Should the U.S. become more socialist? It’s going to be a big issue in the 2020 presidential election. President Trump has vowed America will never adopt socialism. Presidential candidate Bernie Sanders has said democratic socialism is the future. And many look to the Nordic model in countries like Norway, Sweden, and Denmark as a possible way to adopt social services like universal healthcare. But can it work? And will it just mean high taxes?
Chris Chappell from America Uncovered asks Norwegian economist Eirik Løkke to explain the Nordic model and whether or not Norway really is a socialist country.
What Is the Nordic Model?
Is the Nordic model socialist?
Eirik Løkke: In my view, definitely not. Again, it kind of depends on how you define socialism, doesn’t it? Traditionally, we define socialism as a planned economy and let the government have all the means to organize the economy, like they did in the Soviet Union, the old communist states. In that sense, Norway, Sweden, and Denmark have never been socialist countries.
I think they mix it up with the fact that we have a fairly large wealth redistribution, which we arguably do. But socialism in terms of an economic system, they probably should look much more to the disaster in Venezuela, Cuba than to the Nordic countries. — Eirik Løkke
How would you define the Nordic model then if you’re not calling it socialism?
Eirik Løkke: I would say that it is a compromise between center right and center left in terms of that you have a very open economy. It’s based on free trade. It’s based on private enterprises, very productive, well-functioning capitalism with a high level of redistribution. And higher social spending is not equivalent with socialism.
How Did the Nordic Model Come About?
So Norway didn’t always have the Nordic model. How has implementing high taxation and social services affected the economy?
Eirik Løkke: If you look from the 19th century, 20th century, Norway actually had, in many ways, lower taxes than the U.S. After the Second World War, which probably resembled Democratic Socialism the most with the Social Democratic Party, the Labor Party totally dominating politics and government in Norway for almost 30 years, where you had a lot more planned economy, much more regulations. The tax rate and the government’s share of GDP rose steadily. But in the ’70s, you started to get stagnation all over Europe. You also found some instances of this in Norway … The center left started adopting a more competitive market policy.
Internationally, there weren’t that many people talking about the Nordic model before the 1980s. What happened in the ’80s was a lot of liberalization away from regulation. They were cutting a lot of red tape. Even though you didn’t cut down taxes, you did a lot of other things which made the Nordic countries more competitive to offer free markets: free trade, free markets, less regulation, introducing competition in different sectors. — Eirik Løkke
Bernie Sanders Is Too Left Even for Norway
Eirik Løkke: Bernie Sanders in many ways is living in the Nordic countries of the ’70s. And he’s not the only one. I remember Marco Rubio got a question about Bernie Sanders from Swedish journalists, and he just said, oh, you’re from Sweden. Well, Bernie Sanders should be prime minister in Sweden. But he would be far too left leaning to be prime minister in Norway and Sweden, in my view, because he’s stuck in the ’70s. There was a lot of reforms made from the late ’70s, early ’80s.
So backing off from socialism is what actually improved the economy to get it to where it is today?
Eirik Løkke: Yeah, in my view, and I think most economists would agree on that. The broad consensus, I would say, in Norway and the Nordic countries is that free trade, open economy, efficient competition, well-functioning capitalism, to say it in one sentence, is a very important key feature of the Nordic model. And on the other side, the center right and Conservatives have accepted a high level of social spending, to a large extent, in Norway. And that’s very important.
Can the Nordic Model Work in the U.S.?
Eirik Løkke: Well, one thing we haven’t mentioned, which is a key feature in the Nordic countries, is a high level of social trust. But there has been some research saying that Norwegians in the U.S., that is Americans who have Norwegian ancestors and Nordic ancestors, have just as high social trust as Norwegians, Swedes, and the Danish. But as you well know, America is a continent with so many different cultures, so many different ethnicities and political beliefs. So probably the Nordic model would function better in Massachusetts, in Minnesota, Wisconsin, better than in Alabama or Florida or Texas. The federal system in the U.S. makes it very difficult to implement.
Press play to listen to their whole conversation. Do you agree with Eirik Løkke‘s view of the Nordic model and socialism in America? Please comment below.