Is the Scandinavian Economic Model Better?

 

I am a 21 year-old student from Finland.
It makes me sad to hear how Americans are suffering.
Here, our taxes are high but we all benefit from them.
I grew up in the countryside and always had access to the same services that people in the city did.
My university is known around the world in my field and my education is not only free, but my government pays ME to go to university. Everyone has a right to this.
Everyone has a right to the best healthcare, there is no such thing as health insurance.
I am young now and able to take risks and pursue my passion because I will never have to worry about starving if I lose my job or my business fails.
I know that when I am old my state pension will be there for me so that I can enjoy my retirement.
We call this the Nordic Model, and under it we live well and our businesses are among the most competitive in the world. I am grateful to have been born a citizen of a country that cares for its people, and I hope that one day the USA will take example from us.

What are your thoughts?

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About Tom Matlack

Tom Matlack is the co-founder of The Good Men Project. He has a 18-year-old daughter and 16- and 7-year-old sons. His wife, Elena, is the love of his life. Follow him on Twitter @TMatlack.

Comments

  1. Nick, mostly says:

    I think it’s a model that can not be separated from the relative homogeneity of the society in which it exists. Our politics is based on greed, fear, and resentment and we’re not likely to even entertain a half-measure of what Scandinavian and Nordic countries provide. When people have high-quality, robust government services they don’t mind paying for them. We, on the other hand, have a political party whose intent is to discredit the government entirely as means to justify reducing tax revenue. It will never happen here.

    • trey1963 says:

      Humans are tribal. Finland is small enough that all their ethnic diversity can still be seen as belonging to one over-riding Finnish tribal identity. In the US the Tribal identity barriers only recently have been mostly subsumed between “white” people……I hope we can hold it together long enough for american to be accepted a a tribal identity rather than a national one. My greatest hope is that the intermarriage rate continues to increase and in doing so, we as a nation accept that we are all, at the very least cousins.

      • Tom Matlack says:

        I’m all for viewing ourselves as a tribe. On interracial marriage, that goes back several hundred years, albeit not of a voluntary sort, and not sure that is really the only answer.

        • As race is just a social construct, I’d hope the concept devolves when a fair majority of the population can no long look at it as us vs them……when they are us and we are them.

        • Douglas Presler says:

          Read the work of Barry Vann and not only would you see the genesis of the perverse American trope of ersatz individualism in the culture of Ulster Scots, you’d see that viewing ourselves a tribe is about the worst thing we could do. What is the Tea Party but a tribe that takes its cues from grievances brought to the Americas by the Ulster Scots?

    • Terence Manuel says:

      “We, on the other hand, have a political party whose intent is to discredit the government entirely as means to justify reducing tax revenue. It will never happen here.”

      No. We have a gov’t that simply doles out favors, tax credits, and other gifts to special interests and lobbyists.

      We no longer have a gov’t by the people, of the people, and for the people. We have a legalized corruption and we are seeing the results.

      Our system is simply unsustainable and is heading for a Soviet Union type collapse.

    • drunicusrex says:

      First of all, the vaunted Scandinavian “higher quality of life” is a myth.
      Their per capita incomes are considerably lower – Swedes make nearly $15,000 LESS per year than the average American, and Finns and Norwegians make thousands less as well.
      Most Scandinavians don’t own cars. Far fewer Scandinavians own their own.homes. Their stores have considerably less inventory, at considerably higher prices; all three countries have more than their fair share of slums.
      Like much of Europe, Scandinavia is more skilled at hiding their poor than America is. But by most measures their living standards are lower than ours.

  2. Soullite says:

    Yes. They take care of their people, while we’re a nation of and scammers always seeking to get one over on each-other.

    I’d actually say the problem runs a bit deeper than mere economics. We’re dealing with a very different psychology. Nordics, for all their problems, understand what human beings are: cooperative animals that can’t survive without a very strong and supportive society. They get that people need each other on a very basic level. Your average American man is convinced he could solo a grizzly bear with nothing but a hunting knife; he won’t accept that he needs anyone else. Your average American woman will look down on him if he thinks any differently (in her eyes, she should be the only think he needs).

