian countries are again no longer outliers when it comes to levels of government spending and taxation.
  • The third-way radical social democratic era in Scandinavia, much admired by the left, only lasted from the early 1970s to the early 1990s. The rate of business formation during the third-way era was dreadful. In 2004, 38 of the 100 businesses with the highest revenues in Sweden had started as privately owned businesses within the country. Of these firms, just two had been formed after 1970. None of the 100 largest firms ranked by employment were founded within Sweden after 1970. Furthermore, between 1950 and 2000, although the Swedish population grew from 7 million to almost 9 million, net job creation in the private sector was close to zero.
  • Scandinavia is often cited as having high life expectancy and good health outcomes in areas such as infant mortality. Again, this predates the expansion of the welfare state. In 1960, Norway had the highest life expectancy in the OECD, followed by Sweden, Iceland and Denmark in third, fourth and fifth positions. By 2005, the gap in life expectancy between Scandinavian countries and both the UK and the US had shrunk considerably. Iceland, with a moderately sized welfare sector, has over time outpaced the four major Scandinavian countries in terms of life expectancy and infant mortality.
  • Scandinavia’s more equal societies also developed well before the welfare states expanded. Income inequality reduced dramatically during the last three decades of the 19th century and during the first half of the 20th century. Indeed, most of the shift towards greater equality happened before the introduction of a large public sector and high taxes.
  • The development of Scandinavian welfare states has led to a deterioration in social capital. Despite the fact that Nordic nations are characterised by good health, only the Netherlands spends more on incapacity related unemployment than Scandinavian countries. A survey from 2001 showed that 44 per cent believed that it was acceptable to claim sickness benefits if they were dissatisfied with their working environment.
  • Other studies have pointed to increases in sickness absence due to sporting events. For instance, absence among men due to sickness increased by 41 per cent during the 2002 football World Cup. These shifts in working norms have also been tracked in the World Value Survey. In the 1981–84 survey, 82 per cent of Swedes agreed with the statement ‘claiming government benefits to which you are not entitled is never justifiable’; in the 2010–14 survey, only 55 per cent of Swedes believed that it was never right to claim benefits to which they were not entitled.
  • Another regrettable feature of Scandinavian countries is their difficulty in assimilating immigrants. Unemployment rates of immigrants with low education levels in Anglo-Saxon countries are generally equal to or lower than unemployment rates among natives with a similar educational background, whereas in Scandinavian countries they are much higher. In Scandinavian labour markets, even immigrants with high qualifications can struggle to find suitable employment. Highly educated immigrants in Finland and Sweden have an unemployment rate over 8 percentage points higher than native-born Finns and Swedes of a similar educational background. This compares with very similar employment rates between the two groups in Anglo-Saxon countries.
  • The descendants of Scandinavian migrants in the US combine the high living standards of the US with the high levels of equality of Scandinavian countries. Median incomes of Scandinavian descendants are 20 per cent higher than average US incomes. It is true that poverty rates in Scandinavian countries are lower than in the US. However, the poverty rate among descendants of Nordic immigrants in the US today is half the average poverty rate of Americans – this has been a consistent finding for decades. In fact, Scandinavian Americans have lower poverty rates than Scandinavian citizens who have not emigrated. This suggests that pre-existing cultural norms are responsible for the low levels of poverty among Scandinavians rather than Nordic welfare states.
  • Many analyses of Scandinavian countries conflate correlation with causality. It is very clear that many of the desirable features of Scandinavian societies, such as low income inequality, low levels of poverty and high levels of economic growth, predated the development of the welfare state. It is equally clear that high levels of trust also predated the era of high government spending and taxation. All these indicators began to deteriorate after the expansion of the Scandinavian welfare states and the increase in taxes necessary to fund it.

To read the press release click here

2015, Readings in Political Economy 1. 

Nima has also been given a scholarship by The Axel and Margaret Ax:son Johnson Foundation, for writing the book. 

Scandinavian Unexceptionalism has also been translated into Polish, available for download here

Scandinavian Unexceptionalism featured heavily in the media. 

Selected media hits

June 23 2015 – CityAM

June 23 2015 – The International Business Times

 June 23 2015 - CityAM

June 23 2015 – One News Page – Everything you thought you knew about Sweden is wrong

June 23 2015 – Svenska Dagbladet – Danska S kan inspirera svensk vanster och hoger

June 23 2015 – Arbetsmarknadsnytt – Ska arbete lona sig?

