Yesterday I was rather surprised to find that I agreed with Charles Lane’s assessment in his Washington Post column. The Scandinavian countries do have better governance than we do here in the United states:
Undoubtedly, the Nordic nations, with their high incomes, low inequality, free politics and strong rule of law, represent success stories. What this has to do with socialism, though, is another question.
And the answer, according to a highly clarifying new report from analysts at JPMorgan Chase, is “not much.”
Drawing on data from the World Bank, the Organization of Economic Cooperation and Development and other reputable sources, the report shows that five nations — Sweden, Denmark, Finland, Norway and the Netherlands — protect property rights somewhat more aggressively than the United States, on average; exercise less control over private enterprise; permit greater concentration in the banking sector; and distribute a smaller share of their total income to workers.
“Copy the Nordic model if you like, but understand that it entails a lot of capitalism and pro-business policies, a lot of taxation on middle class spending and wages, minimal reliance on corporate taxation and plenty of co-pays and deductibles in its healthcare system,” the report notes.
Sanders and other left-leaning Democrats promise to pay for tuition-free college and Medicare-for-all with higher taxes on the top 1 percent of earners. Most Nordic countries, by contrast, have zero estate tax. They fund generous programs with the help of value-added taxes that heavily affect middle-class consumers.
In Sweden, for example, consumption, social security and payroll taxes total 27 percent of gross domestic product, as compared with 10.6 percent in the United States, according to the JPMorgan Chase report. The Nordic countries tried direct wealth taxes such as the one that figures prominently in the plans of Sen. Elizabeth Warren (D-Mass.); all but Norway abandoned them because of widespread implementation problems.
He underestimates U. S. taxation somewhat. In the United States in addition to the taxes listed above we have other state and local taxes adding to the tax burden. With all of that our total tax burden is still lower than that of Sweden but not that much lower. Depending on the state it’s probably between 15% and 20%. Our tax system is a bit more progressive than Sweden’s.
The Nordic countries’ use of co-pays and deductibles in health care may be especially eye-opening to anyone considering Sanders’s Medicare-for-all plan, which the presidential candidate pitches as an effort to bring the United States into line with European standards.
His plan offers an all-encompassing, government-funded zero-co-pay, zero-deductible suite of benefits, from dental checkups to major surgery — which no Nordic nation provides.
Let’s dig a little deeper. The last time the U. S. population was the size of Sweden’s today was 1820. A couple of generations ago, when Sweden adopted its cradle-to-grave welfare system not only had it been prosperous and growing for some time but its population was 90% ethnic Swedes. As economic growth has slowed, its welfare system has become less generous.
Sweden’s present population is about the same in number as that of the metro Chicago area. I suspect that Chicago would have better governance, too, if it were 70% ethnic Swedes and cultural Lutherans as Sweden is today. Instead we have different factions vying for larger government outlays for themselves and enormous corruption, something practically unknown in Sweden.
For the U. S. Congress to be as representative as Sweden’s parliament is of Swedes, we’d need to have 10,000 Congressio9nal representatives.
When the Swedes faced a financial crisis a few years back, it nationalized the banks, the banks’ shareholders lost their equity, they liquidated the banks’ remaining assets, reorganized, and moved on. During our financial crisis we preserved the banks and their stockholders and are continuing to prop them up. We’re pretty sure we’ll do it again in the next financial crisis and there will be a next financial crisis.
When the Swedes’ large auto company was in financial problems, they let it go. When our largest auto company was in trouble, we preserved it.
All of the countries with which Sweden has land borders have median incomes within 15% of that of Sweden’s. We have a long land border with a country in which the median household income is a quarter of what it is here.
In Sweden the typical physician earns about $80,000. That’s about double the income of the average Swedish household. It’s also about a third of what American physicians are paid which is about four times the typical American household income.
In short the differences between Sweden and the U. S. are substantial. As I have pointed out before countries are systems not cafeterias. Their cultures, politics, and economics are all interrelated. If your objective is for the United States to become more like Sweden, start by explaining to me your plan for making us 70% cultural Lutherans. That’s part of the system.