Nordic Socialism Is Realer Than You Think

This post was originally intended for the launch of the People’s Policy Project website. But as that is running behind schedule, I figure I will post it here.

When policy commentators talk about the Nordic economies, they tend to focus on their comprehensive welfare states. And for good reason. Denmark, Finland, Norway, and Sweden are home to some of the most generous welfare systems in the world. Each has an efficient single-payer health care system, free college, long parental leave, heavily subsidized child care, and many other social benefits too numerous to list here.

As marvelous as the Nordic welfare states are, the outsized attention they receive can sometimes lead commentators to the wrong conclusions about the peculiarities of Nordic economies. Jonathan Chait thinks the Nordic economies feature an “amped-up version of … neoliberalism” while an oddly large number of conservative and libertarian writers claim the Nordics are quasi-libertarian.

The common thread to these mistaken conclusions, aside from the desire to deny that there are leftist success stories in the world, is the apparent belief that the only extraordinary part of Nordic economies are the welfare states. Except for their generous social benefits, everything else is properly capitalist and even more capitalist than the United States. Or so the argument goes.

Labor Market
But this is not true. In addition to their large welfare states and high tax levels, Nordic economies are also home to large public sectors, strong job protections, and labor markets governed by centralized union contracts.

Around 1 in 3 workers in Denmark and Norway are employed by the government.

Protections against termination by employers are much stronger in the Nordic countries.

Centrally-bargained union contracts establish the work rules and pay scales for the vast majority of Nordic workers.

These labor market characteristics are hardly neoliberal or quasi-libertarian, at least if we stick to typical definitions of those terms. The neoliberal tendency, as exemplified most recently by France’s Emmanuel Macron, is to cut public sector jobs, reduce job protections, and push for local rather than centralized labor agreements. For the US labor market to become more like the Nordics, it would have to move in the opposite direction on all of those fronts.

State Ownership
Even more interesting than Nordic labor market institutions is Nordic state ownership. Collective ownership over capital is the hallmark of that old-school socialism that is supposed to have been entirely discredited. And yet, such public ownership figures prominently in present-day Norway and Finland and has had a role in the other two Nordic countries as well, especially in Sweden where the government embarked upon a now-defunct plan to socialize the whole of Swedish industry into wage-earner funds just a few decades ago.

The governments of Norway and Finland own financial assets equal to 330 percent and 130 percent of each country’s respective GDP. In the US, the same figure is just 26 percent.

Much of this money is tied up in diversified wealth funds, which some would object to as not counting as real state ownership. I disagree with the claim that wealth funds are not really state ownership, but the observation that Nordic countries feature high levels of state ownership does not turn upon this quibble.

State-owned enterprises (SOEs), defined as commercial enterprises in which the state has a controlling stake or large minority stake, are also far more prevalent in the Nordic countries. In 2012, the value of Norwegian SOEs was equal to 87.9 percent of the country’s GDP. For Finland, that figure was 52.3 percent. In the US, it was not even 1 percent.

Some of these SOEs are businesses often run by states: a postal service, a public broadcasting channel, an Alcohol retail monopoly. But others are just normal businesses typically associated with the private sector.

In Finland, where I know the situation the best, there are 64 state-owned enterprises, including one called Solidium that operates as a holding company for the government’s minority stake in 13 of the companies.

The Finnish state-owned enterprises include an airliner called Finnair; a wine and spirits maker called Altia; a marketing communications company called Nordic Morning; a large construction and engineering company called VR; and an $8.8 billion oil company called Neste.

In Norway, the state manages direct ownership of 70 companies. The businesses include the real estate company Entra; the country’s largest financial services group DNB; the 30,000-employee mobile telecommunications company Telenor; and the famous state-owned oil company Statoil.

Finland and Norway have their special reasons for the level of state ownership they engage in. Finnish government publications discuss the country’s late development and status as a peripheral country when justifying their relatively heavy public involvement in industry. That is, Finland does not want to expose the entirety of its marginal, late-developing, open economy to the potential ravages of international capital flows.

In Norway, the discovery of oil in the North Sea was the impetus for the creation of its enormous social wealth fund. The fund currently owns around $950 billion of assets throughout the world, including more than $325 billion of assets inside the US. In a video on the Norwegian central bank’s website, the fund is described as follows: “It is the people’s money, owned by everyone, divided equally and for generations to come.”

No one would argue that the Nordic countries are full-blown socialist countries, whatever that might mean. But it is also folly to pretend the only thing they have proven is that high taxes and large welfare states can work. Even on the narrow understanding of socialism as public ownership of enterprise, the Nordic countries are far more socialistic than most commentators seem to realize. American socialists who draw inspiration from their successes do so rightly.

Some Opponents of UBI Necessarily Believe the Racial Wealth Gap Is Good

A universal basic income (UBI) is a program where everyone receives an equal cash benefit each month in addition to the income they receive from the market. So, for example, you could imagine a situation where the government directly deposited $1,000 each month into each person’s bank account. That would be a UBI.

Some argue that the UBI is bad because it would discourage work. The argument is that getting income without having to work for it would make people work less or, in some cases, not work at all. This non-work would then cause all sorts of problems for the individuals, their families, and the society more generally.

But there is another way to get income without having to work for it. It is called capital income and people receive it because they own wealth (real estate, bonds, and stocks). Owners of wealth receive rents from the real estate they own, interest from the bonds they own, and dividends from the stock they own. The amount of money received from these non-work income sources was $4.8 trillion in 2015.

If getting income without having to work for it is bad, and wealth allows you to get income without having to work for it, then that means wealth is also bad. Or, more precisely, it means that wealth has a negative consequence, which is that it delivers its owners non-work income, which then causes all sorts of problems for the individuals, their families, and the society more generally.

If wealth is bad in this particular way, then that means having less wealth is better than having more wealth. This is because having less wealth means you receive less non-work income and are therefore less vulnerable to the toxic effects of receiving non-work income.

The racial wealth gap refers to a situation in the United States where Blacks and Latinos have far less wealth than Whites. Normally this is seen as bad for Blacks and Latinos. But if the argument above is correct, then that means the racial wealth gap is actually good for Blacks and Latinos because it ensures that they receive far less non-work income.

To summarize:

  1. UBI is bad because getting income without having to work for it reduces work activity.
  2. Ownership of wealth allows you to get income without having to work for it.
  3. It follows from (1) and (2) that wealth ownership is bad and owning less wealth is better than owning more wealth.
  4. The racial wealth gap ensures that Blacks and Latinos own less wealth than Whites.
  5. It follows from (3) and (4) that the racial wealth gap is good for Blacks and Latinos.

To be clear, I do not believe the conclusion of this argument. But this is because I reject the premise that getting income without having to work for it is bad. My point is only to say that if you believe Premise One above, then you necessarily believe the racial wealth gap is good. If you do not believe the racial wealth gap is good, then you should not believe Premise One.

How many people will Obamacare and AHCA kill?

Five separate people were bylined on a Center for American Progress post about how many people AHCA will kill. The post is quite long, but all the authors really do is take the CBO estimates of how many people will lose coverage under AHCA and then divide that number by 830. They do this because there is a study that shows that 1 person dies unnecessarily for every 830 people who lack health insurance.

I have duplicated CAP’s efforts here, but rather than focus only on the AHCA, I have also included Obamacare and single payer into the mix. One other difference is that I track cumulative deaths between 2017 to 2026 rather than reporting an annual figure for each year.

Under AHCA, nearly 540,000 people will die in the next decade because of lack of health insurance coverage. For Obamacare, it is a more respectable 320,000 deaths.

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