June 23 2015 – Dagens Samhalle – Debattsvepet tisdag 23 juni

June 24 2015 – Austrian Center – New free market book: ‘Scandinavian Unexceptionalism’

June 24 2014 – The Wall Street Journal – The End of Nordic Illusions

June 24 2015 – InsiderOnline – Scandinavian Unexceptionalism: Culture, Markets, and the Failure of Third-Way Socialism

June 24 2015 – CapX – Scandinavian Unexceptionalism #1: Does welfare mean that you live longer?

June 25 2015 – Freenewspos – Scandinavia’s economic utopia has fostered welfare dependency

June 25 2015 – Center for Indonesian Policy Studies - Scandinavian Unexceptionalism

June 25 2015 – Tkejejohngalt blog – Skandinavska Neizuzetnost

June 26 2015 – Discussion in Kauppalehti – The rest of the Nordic welfare-illusion

June 26 2015 – DarikFinance – The myth of the Scandinavian welfare state

June 27 2015 – Ekonomia Blogi gospodarcze – ‘Polowa dla jasnie panstwa’ 

June 27 2015 – Marginal Revolution - Scandinavian Unexceptionalism

June 27 2015 – Kavarna Hayek – London IEA empirical and analytic writer smashed the myth of the successful Scandinavian socialism

June 27 2015 – FreedomWatch – Top 3 articles from this week you must read

June 27 2015 – NME – The myth of the success of the Nordic welfare state

June 27 2015 – Economic Roundtable - Scandinavian Unexceptionalism

June 28 2015 – Amazon.com - Scandinavian Unexceptionalism at 4th place in listings

June 28 2015 – Peru21 – Fernando Caceres: Agrandemos el estado?

June 28 2015 – Ekonomia – Polowa dla jasnie panstwa

June 28 2015 – Slobodaiprosperitet.tv – Skandinavska neizuzetnost

June 29 2015 – Washington Examiner – Scandinavia – land of the free

June 29 2015 – L’agefi – Les modeles scandinaves au-dela des mythes et clichés eternels

June 29 2015 – Warsaw Enterprise Institute – Wynik jest Wazny

June 29 2015 – Dan Mitchell at the Cato Institute – Economic lessons from the Nordic countries

June 30 2015 – Thecommentator – The economics of freedom: lessons from the Nordic countries

June 30 2015 - Gabriel Sahlgren at LSE - Scandinavian Unexceptionalism

July 03 2015 - The Daily Telegraph - Scandinavia's errors: lessons for Greece and Britain 

July 04 2015 – Göteborgs Posten – Fabian Wallen: Lyckan på andra sidan atlanten

July 04 2015 – Institucion Futuro Think Tank Indipendiente – Scandinavian Unexceptionalism

July 06 2015 – American Enterprise Institute – ,7 myths about Scandinavia’s social democratic ‘paradise’

July 06 2015 – Konservative Kartel – 7 myths about Scandinavia’s social democratic ‘paradise’

July 06 2015 – Richochet – 7 myths about Scandinavia’s social democratic ‘paradise’

July 07 2015 – Realclearpolicy (link to the publication)

July 08 2015 – CapX – (link to the publication)

July 09 2015 – Patria – Skandinávský model nikdy nefungovals

July 11 2015 – The Local – 'Trust not taxes have made Sweden a success'

July 12 2015 – Easybranches – 'Trust not taxes have made Sweden a success'

July 14 2015 - SkandynaviaInfo - 'Uwierzcie, to nie podatki przyczyniły się do sukcesu Szwecji'

July 15 2015 - CityAM - Scandinavia provides the evidence for George Osborne's war on welfare

July 15 2015 - Mandiner - 'Mi kell a vállalkozóknak?'

