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Wednesday, December 07, 2005

Comments

Shaun

I also recommend - Huber, Evelyne and John D. Stephens Development and Crisis of the Welfare State. In its comparison of welfare states, you can see why the Nordic model is a lot more sophisticated than most people (including myself) realised.

hirvi

[I]...particularly in anglo-saxon countries.[/I]

I believe that's true. But many of them seem to be 'adversarial' as opposed to 'consensual' thinkers, so is there any evidence they'd want to be like us?

Tom Geraghty

It's funny how the knee-jerk "Nordic model is not exportable" theme is taken as gospel, but nobody ever makes the obvious parallel argument that the deregulate-everything "Anglo-Saxon" model may not be appropriate for all countries due to the scale or social or cultural idiosyncracies of the US or Britain.

New Economist

Tom

I take your point about the anglo-saxon model. However:

(1) I am not saying the Nordics should import our model, when they already have a system that seems to work as well, if not better.

(2) There is greater homogeneity in the Nordic countries than the anglo-saxon ones. If a model can work for a country as tiny as New Zealand as well as it does the enormous US economy, that does tend to suggest it may 'export' more easily than one which has only really been tested in a bunch of relatively small and homogenous countries.

Stephen Gordon

I don't really understand why it's so important to note that the Nordic countries are homogeneous, and why that would be an obstacle in exporting that model.

Could you (or someone) expand on this point?

New Economist

By homogenous, I mean - until quite recently, at least - each country being dominated by one religion, one language, one race, one political party, and a population small enough that most of the key decision makers grew up together and know each other well. A little like if New England had been a separate country for the past 300 years, with little immigration from the rest of the United states and most of its popoulation still pilgrims.

hirvi

Stephen,
perhaps NE is implying that 'homogeneous countries' have a different approach to social solidarity?

If so, he could be right, at least as far comparing Nordic to Anglo-Saxon economies is concerned.

Looking at recent OECD child poverty* stats, one finds the Nordic countries occupying the top four positions (= the least child poverty), and the English-speaking countries taking six of the bottom eight, with not one of them making it into the top 15.

(*with poverty defined as households with income below 50 per cent of the national median income)

Stephen Gordon

That's what I thought, but I still don't see why a lack of homogeneity would make it harder to import the Nordic model.

I like the Nordic model, and I'd like to see more of it here. Offhand, I don't see why Canada's relative heterogeneity would be an obstacle, so what I'm really looking for is a way to counter arguments along the line "The Nordic model can't be applied to Canada because Canada is a heterogenous country." I can't plausibly reply "No, it's not", so right now my answer would be "So what?"

There's probably a good comeback to that, and I'd like to learn more about this line of reasoning if it's going to keep coming up - as it seems it will.

Jonathan Goldberg

Stephen:

My reference answer to your question:

I don't really understand why it's so important to note that the Nordic countries are homogeneous, and why that would be an obstacle in exporting that model.

Could you (or someone) expand on this point?

is here:

WHY DOESN’T THE US HAVE A EUROPEAN-STYLE WELFARE SYSTEM?
Alberto Alesina
Edward Glaeser
Bruce Sacerdote
Working Paper 8524
http://www.nber.org/papers/w8524

The basic thesis is that ethnic and above all racial animosity makes people unwilling to pay taxes to benefit "them."

hirvi

"That's what I thought, but I still don't see why a lack of homogeneity would make it harder to import the Nordic model"

Stephen, I agree with you.

Allowing people not to have healthcare or to be fully educated, even making them pay for higher education purely because they don't have money, means terrible inefficiency, but has nothing to do with lack of homogeneity.

Daniel

Hej!