    I don’t even know how you fix that.

    • Tom Matlack says:

      “Your average American man is convinced he could solo a grizzly bear with nothing but a hunting knife; he won’t accept that he needs anyone else. ”

      Wait, are you telling me I can’t take down a grizzly by myself? Now I’ve been to Yellowstone. I’ve seen those beasts. And frankly I don’t need a hunting knife.

    • I don’t know how you fix that either. I think we are pathologically individualistic as a culture in the US Don’t have health care? Fuck you for not working hard enough….but then we also sue when things go wrong with us! Hey I lost my health care! I’m PISSED!

      We are also more focused on money, bigger and better (houses, burgers, lifestyles) than we truly need to be. In my opinion at least. I’ve never understood the resistance to paying into a system to get things back out of the system. But I’m a damnable liberal with a distinct bent against the corporate model.

      • You know that no one actually opposes “paying into a system to get things back out of the system” this literally describes insurance, and Americans have never been opposed to that.

        The problem has never been with paying in to get back out, the problem has been with being forced to pay into a system which may never benefit you, but has a 100% chance of benefiting someone else entirely.

        At present (though it’s about to change) I choose my own insurance provider. I work out regularly, I try to make healthy eating choices, and I’ve never smoked. This means that many insurance providers are happy to cut me a discount: if they don’t, I’ll just go to one of their competitors and they’ll lose out. Because I like discounts, I have an incentive to continue eating right, not smoking, and getting regular exercise.

        If we move to a government-mandated system, where I’m taxed a percentage of my income for healthcare, regardless of what I do (because this is the model used in virtually all single-payer countries), then I lose my incentives to try and live a healthy lifestyle. Indeed, I actually receive more government benefits for the same amount of money if I live an unhealthy lifestyle.

        The real joke is that many people who support single-payer systems admit the existence of these sorts on incentives on other issues (such as claiming that inexpensive fast food causes obesity, or claiming that overly cheap energy causes pollution), but then suddenly pretend the logic doesn’t work this way when examining healthcare.

        • Finnish guy says:

          Nevertheless, it seems that there is much less obesity outside USA and most western countries pay much less for health care per capita than the USA. However, even with all that spending, USA has lower life expectancy. For me, it sounds that it is not very optimal system.

          • Finnish guy,

            The whole “other countries pay less” for better outcomes is garbage for two reasons.

            First, the US consumers subsidize pharmaceutical development for the rest of the world. Please see my link to the study about this in the New England Journal of Medicine further down in the comment thread.

            Second, the rest of the world is defined very arbitrarily so that the US loses out.

            For example, Finland trades extensively with Russia, such that there is a great deal of symbiosis between their economies. Yet because of an imaginary line that creates a “border” the low life expectancies of Russians are not averaged into the the life expectancies of Finns.

            If individual states in the US had their own life expectancy calculations, you would see the same effect: Illinois would have high life expectancy to Kentucky’s low life expectancy, Connecticut would be high, and Rhode Island comparatively low, so on and so forth.

            This is why is you take the overall life expectancy of the EU, which includes places like Bulgaria and Romania, you get 78 years, which is the same number you get for the US. It’s only when you break it down into further countries that you get higher numbers, but this is unfair to the US which does not get the benefit of breaking it down by state.

      • Terence Manuel says:

        I am a conservative Republican. I do not like paying into a system that benefit cronies. I am sick of the Boone Pickens of the world constantly asking the gov’t for a “small start” of $20 bil for his fleet natural gas conversion project. Did Apple need a “small start” from the gov’t? Did Google?

        It has become systemic corruption and I no longer want to support it. Mentioning Google. I reside in MD. Our Governor just got through our state legislature a bill to subsidize some wind farms for “clean” energy…..Cost is $200 mil. Each rate payer will have about $2 added to his or her utility bill.

        Google is a partner in this windmill project. The last time I looked at its balance sheet, it had around $10 bil in cash! So why are we subsidizing the project.?

        Just a small part of the craziness that will lead to the collapse of this economy.

