The attractive Scandinavian model

Unfortunately the article about blond Scandinavian beauties must wait for another time.

Today is devoted to the Scandinavian Welfare Model – a system of laws and principles in Sweden, Norway and Denmark that many argue has perfected a society’s balance between government intervention and the free market, resulting in the greatest amount of happiness.

It is also referred to as the Nordic Model, because Finland, who is not technically part of Scandinavia, follows a similar system.

The other member of the Nordic model, or family, is Iceland. However, as they have just fallen off an economic cliff due to their banking blunders, they can hardly be held up as a model for success.

The system certainly has its critics and flaws as any system does. But it is hard to ignore the overwhelming results that have made Finland and the Scandinavian countries the high-achievers of the modern world.

How it works

The government is responsible for all welfare, or social, services. This includes:

• Free universal health care (something the US seems utterly afraid of)
• Free education to the end of university and living assistance for students
• Ensuring a high minimum standard of living for all its citizens relating to housing, food and security

Healthcare and education especially are considered to be at the core of a successful society.

A priority is the protection and empowering of socially excluded and vulnerable groups, such as the elderly, disabled, poor and immigrants. As it is often vulnerable groups that get involved in crime, their crimes rates are also enviably low.

Another key objective is to maximise participation in the workforce. People are more highly skilled and better placed to work due to the free health and education and a minimum standard of housing.

Paid maternity leave is generous, and affordable childcare services are provided. This is so women are more freely able to return to work if they wish.

As a result, and despite critics’ claims that assistance is a disincentive to work, unemployment is among the lowest in the world.

All this is provided, or subsidised, by the government. Obviously all these services must be paid for and this is achieved through its unique tax structure.

In Denmark the top personal income tax rate is 63%. In Sweden it is 59% and in Norway it is 47%.

The corporate tax rates, however, are similar or lower than those in other countries to encourage business.

The theory that has succeeded in practice

The idea behind the high top personal tax rate is wealth redistribution to stop the rich getting richer and the poor getting poorer – the common curse of the free market.

The idea is that the wealthy can, and should, pay a much higher proportion of their income in tax to help grow the middle class. As most economists will agree, it is a healthy and wealthy middle class that makes a better society.

And many economists and psychologists believe that a wealthy person doesn’t get proportionately happier the more money they earn.

They argue it is the human instinct of greed and selfishness that drives the distaste for paying more tax, rather than a decrease in happiness.

The theory goes that by making the less fortunate wealthier, there are more people able to buy goods and services, increasing the opportunity for businesses to do well.

As a result, the system has sent Finland and the Scandinavian countries of Norway, Sweden and Denmark to the top of almost every ‘good’ list and the bottom of every ‘bad’ list.

These ‘good’ lists include the Human Development Index, GDP per capita, gender equality, life expectancy, foreign aid per capita, and renewable energy.

The ‘bad’ lists include unemployment, crime, poverty, infant mortality and corruption.

It all contributes to having among the highest standard of living in the world and is indicative of how the Scandinavians are perfecting their all-round perfection.

Politics aside

Over the years, the political parties in these countries, whether right or left wing, have all agreed to the fundamental principles of the model and contributed to its development.

Therefore, instead of being considered a socialist ideology, the Scandinavian welfare model is a national ideology on how the government can best provide for its citizens.

The parties’ differences lie in how best to tweak the model depending on their specific beliefs and the economic conditions at the time.

Each country has its own specific group of rules within the model, but they all act as supports for each other.

As they are culturally and linguistically linked (apart from Finland) they have ensured that one Scandinavian country can’t lure the best and brightest people across the border with lower taxes.

Essentially, if you want to live in a Scandinavian country with all its benefits, you have to play by the rules.

Criticisms and challenges

Some critics argue that such high taxation restricts individual freedom and the opportunity to become wealthy.

And although there are still many wealthy people in these countries, they would certainly have more wealth under the Anglo-Saxon (English, US) model.

Other criticisms include the belief that this model could not work in societies with large populations, and that all the benefits relating to sick leave and maternity leave make for a less productive workforce.

One of the challenges they face is how to compete in the globalised economy and labour market while maintaining extensive welfare services.

Nevertheless, the Scandinavian model continues to prosper and serve its people well. While at times they still face the same social and economic problems as other countries, the scale is always less severe.

And as other countries reflect on their mistakes over the past few years, they may finally start to acknowledge the successful methods of the quiet achievers to the north.

By Alexandra Jannetto