Saturday, July 29, 2017

Scandinavia is 'a far cry' from actual socialism

Scandinavia is no socialist Valhalla - CapX - Madeleine Grant, Intitute of Economic Affairs:

June 28, 2017 - "Scandinavia occupies a special place in the minds of socialists around the world.... Over in America, all manner of people, from presidential candidates to Nobel-prize winning economists have argued that policy makers should take Scandinavia as a model for reducing inequality and promoting more balanced growth. But is it really the socialist Valhalla it’s feted to be?

"Addressing Harvard University last year, Danish PM Lars Løkke Rasmussen tried to set the record straight. 'I know that some people associate the Nordic model with some sort of socialism’, he said. 'I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.'

"Indeed, viewing Scandinavian countries as socialist – or even left-wing – overlooks an essential truth about how their economies are organised. While these nations do have high taxes and generous welfare, in many respects, their markets are unusually free, adopting exactly the kind of policies that the British Left, with its rigid adherence to central planning and intervention, spends its time fighting against....

"Neither Sweden, Norway nor Denmark actually has a minimum wage. Instead, wages are decided by mutual agreement between unions and employers, which usually vary according to the industry or occupation in question. In this respect, Scandinavian labour markets are far more flexible and decentralised than Britain’s....

"Corporate tax rates in Scandinavia compare favourably with those of overtly capitalist countries. Sweden and Denmark’s are among the lowest in the EU 15, while Finland’s, at 20 per cent, is on a par with Britain. Norway has the highest rate of the five countries, but, at 27 per cent, is still significantly lower than America’s (nearly 40 per cent).

"In a recent count, about 20 per cent of public hospital care and about 30 per cent of public primary care [in Sweden] was provided by private companies – compared with around 6 per cent in Britain.... Sweden’s education system – inspired by the ideas of that well-known socialist thinker Milton Friedman – allows parents to top-up the cost of private schooling with government-funded vouchers, and has led to a surge of choice and competition in schools.

"Norway, another nation often held up as an example of a “better way” by the British Left, is also something of a red herring.... Norway’s vast oil reserves ... allowed it to build up the largest sovereign wealth fund in the world (predicted to reach $1 trillion by 2020). Thus is Norwegian 'socialism', ironically, funded by investment in capitalist projects around the world.... Last year, for the first time ever, Norway’s government took more money from the fund than the fund itself derives from oil revenues....

"Scandinavia’s prosperity has only ever been threatened when its nations have embraced genuinely socialist policies. In the 1970s, the size of the Swedish state began to expand in earnest under successive socialist governments. Punitive taxation, including effective marginal rates that topped 100 per cent in some cases, prompted a mass exodus of wealthy citizens and entrepreneurs.... By 1993, when public spending had reached 67 per cent of GDP, Sweden had dropped from being the 4th richest nation in the world in the 1970s, to the 14th. Both Swedish and Danish citizens have since begun to reject 'tax and spend' at the ballot box and recent years have seen a growth in support for centre-right parties, promising fiscal restraint....

"The success of the Nordic Model hinges on its embrace of free-market capitalism, competition and defence of private property – a far cry from the centralised planning system espoused by the socialist Left."

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