  3. Heh, every scandinavian country has its own economic model. Sure they have similarities but they are different. Now I would say that our system has certain advantages over the US system but its not better in all aspects. Like we might have to consider an stricter immigration policy more similar to the US one.

  4. The sad thing is many Americans believe ‘moving the bottom up’ equals a loss of opportunity or individualism.

  5. I hate to be a troll about it but Finland isn’t traditionally considered Scandinavia. That’s Denmark, Norway and Sweden, to the best of my knowledge. And to further pick nits, has “loose” become an acceptable substitute for “lose”? I feel like I’m being gaslit the same way New Yorkers insist that you are standing “on line” when queued up.

    On to the potatoes. Part of the reason that various healthcare economies work is because of our system. Things like price caps on medication keep healthcare costs manageable for Finland. But those caps are subsidized by passing the costs onto American prescriptions. While a number of pharmaceutical companies have German-sounding names, many of them are headquartered in the US and roughly all of them must use the FDA to bring product to market. Furthermore, big pharma needs funding for R&D and insurance in cases when their newest medication makes someone’s dick fall off. Americans aren’t the only ones whose sweat helps keep medication cheap for everyone else. Oppressive and somewhat oppressive conditions in China keep manufacturing costs for drugs down even as those same factories undercut their own product by creating black market knockoffs two conveyer belts over. The shareholders of these pharmaceutical companies, you, me and uncle Earl’s 401k, need them to either keep turning a profit to keep dividends healthy or keep coming up with new products to force the market to keep increasing the stock price. I’m not saying our healthcare system is in desperate need of a good fixing (I’d estimate that the same insurance plan has had a year-over-year increase of around 11% this decade) but there are too many moving parts for the answer to be “just tax everyone more.”
    The thing that surprises me the most is the out-of-control cost of higher education in America. I finished undergrad 10 years ago and my university’s tuition has basically doubled in that time. I’ve been on campus since and I don’t think the food, lodging, amenities or staff have increased in quality that appreciably in a decade.

    • Finally, someone with some sense. All these other political/cultural anthropology explanations complaining “why can’t everyone just be as smart as I am so they can see the forest for the trees and we can copy these successful European models” are total BS. Truth be told we have a dysfunctional healthcare system for reasons ranging from entrenched lobbies (in the form of the trial attorneys) to disincentives for healthy living (in the form of subsidies for industrial farming – a double cheeseburger is $0.99 and a grapefruit is $2.50?!?) to a culture of political obstructionism on both sides of the aisle. I certainly don’t have all the answers, but socialism has proven to be a born loser (excluding in European countries where it persists – not succeeds – not due to their more advanced culture, but because many of their costs are subsidized by the U.S.). I’m sure this Finnish kid is clever is his on right, but the idea that everyone can have “equal” means in every facet of life is not only a dangerous idea, it’s impossible.

      • Many of our costs are subsidized by the US? How come?

        • In the US pharmaceutical companies can gain patents on newly discovered drugs. This grants the patent holders a monopoly on the product: they can sell it for whatever price they want, and retailers (hospitals, pharmacies, etc.) just have to accept the price and then pass the costs along to consumers.

          In other countries, the hospitals and pharmacies are all government controlled, such that the government negotiates the price of the drug directly with the manufacturer, and can effectively fix the rate very low (this occurs commonly in Canada, where the Canadian government simply says “charge us this much, or do not sell anywhere in Canada”).

          Because they face fixed prices in other countries, the pharmaceutical companies have no ability to finance research based on those markets: the price is fixed, so they cannot make enough profit to fund their research.

          The companies currently deal with this by raising prices in the US. As a result US consumers essentially end up funding all of the research that takes place in the pharmaceutical industry. Note that because foreign companies can also hold patents in the US, they can also foist research costs onto US consumers.

          This has been discussed extensively in the US including in leading medical journals, see here for example:
          http://www.nejm.org/doi/full/10.1056/NEJMp048158

          • One. Thats private companies you are talking about not the US state.
            Two. The state of Finland is also funding medical research with taxed money.
            Three. Not all of our hospitals and pharmacies are government controlled.
            Four. We have our own backup facilities inside solid rock. If we lose all external medical support today (What could happen in the case of an invasion.) our state wouldn’t crumble.
            Of course in that case patents would practically equal toilet paper.

