SHAPIRO: Debunking The Myth Of A Scandinavian Socialist Paradise

The Nordic Countries… Denmark. Norway. Sweden.

You might think of Vikings. Over 250 years of conquest through Europe. 

You might think of the middle ages. Medieval battles, kingdoms, Kings and Queens.

Or maybe you think of design. Simplicity. Minimalism. That thing you bought from Ikea that is always missing just the part you need.

But the left thinks of an economic ideal. An example of how socialism can shape society. 

First, let’s define socialism: communal ownership of the means of production and distribution. It is important to differentiate between socialist programs and socialist economies – they are not the same thing. Socialist programs redistribute; socialist economies abolish private property and nationalize industry in order to override the profit incentives that drive the market.

For example, nationalized health care is socialized medicine – but Canada is not a “socialist economy.” It is a privatized, capitalist economy with socialist redistribution programs. That’s an important distinction, because it allows us to see what works and what doesn’t work. Socialist programs are always inefficient, because they involve taking money from those who are most efficient and giving it to those who are less efficient through governmental compulsion – through force.

Now, to Scandinavia. 

While Bernie Sanders says “we should look to countries like Denmark, like Sweden and Norway, and learn from what they have accomplished for their working people,” he misses the point: All those countries are ardently pro-free trade and rely heavily on the free market. Denmark is actually ranked above the United States in the Heritage Foundation index of economic freedom. So are the Netherlands; Sweden is ranked essentially even with the United States. Even Norway is ranked only slightly behind the United States. 

The idea that Scandinavia is fully socialist really started to propagate after the Swedish ‘Third Way’ was promoted in the 1970’s with a very heavy welfare state. And then by the 198’s it was already in remission because it had failed so dramatically in the 70’s. 

Speaking at Harvard’s Kennedy School of Government in 2015, Denmark’s prime minister explained, “I know that some people in the US associate the Nordic model with some sort of socialism. Therefore I would like to make one thing clear: Denmark is far from a socialist planned economy. Denmark is a market economy.”

Prosperity is generated by innovation, by free trade, by people exchanging goods and services. And then socialists come in and pretend they’re the ones who created prosperity and redistribute all the goods. 

Most of the things socialists love about the Scandinavian countries developed in advance of their move to the far Left. Scandinavia does have high life expectancy and good health outcomes in areas such as infant mortality. But this predates the socialist programs: 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. 

The same is true with regard to income inequality. 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.

Scandinavia Is Not Paradise

Sweden gained riches only after embracing capitalism in the mid-19th century; from 1975 to 1993, the country dropped from fourth in the world wealth rankings to 14th. Swedish scholar Nima Sanandaji called the country’s embrace of socialism a “colossal failure.” Between 1870 and 1936, Sweden enjoyed the highest growth rate in the industrialized world. However, between 1936 and 2008, the growth rate was only 13th out of 28 industrialized nations. In 1960, for every 100 Swedes working in private industry, 38 worked for the government or were on welfare. By 1990, that number was 51. From 1970 to 1984, the government was the largest “job creator” in the country. In response, Sweden cut back its taxation scheme – for example, the estate tax (65 percent in the 1970s) was abolished in 2004. Sweden also killed its wealth tax. 

Denmark has a top tax bracket of 55.9 percent, which kicks in at 1.3 times the average income (that would be around $65,000 in the United States). Denmark has a 22 percent corporate tax rate. Denmark also has a national sales tax of 25 percent. Between 2007 and 2015, Denmark experienced a 5.5 percent decline in real GDP. That led to the election of a center-right coalition in Denmark.

Norway, the Left’s current favorite country (they’ve moved on from Denmark and Sweden), is propped up by massive oil assets that support its social welfare

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