July 16 2015 – Blog Obywatelskiego Rozwoju – ‘To nie wydatki socjalne doprowadziły do sukcesu krajów skandynawskich’

July 17 2015 - Energy Press - 'Nima Sanandaji: Nepotrebni su sustavi koji narušavaju radnu etiku'

July 20 2015 - banka.hr - 'Tajne skandinavskog prosperiteta'

July 20 2015 - Liberte! - ‘Książka: Nima Sanandaji obala mit sukcesu „modelu skandynawskiego’

July 21 2015 - Hospodarske Noviny - 'Mimochodem Davida Klimese:Na obranu socialismu.Ale ne reckeho'

July 21 2015 - TokFM.PL - 'M. Tatala: Ksiazka: Nima Sanandaji obala mit sukcesu modelu skandynawskiego'

July 22 2015 - Republika.eu - 'Visoki ekonomski standard skandinavskih zemalja nije posljedica visokih poreza, vec se odrzao unatoc tome' 

July 22 2015 - Cap X - 'Scandinavian Unexceptionalism #5: Norms and welfare policy'

July 23 2015 - Warsaw Enterprise Institute - 'Uwaga:Jajoglowf'

July 24 2015 - The Independent Ireland - 'Vaunted Nordic model is all the rage, but we musn't ignore its flaws'

July 28 2015 - H+Youtube Interview - 'Swedish success is not due to the welfare state'

July 29 2015 - CapX - 'Scandinavian Unexceptionalism #6: Taxes matter

July 29 2015 - Commeu - 使瑞典成功的是信任而不是税收

July 30 2015 - The Weekly Standard - 'Sorry leftists Americans, your Swedish utopia does not exist'

August 1 2015 - Freedinaub Radio - ‘Scandinavian Socialism: Dangers of the Welfare State’

August 1 2015 - Obserwator Finansow - ‘Sekret bogactwa Skandynawów’

August 1 2015 - Financial Survival Network - 'Scandinavian Socialism: Dangers of the Welfare State’

August 1 2015 - Before Its News - 'Scandinavian Socialism: Dangers of the Welfare State’

August 3 2015 - Liberaleren - ‘J.K. Baltzersen: Frihetsfrontens sommerseminar’

August 4 2015 - ABC - 'Dr Nima Sanandaji's Nordic Economic Model'

August 4 2015 - New Geography - 'Rethinking the Scandinavian model'

August 4 2015 - Forsal - ‘Opieka państwa czy zdolni ludzie: gdzie tkwi sekret bogactwa narodów?’

August 5 2015 - Jacobinmag -  'What makes Scandinavia Different?'
 
August 5 2015 - CapX - 'Scandinavian Unexceptionalism #7: Hiding the burden of government'
 
August 5 2015 - Realclearworld - 'A different view of the Scandinavian model'
 
August 6 2015 - Foundation for Economic Education - 'Scandinavian myths: high taxes and big spending are popular'
 
August 6 2015 - Daily Signal - 'Why Scandinavia is unexceptional'
 
August 6 2015 - Camel Larry - 'Why Scandinavia is unexceptional'
 
August 6 2015 - SWOT - 'Tajne skandinavskog prosperiteta'
 
August 6 2015 - Copenhagen News -  'Why Scandinavia is unexceptional'
 
August 6 2015 - Vidskiptabladid - 'Velferoarkerfio og jafnretti kynjanna'
 
August 6 2015 - Stockholm News - 'Why Scandinavia is unexceptional'
 
August 7 2015 - Hallands Posten - 'Valfardens grans satts av var arbetsmoral'
 
August 7 2015 - Katrineholms Kuriren - 'Valfardens grans satts av var arbetsmoral'
 
August 7 2015 - Cafe Hayek - 'Nima Sanandaji exposes some myths about Scandinavia'
 
August 7 2015 - Hela Gotland - 'Valfardens grans satts av var arbetsmoral'

August 7 2015, Bohuslänningen, ‘Välfärdens gränser sätts av vår arbetsmoral’

August 8 2015, 180 grader, ‘Scandinavian Socialism: Dangers of the Welfare State - YouTube’

August 8 2015, Africa Horn Now, ‘Rethinking the Scandinavian Model’

August 8 2015, Black Baltic Sea Text, ‘1 – What Makes Scandinavia Different?’