Well, I would challenge the finding that the Nordic countries are homogenic.
A raise in population in Sweden from 8 to 9 mil people for exoample was mostly due to imogration from now neighboring countries. Take walk around the outsirts of Stockholm, Malmo or Götheborg and you can see yourself.
Those numbers (or rather the percentage) might not be much comparred to the US or Canada but do not forget that people regard themthelves as homegenious with all implications that come with it and theat the Nordic countries do not regard themselves as imigration countries (as arguably the US and Canda)

Stephen Gordon

Jonathan, thanks very much; I'd heard of that paper, but I hadn't read it yet. I've just given is a quick skim-through, but there's a lot to digest. Thanks again!

fjolset

I used to think that the old 'cultural homogeneity' argument was compellling. I lived in Denmark for a couple of years, and this made sense. However, it ceased making sense when I lived in Toronto for six years and saw that the Canucks had made far more progress in social equity than the Americans. That's just about what tipped me ovet to the left side of the dived.

Øystein Sjølie, Oslo, Norway

Reporting as a Norwegian economist/journalist:

As noted, the Nordic countries are not alike, and only two are really rich (in a Western EU/north America context): Denmark and Norway. Norway has a lot of oil, and is one of the worlds three leading exporters. However, much of the income (around 80 per cent at present rate) is saved in a well diversified fund abroad. Even subtracting this, Norway would be a very rich country on a per capita basis, on par with Denmark and far beyond Finland and Sweden. The two latter countries have more big manufacturing companies, partly based on energy and pulp.

However, one of the striking similarities between the countries is the income equality, which translates into low poverty rates. Most Norwegian experts (who dont refer to this as a cultural feature) points to the way the labor markets operate. Hiring and firing are certainly harder than in the US and UK, but far easier than in most of the EU continent. But wage settings are centralised. This has worked as a major compressor, jacking up the wages of the blue-collar guys at the expense of the white-collars. A conspiracy between the well-organised capitalists and the well-organised manual laborers has compressed living standard differences substansially.

While Norway has a generous welfare system, most of the benefits from the system are connected to labor market participation. The welfare state can then be viewed as a well developed insurance scheme for the employed. Together with a compressed wage structure, this gives strong incentives to work, and the employment rates in both Norway and Denmark are among the worlds highest (at 76 per cent, surpassed only by Iceland and Switzerland).

This three year old paper, cowritten by the Norwegian economist Kalle Moene, is still relevant:
http://www.oekonomi.uio.no/memo/memopdf/memo3503.pdf
Among other things, they argue that homogenity is no prerequisite for a "nordic model".

Joe

I think the Nordics model might work because of the size of the counties. What I mean is they are small enough to be run as if they are corporations themselves. That is they have to be competitive on a global scale just to stay afloat. Our government in the US doesn't have to really compete with anyone today. It used to compete with Russia, that is why both the US and Russian systems used to be more efficient. For example NASA--we spend almost as much money on NASA today as we did when we went to the moon. Yet somehow with after 45 years of advancement we have lighter, faster, and better everything and we can't get back to the moon because it will cost too much. It should be way cheaper to go to the moon today than it was in the 60s. I wonder how long it would take us to get to the moon if another country were planning to attack us from there. The Nordic counties are competing like we were in the 60s, that is why they are better at running themselves.

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im a nordic model in the us and i must say im not doing well. the social structure is counter clockwise to my learned m.o.,very against the grain of appropriate nordic social order.my abilities are hampered and not condusive to others, thus widening the gap.i read to others like combatative instead of formed determination, communicated truth sounds to others like insults. accused of being above it all instead of seen as a difficult jugling act in the face of constant opposition while oppurtunistic americans are triing to take my balls off me, a no no at home.

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However, one of the striking similarities between the countries is the income equality, which translates into low poverty rates. Most Norwegian experts (who dont refer to this as a cultural feature) points to the way the labor markets operate. Hiring and firing are certainly harder than in the US and UK, but far easier than in most of the EU continent. But wage settings are centralised. This has worked as a major compressor, jacking up the wages of the blue-collar guys at the expense of the white-collars. A conspiracy between the well-organised capitalists and the well-organised manual laborers has compressed living standard differences substansially.

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