            So basically the problem is that your companies are unable to negotiate an price they see as fit.
            You know thats called protectionism and as long as you are not in the EU or have an trading treaty similar to the one we have with Israel…
            Well you could say that we substitute costs by bargaining better prices but its not like they are forced to sell.

            Also theres generic medicine that spares the EU some 18 billion € every year.

            • Safor,

              It’s immaterial if it’s private or public, the end result is the same: US consumers subsidize the rest of the world. The point about it being “private” is moot.

              The funding of research with tax money is a joke. Look at the Human Genome Project. As a public project, the research took 15 years and cost $3 billion. A private company, Celera, was able to do the same work for $300 million (1/10th of the cost), in 3 years time (1/5th of the time). There is no comparison, public research is a joke.

              Even if hospitals and pharmacies are not government controlled, the government of Finland still practices collective bargaining to drive down cost. This cost is passed on to US consumers. This is also a moot point because the end is the same: US consumers pay because Finland will not.

              Finally, I literally cannot understand anything else you say, the bit about invasion doesn’t make sense. Patents are necessary to spur innovation. The next time Finland invents Facebook, or even the internet for that matter, I’ll take you seriously. Until then, I’ll stick with patents.

          • Terence Manuel says:

            THEN DON’T SELL THE DRUGS IN CANADA! WHEN THEIR CITIZENS START DYING DUE TO A LACK OF THE DRUGS, COMMON SENSE WILL PREVAIL!

          • Finnish guy says:

            I would like to correct some things in your message:

            1. At least in Finland, government doesn’t prevent selling overpriced drugs. However, they may withhold subsidies for the drug, if the drug is not considered to be worth of the price. For example, as far as I know, drugs against balding, are not subsidized, but you are still free to buy them with your own money. And sometimes some of the newest and most expensive drugs are not subsidized when there are less expensive alternatives available, but you are still free to buy the most expensive drugs, if they have passed drug safety tests.

            2. Drug companies use more money for advertisements than for developing new drugs. And at least in Finland, drug makers aren’t allowed to to pursue as aggressive advertisements that is targeting the drug users, as in the USA.

      • Show me the evidence that European socialism is failing…

        Western Europe seems to be doing pretty well at the moment.

        • Mike,

          First, the whole “Western Europe seems to be doing pretty well” is a joke, right? You know that Spain has had an unemployment rate of 25% for years now, that Italy has yet to recover from the recession, and currently experiencing a sovereign debt crisis, that France has an unemployment rate that exceeds the US (10%) and that virtually all of Western Europe headed into a double-dip recession that the US avoided, right?

          Seriously, check out the financial news some time, this is all 100% true.

          Bloomberg actually had a great story on how Germany managed to buck the trend, you can read it here:
          http://www.bloomberg.com/news/2012-04-16/germany-reformed-its-social-model-europe-can-too.html

          The short version is that they cut marginal tax rates on top income earners, reduced capital gains taxes, curbed government pensions, introduced copays for medical visits, and reduced unemployment payments to only 12 months in length (which is half of the 99 weeks still available for many Americans).

          Now, does all that sound like “European Socialism”? Because last I checked Germany seemed to borrow a heck of a lot of policies from the US when enacting that agenda…

          • Now if I may remind you that the Scandinavian countries currently have to pay for less socialistic countries.
            Its poor economics that have caused the problem not welfare.

          • I live in western europe,

            Spain and Italy are massive exceptions. Italy has a HUGE problem with organized crime and corruption.

