Referring to American millennials’ purported fascination with socialism, someone recently cracked that perhaps they’re confusing the term with social media. But wickedly irreverent though that crack might be, it fails to do justice to millennials and their aspirations.
However, the question remains: What exactly do these socialism enthusiasts have in mind?
Unlike left-wingers in the 1930s, nobody seems to be hankering for an American version of Stalin’s Soviet Union. Nor is there an equivalent of the 1960s progressive ardour for perceived utopias like Mao’s China or Castro’s Cuba. Even Venezuela, the 21st century touchstone that virtuous folks were supposed to admire, has fallen out of fashion.
When pressed for examples of what socialism is, the Nordic countries, particularly Sweden, are often trotted out. So it’s useful to probe a bit.
Economist Deirdre Nansen McCloskey notes that “Sweden is pretty much as ‘capitalistic’ as is the United States.” In her reckoning, “If ‘socialism’ means government ownership of the means of production, which is the classic definition, Sweden never qualified.”
This differentiates Sweden from, say, the post-war United Kingdom. There, the Labour government adopted the technocratic orthodoxy of the day and nationalized what was described as the “commanding heights” of the economy – including coal, railways, gas and steel.
But Sweden never went that route. The central planning/government ownership model wasn’t – and isn’t – the Swedish way.
What the Nordics do have, however, is a robust social safety net. And it’s useful to look at how they pay for it.
JPMorgan Chase analyst Michael Cembalest has trawled through data from a number of sources, including the World Bank and the Organization for Economic Co-operation and Development (OECD). He has this to say:
“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 health-care system.”
For instance, take the kind of taxes that are often derided as undesirably regressive – sales taxes, social security taxes and payroll taxes. In Sweden, they account for a whopping 27 per cent of gross domestic product. The comparable American levy is 10.6 per cent.
Another Nordic country – Denmark – is particularly demanding of its taxpayers.
Drawing on his first-hand experience living there, journalist Michael Booth recounts how the combination of income tax, sales tax and various other special levies means that “the total direct and indirect burden on the Danish taxpayer ranges from 58 to 72 per cent.” If you’re a typical Dane, roughly two-thirds of your money will be requisitioned from you and ostensibly spent on your behalf.
Then there’s the matter of health-care co-pays and deductibles. As the Washington Post’s Charles Lane notes, 15 per cent of health expenditures in Sweden are out-of-pocket.
Mind you, he doesn’t intend that observation as a criticism. Far from it.
“Nordic countries are generous; but they are not stupid. They understand there is no such thing as ‘free’ health care, and that requiring patients to have at least some skin in the game, in the form of cost-sharing, helps contain costs.”
In effect, Nordic societies have made an internal bargain. Ordinary people are prepared to fork over large chunks of their own money in return for a comprehensive social safety net. They’re not expecting the good stuff to come to them without a personal cost.
That dimension is often absent from the North American discussion.
Instead, social spending ideas are floated on the explicit premise of having someone else pay. And the electorally prized middle class is to be protected at all costs.
So we get proposals for wealth taxes on assets over a particular threshold. And “the one per cent” or “the rich” will be asked to “pay just a little bit more.” But not the rest of us.
Taxation propensities aside, Nordic societies are different from the United States and Canada.
Ethnically, they’re more homogeneous and less diverse. And they’ve inculcated a degree of social conformity that would be completely alien to Americans.
For better or worse, this gives them a social cohesion that facilitates building the kind of societies they’ve become.
Still, though, it would be useful to have an informed discussion. If the Nordic countries are what the socialism enthusiasts have in mind, are they prepared to recommend the appropriate enabling policies?
Troy Media columnist Pat Murphy casts a history buff’s eye at the goings-on in our world. Never cynical – well, perhaps just a little bit.