Debunking Utopia: Exposing the Myth of Nordic Socialism

The socialist system has failed, leading to human misery on a wide scale in every country in which it has been introduced

Bernie Sanders and other leftist politicians want to increase taxes, regulate businesses, and create a society where government takes responsibility for many aspects of daily life. If you are sick, the public sector should pay for your treatment and give you sick leave benefits. If you quit your job, taxpayers should support you. If you have a low income, the government should transfer money from your neighbor who has a better job.

While many believe that the public sector should provide some help in these situations, there are those on the left who believe that nearly all the responsibility should be on the public sector and little on the individual, families, and other parts of civil society. The ideal is a society in which the state makes sure that those who work and those who don’t have a similar living standard. There is nothing odd about these views. They are classical socialist ideas, or as Bernie Sanders himself would explain, the core ideas of social democracy.

These days, few people believe in pure socialism. The socialist system has failed, leading to human misery on a wide scale in every country in which it has been introduced. The Soviet Union, Cuba, Venezuela, and North Korea are hardly positive role models. China, the last major socialist country, has in many ways transitioned to a capitalist economy.

A less radical idea that is gaining ground is social democracy. Contrary to socialism, social democracy isn’t meant to be introduced through an authoritarian system where one party monopolizes power. It is to be combined with democracy and also the free market. In social democracy government takes control of some, but not all, parts of the economy within the frame of a democratic system. Services such as education, health care, and elderly care are provided through public monopolies, and funded by tax money.

“I think we should look to countries like Denmark, like Sweden and Norway and learn from what they have accomplished for their working people.” — BERNIE SANDERS, 2015.

Social democracy is becoming increasingly popular among the Left in the United States. An important reason is that positive role models exist. In fact, a number of countries with social democratic policies — namely, the Nordic nations — have seemingly become everything that the Left would like America to be: prosperous, yet equal and with good social outcomes…

I fully understand the Left’s admiration for the Nordic countries. … This part of the world has indeed fascinating social systems. … What is less known on the other side of the Atlantic is that the Nordic welfare states also create a range of social problems. … The reality is that Nordic policies trap many families, particularly those with an immigrant background, in welfare dependency. This is why, as I show in detail later in this book, the American Dream of income mobility is more vivid in capitalist America than in the Nordic welfare state systems.

… The Nordic welfare states certainly have their advantages. Public provision of child care, for example, allows many women to work. A closer look at the systems, however, shatters the rosy illusion of the Left. The welfare states of the north are dealing with challenges stemming from the long-term effects of high taxes, generous benefits, and public-sector monopolies. From Spain to the Baltics, Latin America and the United States, leftist ideologues hedge much of their political beliefs on the success of Nordic social democracy. In the Nordics themselves, this ideal image of democratic socialism has lost its shimmer.

… As a simple illustration, let’s look at the current governments in the Nordics. Denmark, the Nordic country with the highest tax burden in the world (taxes correspond to about 50 percent of the Danish economy, nearly twice the rate as in the United States), is led by … a coalition of center-right parties. … Finland is also ruled by a center-right coalition. … Sigmundur Davíð Gunnlaugsson, the prime minister of Iceland, is yet again the head of a center-right coalition. … Norway is led by conservative party leader Erna Solberg. The massive oil wealth of Norway would make a generous welfare state more feasible than elsewhere. Over time, however, even Norwegians have been alarmed over how working ethics are eroded by a system where much responsibility is placed on the public sector and little on the individual.

An issue that has come to dominate the Nordic political landscape is that of immigration. … The welfare systems in this part of the world are much less successful than America’s when it comes to integrating immigrants. This explains in part why voters in the Nordic countries have turned to anti-immigration parties, which often have a socially conservative stance and are seen by their adversaries as populists…

The Norwegian prime minister’s government is described as a Blue-Blue Cabinet, since it is a two-party minority government consisting of the Conservative Party and the anti-immigration Progress Party. In Finland, the anti-immigration Finns Party is part of the government, while in Denmark the anti-immigrant Danish People’s Party supports the current government. Iceland’s two largest parties are both skeptical of the European Union, and the public opinion in the country is overall against open borders.