August 10 2015, Dalarnas Tidning, ‘LEDARE: Gränsen för välfärd går vid våra värderingar’

August 10 2015, Norran, ‘Välfärdens gräns sätts av vår arbetsmoral’

August 10 2015, Instituto Ludwig  von Mises Brasil,  ‘Mitos escandinavos: "impostos e gastos públicos altos são populares"’

August 10 2015, Kristiandstadsbladet, ‘Hårt jobb ger välfärd’

August 10 2015, D4rk, ‘#NãoPagueImpostos #Anarcocapitalismo :: Estados inchados são amamentados por impostos | Mitos escandinavos: “impostos e gastos públicos altos são populares”’

August 10 2015, Trelleborgs Allehanda, ‘Hårt jobb ger välfärd’

August 11 2015 - Katalaskija - 'Švedska: uzor za kapitalističku reformu?'

August 11 2015, CEA, ‘Nima Sanandaji otkriva tajne skandinavskog prosperiteta’

August 11 2015, 700 Kbyr Alaska, ‘’

August 12 2015, Ystads Allehanda, ‘Hårt jobb ger välfärd’

August 12 2015, CapX, ‘Scandinavian Unexceptionalism #8: The third-way model – a collosal failure’

August 15 2015, Inversor Global, ‘El mito del socialismo que funciona’

August 18 2015, The Libertarian Republic, ‘Dear America: Don’t Listen To Bernie Sanders. Sweden’s Not All That Great.’

August 21 2015, Storm, ‘新世代觀點:左派可能不知道的北歐模式真相’ (Translation: “The new generation of view: the left may not know the truth of the Nordic model”)

August 22 2015, Liuxeu, ‘你可能不知道的北欧模式真相’ (Translation: “You may not know the truth of the Nordic model”)

August 24 2015, Conservative Review, ‘Dear America: Don't Listen To Bernie Sanders. Sweden's Not All That Great’

August 25 2015, Conservative Angel, ‘Debunking the Myth of Socialist “Success” in Scandinavia’

August 25 2015, The New American, ‘Debunking the Myth of Socialist “Success” in Scandinavia’

August 26 2015, Prison Planet, ‘Debunking the Myth of Socialist “Success” in Scandinavia’

August 27 2015, Verkkouutiset, ‘Pohjoismaiden menestys syntyikin ennen hyvinvointivaltiota - "radikaaliajan tulos oli kauhea"’ (Translation: “Nordic region of success was born before the welfare state - "a radical time the result was terrible")

August 27 2015, IMF Canada eReivew, ‘Scandinavian Unexceptionalism - How Sweden’s wealth, work and motivation have suffered due to the welfare state’

August 27 2015, CUTCD

September 1 2015, PTT

September 3 2015, Weihos.EU, ‘WHICH IS THE REAL CAUSE FOR THE SUCCESS OF SCANDINAVIA?’

September 3 2015, Financial Post Comment, ‘A Scandinavian myth-buster: What’s wrong with the idea of Sweden’s utopia’

September 5 2015, Before its News, ‘Scandinavian Countries Are Super-Capitalist with the Terrible Baggage of a Huge Welfare State’

September 10 2015, Obywaterlskiego Rozwoju, ‘Czy Norwegia jest ostatnim krajem sowieckim?’

September 15 2015, Mercartornet, ‘Scandinavian Unexceptionalism’      

September 28 2015, Academia Liberalismo Economico  'A Suécia é um modelo de sucesso do Estado do Bem-Estar Social?'

October 1 2015, Svenska Dagbladet, 'Att ställa krav är att bry sig'

October 5 2015, CapX, 'Nacka, the municipality that challenged public monopolies'

October 7 2015, Cayman Financial Review, 'Culture, economics, and lessons from the Nordic model'

October 11 2015, O-klooun, 'Το Σκανδιναβικό Θαύμα'

October 15 2015, Boston Globe'No, Bernie Sanders, Scandinavia is not a socialist utopia'

October 15 2015, The Week, 'Democrats, it's time to give up your obsession with Denmark'

October 15 2015, The Conservative Historical Review, 'Two Accounts from Scandinavia Warning America About Socialism Under Bernie Sanders'

October 16 2015, Vox, '9 questions about Denmark, Bernie Sanders’s favorite socialist utopia'

October 18 2015, Town Hall, 'No, Bernie Sanders, Scandinavia Is Not a Socialist Utopia'

October 18 2015, San Jose Mercury News, 'Eugene Robinson: Bernie Sanders' clarion call'