            I am talking about places like France, Germany, England, Norway, Sweedan, The Netharlands, ect…

            • So, you’re talking about:

              France, which has higher unemployment than the US (10% compared to 8.2%),

              Germany, which enacted American social policies (please see my above link)

              The Netherlands, which entered a double-dip recession in last half of 2011 (see this link: http://www.bloomberg.com/news/2012-04-26/dutch-budget-cuts-get-go-ahead-as-government-strikes-deal.html)

              Norway, whose system is using the national oil company to subsidize the population, a great system, but only workable for a country with a total population of 5 million,

              and Sweden, which recently predicted that unemployment will INCREASE while unemployment elsewhere is decreasing (please see the statements of Anders Borg from 17 February 2012)

              I’m not really seeing a system here that I want the US to change to…

  6. I think the unspoken message is that there are not enough resources in this country for everybody, especially in terms of healthcare and education….it seems like the people at the upper strata don’t necessarily want the people of color at the bottom strata to receive the same elite education opportunities and premium healthcare…

    • Tom Matlack says:

      Leia I don’t know that it is conscious but it is denial for sure. When you look at poverty, incarceration, and education data by race it is … depressing.

    • the richest 400 Americans have half of the money. That is the problem, take the money away from them and distribute it. Easy.

      • Wirbelwind says:

        Sarcasm ? The problem is, when you take the money from the richest the only thing you can get is that everyone is poor. It’s like you sold your house and gave 1000 $ to every poor person… guess what happens ?

  7. There are lots of people living in the US whose roots are clearly Scandinavian. For the most part, they are more prosperous than their distant kin who stayed home. Even without all the free oil income the Scandis have.
    Nowadays the police use DNA tests to determine the predominant continent of origin of the perps they are looking for. “Race’ is a largely made-up concept but genetic inheritance most certainly is not.

  8. JoeMocha says:

    What works in one country will not work in another. The net income for teachers in the United States is twice that of Norway, then demand to live outside the school districts so they do not have to pay the property taxes which are used to pay their salaries. In the state of Illinois, 40% of the budget goes to paying state pensions, with the remainder to run all of the states services and keep up its roadways and infrastructure.

    • Tom Matlack says:

      Joe clearly the whole topic of pensions and social security is one where we just are irrational. I just wish it was possible to talk about it without a nuclear melt down. I am for a more just and probably even socialist type of government. But that doesn’t mean we don’t have to reduce the obligations under current law to fixed benefit pension plans of all kinds. They will sink us. We can’t afford them.

    • Terence Manuel says:

      Joe,

      That is what happens when the fox is guarding the hen house.

      How can Democratic politicians “negotiate” with unions when they represent the same unions? It is absolute lunacy, regardless of how you feel about unions.

      In this country today, the boomers have robbed the Gen Y & Millennials of $15 tril. I am telling you today, the day of reckoning is approaching. The Millennials will NOT pay for this crap.

      Class warfare, generational warfare…….It’s just over the horizon.

  9. Most of the Scandinavian countries social service programs are propped up by state owned North Sea oil revenues. Norway, with a population of just under 5 million has a social security reserve in the order of $600 billion from oil. Finland, oddly enough, does not get revenue from oil, but still manages a pretty robust social service program from timber and manufacturing.

    I wish we could go to something like their support services, but unfortunately, I think we would end up like Greece instead of Finland if we were to attempt to do so.

    • Obiviously an welfare country has to be more productive than consuming. Like currently we are building one new nuclear power plant and have decided to build two other new ones. This is relatively much in an small country and will provide the industry with more and cheaper electricity.
      So basically we keep the exports higher than the imports.

    • Terence Manuel says:

      WE CONSUME TOO DAMN MUCH!! WE AMERICANS JUST CANNOT GET ENOUGH STUFF!

      Btw, did you take note of how well this young man wrote his english? Better than most public high school grads in America. But the politicians keep saying we need to spend more on education. I am also sure this young man speaks two to three other languages as well.

  10. Sweden is pretty similar to Finland and has had immigration rates close to the USA, at times higher.

    But as a Finn I still warn against comparing any Scandinavian country to the US, a much bigger and more heterogeneous country, a continent almost.

    If you have to, compare with Minnesota (Scandinavians) or Massachusetts (most Scandinavian like?) and you’ll notice that people over there are doing just fine and in many ways much better. than we are doing here

    The kid writing above, well, he’s a bit childish and perhaps even impolite IMHO: “I’ve been told that I live in this great country and now I want to shove it down your throats, you poor Yankees.