To sum up, conservative parties are in power in most Nordic nations, while anti-immigration parties with a populist touch have been gaining ground. This political landscape is far from what is favored by liberals in the United States, although few American admirers of Nordic-style democratic socialism seem aware of this.

As this book is being written, only one of five Nordic countries has a social democratic government. That country is Sweden, where the previous center-right government implemented significant tax reductions, opened up public monopolies, and limited the generosity of the welfare state. One might have expected a major leftist backlash to these reforms. However, the Left didn’t come to power in late 2014 because they increased their support (the three parties on the left only gained 0.2 percent more votes than in the previous election), but rather because the anti-immigration party, the Sweden Democrats, took many votes from the center-right parties. The party, which also attracts many traditional social democrat voters, had previously minimal support due to its neo-Nazi origins.

Marco Rubio joked during a Fox News debate among Republican presidential candidates, “I think Bernie Sanders is a good candidate for president — of Sweden.” While the audience laughed, Swedish royalist Roger Lundgren remarked that the country has a king and prime minister, no president. More important, the Sanders brand of socialism is not particularly popular these days in Sweden. For much of the twentieth century, the Social Democrats in Sweden were seen as a one-party state, with support from half the population. As shown in the image on the next page, however, voter support for Social Democrats and Socialists has fallen significantly over time.

The political debate in the Nordics is not much different from that in the United States. As I am writing these words, one of the major issues being discussed in Sweden is how high-entry-level wages are creating unemployment. This is similar to the American debate about minimum wages, with the only difference being that Sweden doesn’t have any minimum wage legislation.

Another urgent topic is how a massive shortage of housing has resulted from rent control and burdensome regulation.

A third one is how more and more people are relying on sick leave benefits. Sweden doesn’t seem to have a major epidemic going on, but rather a situation where people are increasingly taking advantage of the generous sick leave insurance system.

And lastly, one issue dwarfs all others in the Swedish debate: how can the cost of immigration be curbed and how can the social challenges relating to immigration be dealt with?

Integrating immigrants on the labour market is a challenge for most modern economies, not least when it comes to those who come from countries with poor education systems. And it is certainly no news that the generous welfare state models in northern Europe are particularly bad at integration, since their systems trap many families in long-term welfare dependency.

As these words are being written, Swedish politicians are conducting a rather ill-fated experiment where extremely progressive welfare state ideas are being combined with open borders. The results are, as discussed in the end of this book, anything but encouraging. The Swedish welfare state is not, as some wrongly claim, collapsing under the weight of immigration. But it is certainly being strained.

To give a short example, in 2015 so many immigrants arrived in the southern part of the country that all available mattresses were reportedly sold out. Sweden’s third largest city, Malmö, which is located in the south, is struggling with social tension and falling school results. Grenades being thrown in the streets of Malmö by rival gangs — once thought unimaginable in peaceful Sweden — are now part of everyday life. One-fifth of the social service workers in the city reportedly quit their jobs in 2015 while fully half of those that remained signed off due to illness, since they were so stressed in their working environment.

Part of these challenges are surely temporary and relate to the open door immigration policies, which abruptly ended in late 2015. And much of them — such as the dramatically falling school results in Sweden — have more to do with the failing of progressive policies than with immigration.

As late as 1985 the Social Democrats and their Socialist supporters gained a majority of the votes in Sweden. In the two recent elections they have only received a little more than a third of votes. As of early February 2016, the Social Democrats had never polled so low in modern history. A poll of polls by Swedish magazine Dagens Samhälle shows that less than a third of voters are backing either the Social Democrats or the Socialists. Without the support of the Green party, which is careful in not identifying itself as socialist, the Swedish Left would find it difficult to gain power…

More to the point, it is doubtful if Sanders would even be welcome in the Swedish Social Democrats, who are fiscally conservative. When the socialist vote was strong in the 1970s, the Social Democrats would really identify themselves as socialists. At the same time, the Socialists were a communist party that dreamed of a violent revolution and took orders from the Soviet regime in Moscow.

