Scandinavian countries are not socialist?

Dr. Harold Pease

Contributing Columnist

Under the traditional definition of socialism that requires government ownership and distribution of the means of production, the Scandinavian countries, Denmark, Finland, Norway and Sweden are not socialist as Democratic presidential contenders insist.

All are free market economies. None have government mandated minimum wage laws. These are set by unions. The Fraser Institute which ranks countries of the world on economic freedom based upon limited government, property rights, and sound money value, not socialist attributes, ranked Denmark 14, Finland 20, Norway 26 and Sweden 19. The United States was 12. Socialist countries normally take the bottom of the 180 countries ranked (Economic Freedom of the World Index).

As to rankings with respect to the ease of doing business, all four countries ranked in the top 17 countries out of 191on the planet: (Denmark 3, Norway 7, Sweden 12 and Finland 17). The United States is ranked 8 (The World Bank, Doing Business Measuring Business Regulations). Socialist countries do not rank high on this index either.

Yes these countries, after becoming comparatively wealthy through the free market system at the end of the 19th Century and most of the 20th, did become welfare states in the 1970s. As Nima Sanandaji, the Swedish author of Debunking Utopia: Exposing the Myth of Nordic Socialism, wrote in 2015: “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. These and other indicators began to deteriorate after the expansion of the welfare state and the increase in taxes to fund it” (Jim Geraghty, “Ten Reasons We Can’t, and Shouldn’t, Be Nordic,” National Review, March 12, 2018).

By the definition above defining socialism, it may be possible to be a welfare country without the government ownership of the means of production — the Nordic model. But if they gather the wealth through confiscatory taxes and redistribute it through gift-giving to those who had not created the wealth, how can they escape the charge of socialism?

In the 70s the Swedish government “instituted a scheme to confiscate corporate profits and hand them over to labor union.” The socialist “golden years” of the next two decades “weren’t so golden for economic performance. Entrepreneurship plummeted. Job creation and wages sputtered” (Rich Lowry, “Sorry, Bernie — Scandinavia is no socialist paradise after all,” New York Post, Oct. 19, 2015). The Nordic model crushed startups and the growth of new companies. As of 2000, Johan Norberg wrote: “just one of the 50 biggest Swedish companies had been founded after 1970” (“Ten Reasons We Can’t, and Shouldn’t, Be Nordic”).

The Scandinavian story since the late 80s “has been a turn against socialism. Taxes have fallen and markets liberalized.” A backlash “against welfare dependency in Denmark” followed (“Sorry, Bernie — Scandinavia is no socialist paradise after all”).

In countries which already have wealth because of a free market philosophy, evidence of which is the existence of the middle class which spawns economic equality for all who choose to work for it. They can afford the free college, healthcare, welfare and etc. so long as immigration, also wanting everything for free, is very limited.

These four countries, because of the presence of the free market socialists seek to destroy, apparently could afford to expanded their “free” offerings. Because they did, and entitlements and free stuff is a favorite lure for reeling in the industrialized world, made rich through the capitalist philosophy, socialists world-wide look to the “Nordic Model” to emulate. But socialists ignore how they got their wealth. This did not happen by nationalizing industries (like General Motors) and subsidizing favored ones (like Solyndra) as we did under George W. Bush and Barack Obama. So the lessons of the Scandinavian countries is to keep the government out of managing the economy — thus away from socialism.

While Bernie Sanders and Elizabeth Warren are pushing America to embrace socialism these four countries are pulling back from the free stuff philosophy. In the 1990s Sweden adopted a universal school choice system “allowing families to use public funds, in the form of vouchers, to finance their child’s education at a private school, including schools run by the dreaded for-profit corporation” (Corey Iacono, “The Myth of Scandinavian Socialism,” Foundation for Economic Education, February 25, 2016).

Nima Sanandaji, observed: “In recent years, they’ve tempered the damage of their big-government policies by scaling back their welfare states and setting limits on their fiscal burdens. Their governments have adopted more work incentives, lowered taxes and allowed for more flexibility when hiring and firing workers. They’ve opened their public schools and health care to more competition, and Sweden partially privatized its pension system. They may not be free market quite yet, but they’re no socialist — or even liberal — utopia, either” (Veronique De Rugy, “Does Socialism Work for Sweden? That’s the Wrong Question,” Reason, Sept. 1, 2016).

The welfare state is not sustainable over time, in any country in any time. Inevitably it will attract immigrants who also want the free stuff without having contributed to the foundation that made this possible before implemented, as had the Scandinavians. It is impossible to have open borders and a welfare state without eventually impoverishing all. This is what all the leading democratic presidential contenders offer in the election of 2020.

Dr. Harold Pease is a syndicated columnist. He taught history and political science from this perspective for more than 30 years at Taft College. To read more, visit www.LibertyUnderFire.org.