    Don’t get me wrong, Finland is not a bad place and the “Nordic model” seems to be working better than most people would have believed. But that’s not the whole picture: the free academic system favors the well-to-do and the health care seems to getting worse each year to mention a couple of examples.

    And men are doing statistically particularly poorly compares to women.

  11. finnish joe says:

    someone: “The net income for teachers in the United States is twice that of Norway”

    is that a fact? In finland a high school teacher’s salary can be between 3000-5000 EUR/month (depending on many things…). After taxes that leaves you with 2000 – 3250 EUR/month. That is approx. 2600 – 4300 USD/month as net income after taxes. Twice that is 5200 – 8600 USD/month as net income after taxes. Boy, you american teachers have it good!!

    Example was Finland. In Norway the salaries are usually higher than in Finland. Norway is oil rich, Finland is not.

    • Peter Houlihan says:

      Was the income adjusted to account for the local cost of living? I suspect it’s a little higher in Finland than most parts of the US.

      • Finnish joe says:

        It was not adjusted. The point I was making was that the difference in teachers’ net salaries cannot be as high as someone suggested. I would assume without statistics that there is no great difference.

        including the purchasing power into the comparison in different cities/countryside in Finland / USA / Ireland will make this a formidable problem :-)

  12. finnish joe says:

    This is an interesting topic. From Finnish perspective the scary things about USA society are

    1- high university tuition (ours is free or almost free)
    2- high cost for medical care (ours is free or almost)
    3- ridiculous compensations awarded by courts for minor mishaps (we are way more moderate)

    However, there are always pros and cons. We can take it easy in the university, but then again our universities are not as good as american ones. We do not have to pay for medical care but there is a phenomenon known as “death in the queu” meaning that someone died before they got the treatment they needed. Also, if you as elderly person become hospitalized they will take 70% of your income to pay for hospital bills (+the monies you already paid as taxes). Many illnesses and conditions may lead to a heavy “bureaucratic war” before you get your treatment. etc. etc.

    And finally, univerisity tuitions and medical care are not free for us. We pay for them every month in the income taxes when the pay check comes.

    i would summarize that the US system may be better for the wealthy and healthy but Scandinavian is a lot better for the poor and the young (students etc.). That said, being poor and ill is miserable for everyone everywhere, even here is scandinavia (incl. finland).

    • Peter Houlihan says:

      “Also, if you as elderly person become hospitalized they will take 70% of your income to pay for hospital bills (+the monies you already paid as taxes). Many illnesses and conditions may lead to a heavy “bureaucratic war” before you get your treatment. etc. etc.”

      Holy wow! O.O What happens to their dependants? Or is they provided for by the state?

      • Finnish joe says:

        There will be problems. My mother is currently trying to deal with these issues as my dad is close to permanent hospitalization. No simple solution is offered by the state.

  13. Peter Houlihan says:

    “Is the Scandinavian Economic Model Better?”

    In a word “NO.”

    High taxes alone don’t make the world a better place. Ireland used to have pretty high taxes too, but it wasn’t until we dropped them to allow greater economic activity that we were able to afford social services even approaching swedish ones.

    There’s plenty of countries out there with high taxes where inequality is rife and unemployment is high.

    • Peter Houlihan says:

      *just to clarify: I’d prefer if the Irish economy was more like the finnish one, but I’m pretty convinced that raising our taxes would have the opposite effect.

  14. Finnish joe says:

    I think that the American model is definitely better for the society’s elite. But the scandinavian model offers a great deal of security to the middle and working classes, and their children. It is quesion of values, at the end of the day.

  15. Scandanavian countries enjoy an excellent standard of living. The cradle to grave subsidies which provide a “high floor” for citizens is based in part of public policy initiatives whichhave many socialist aspects. However, theses initiatives succeed because of the relatively homogenous population, with attendant shared values. Finland does not have an entrenched underclass or high need immigrant population which would otherwise strain the socialist/democratic model. We can strive to replicate the Scandy example of equality in the US, but should recognize we are not comparing apples to apples

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