Today, Sweden’s Social Democrats position themselves more as centrists, not unlike Hillary Clinton, while even the Socialists have to some point embraced the market. It remains to be seen if the Nordic Social Democrats can reinvent themselves or not. My guess is that they will, by further turning away from socialism to pragmatic centrism.

It might seem odd that Nordic-style democratic socialism is all the rage among leftist ideologues in other countries, but to a large degree is rejected by the people in the Nordic countries themselves. If we take a closer look, we find that this apparent paradox has a simple explanation: the global Left doesn’t understand that a unique culture underlies the success in Nordic countries. Therefore, ideologues vastly exaggerate the benefits of the social systems in these countries.

During the past years I have written a number of articles and longer publications dealing with this Nordic utopian image. My arguments, in short, are these:

• Yes, it is true that Nordic people have longer life expectancies than in most other countries. But no, this isn’t simply the proof that large welfare states with universal health care extend the life span. Before the Nordic countries introduced large welfare states, the difference in life span compared to the average American’s was even larger than today. Iceland, the Nordic country which has the smallest welfare state, has seen the most significant increase in life expectancy during recent years. The main reason for the difference in life expectancy is obviously culture. Nordic people have healthy lifestyles and diets, which explains why they live so long.
• Yes, it is true that Nordic countries are rich and have high taxes. But this doesn’t prove that high taxes lead to prosperity. In fact, study after study has shown that the affluent Nordic economies would be even more successful if they had lower taxes. There are few places in the world where the negative effects of taxation have been so well documented as in Sweden and Denmark, the two Nordic countries with the highest tax burdens. Sweden has moved toward significant tax reductions, while Denmark compensates for its high taxes by being very market-friendly in other areas.
• Yes, it is true that Nordic people have low levels of poverty. And certainly, to some degree we can explain this by the aid given to the less fortunate by the public sector. However, researchers have convincingly shown that Nordic countries moved toward income equality in a time when they combined small public sectors and low taxes with free markets. Another observation is that simply adopting Nordic-style welfare states does not remove poverty, as has been the experience in France, Italy, Spain, and other parts of Europe.
• We know that many immigrants in the Nordic countries struggle to get a job and otherwise be included in society. If anything, they are trapped in poverty and dependency on public handouts. The lack of upward mobility for immigrants is a telling sign that there are limits to the success of the Nordic welfare model. Sweden, which has been more open to immigration than its Nordic neighbors, is currently experiencing a massive increase in inequality. Both high-educated and low-educated people of foreign origin have greater success in finding a job in America than in the Nordics.

An obvious explanation for all this is culture. Over centuries, Nordic societies have relied on a particularly strong brand of Protestant working ethics. These stoic societies put great emphasis on hard work, individual responsibility, sobriety, and education.

For this very same reason, the people of Nordic origin whose forefathers have migrated to the United States are today prospering. They have the same or even lower poverty levels than their cousins in the Nordics, although living in the capitalist American system that Bernie Sanders and other ideologues on the left are convinced is the root of social ills.

… This book will burst many popular leftist myths. It will also argue that the Nordic experience, perhaps more than anywhere else in the world, teaches us about the benefits of free markets and traditional values, such as a strong work ethic and individual responsibility. However, my point is not to criticize Nordic welfare states head-on or to simply write an ideological pamphlet for the Right. Rather, if we set rosy, idealistic views aside and take an in-depth look at countries such as Sweden, Denmark, Norway, Finland, and Iceland, we can learn about both the shortcomings and the successes of welfare-state programs.

The world isn’t black or white. And the Nordic welfare states — for all the turmoil they have been experiencing lately — can still teach us much, at least for those interested in a more nuanced view. According to a traditional Persian saying, you can learn at least as much from the mistakes of others as from their successes. In the case of the Nordics, we should learn from both.