October 19 2015, Hot Air, 'The “Swedish Model” Bernie Sanders cites is a myth'

October 19 2015, Patriot Post 'Bernie's Foolish Crush on Sweden'

October 20 2015, National Review, 'Why Socialists Shouldn't Cite Sweden as Success'

October 20 2015, The Salt Lake Tribute 'Lowry: Bernie Sanders’ foolish crush on Sweden'

October 20 2015, The New York Post'Sorry, Bernie - Scandinavia is no socialist paradise after all'

October 20 2015, Jewish World Review'Bernie's foolish crush on Sweden'

October 20 2015, Newsmax, 'Bernie Sanders' Crush on Sweden, Overlooks Facts'

October 21 2015, Lacrosse Tribune, 'Rich Lowry: Left has a foolish crush on Scandinavia'

October 23 2015, The Daily Wire, 'Leftists Angry As Utopian Denmark Moves Right. Here's Why They're Moving Right.'

October 23 2015, Boston Globe, 'It all depends on how one measures a nation’s wealth'

October 27 2015, PJ Media,'Yes, America Needs to Be More Like Denmark'

October 28 2015, Kingsville Record and Bishop News, 'Bernie’s foolish crush on Sweden'

October 28 2015, Daily Corinthian

October 28 2015, The Red River Sun

November 1 2015, Burgeouis (Iran)

November 3 2015, The Suncoast News, 'Fact Checking Scandinavia Socalist Paradise'

November 11 2015, Epoch Times, '北欧一周简讯'

November 12 2015, China Ministry of Commerce, '全球高繁荣国家瑞典排名第五'

November 12 2015, Finance Tech News, (Taiwan) '北歐天堂大崩壞,負債累累比美國慘'

November 20 2015, Neo, 'Fet katt med hög skatt'

November 21 2015, Townhall, 'Is America Great?'

November 22 2015, Chicago Tribune, 'Is America Great or What?'

November 24 2015, The New America (on Youtube), Debunking the Myth of Socialist "Success" in Scandinavia

November 27 2015, AEIdeas, IKEAmerica: Should the US really be more like Sweden?

December 1 2015, Institut Libéral, La culture, l'économie et les leçons du modèle nordique

December 1 2015, Salon 24, Ja twierdzę, że padnie raczej jak starożytna Grecja

December 7 2015, Washington Examiner, Sweden isn't what Bernie Sanders thinks it is

December 14 2015, Washington Examiner, The Democrats’ socialism problem

December 16 2015, Tehran Times, The Democrats’ socialism problem

December 21 2015, 3H Hareketi, Marksist sınıf analizi vs. liberteryen sınıf analizi

December 29 2015, Echo24, Proč nejsme jako Švédi a proč je Zeman mimo

January 4 2016, Pacific Research Institute, Socialized medicine a global failure

January 26 2016, Fortune, What the Left Gets Wrong About Scandinavia

January 28 2016, Tyler Morning Telegraph, Sanders misreads the Scandinavian model

January 28 2016, National Review, Sweden: Reversing Course? 

February 16 2016, Real Clear Policy, Lessons for Integrating Syrian Refugees 

February 16 2016, Cato Institute, Lessons for integrating Syrian Refugees

February 18 2016, Forbes, Bernie Sanders' Scandinavian Utopia is an Illusion

March 7 2016, Reason Road, Debunking the Myth of Socialist "Success" in Scandinavia 

March 14 2016, Headline Politics, Hilarious meme destroys Bernie Sanders' Socialist Agenda

March 24 2016, Fortune Turkiye, Kuzey mucizesi bitiyor mu?

April 1 2016, Pacific Research Institute, Socialized medicine a global failure

April 3 2016, MPRA paper, The Impossibility of Democratic Socialism in a Factionalized Society: Hayek, Jewkes, and the Arrow Theorem

April 19 2016, Free Republic, Bernie's right - America should be more like Sweden; But not in the way he thinks

April 19 2016, Reason, Bernie's right - America should be more like Sweden; But not in the way he thinks

April 21 2016, 3H Hareketi, Marksist sinif analizi vs. liberteryen sinif analizi

May 16 2016, Wall Street Journal, What's Socialism Dad? Venezuela provides a lesson to anyone tempted to feel the Bern

June 17 2016, The Economist, Founding Vikings

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