Socialism is fashionable. We hear from progressives there is no reason why the U.S. could not ape countries such as Sweden, Norway, Finland, Denmark and the U.K., and build a bigger state where everyone would be happy, presumably while drinking cocoa and wearing heavy sweaters.
This is a misunderstanding of the U.K. and northern European economic experiences.
American progressives want to expand Social Security and position themselves as foes of any scheme from the right, as they see it, to privatize any of it. Yet, as Business Insider recently noted, Sweden was hailed as “one of the world’s leaders in the global shift to private pension systems” – in 2000.
As early as 1992, Sweden concluded that pension investments would be safer if they were at least partly in private hands, which is the same model that almost all U.S. states have followed with their public employee pension funds, like Colorado’s PERA. Britain’s experience has been similar, with workers realizing better returns from a substantially privatized pension system than Americans get from their payroll taxes.
Socialists like Bernie Sanders have demanded the U.S. adopt a $15 minimum wage and guarantee jobs or a basic income.
Sweden does not have a minimum wage. Most salaries are negotiated by unions. In Norway, average salaries exceed those of many other European states, but it, too, has no minimum wage; again, most salaries are negotiated by unions. Finland, same story – but with a twist. It recently conducted a two-year experiment with an unconditional basic income, and said it had no plans to continue or expand it (an assessment is due later this year).
Socialists and progressives also want to raise the U.S. corporate tax rate, from an effective 25.7 percent, incorporating state taxes, to 28 percent. The U.K. has lowered its corporate rate to 19 percent, and will go to 18 percent in 2020. Norway is at 24 percent, Sweden at 22 percent and Finland at 20 percent.
Also overlooked on the left in the U.S. is the experience with deregulation of markets. The conservative Heritage Foundation publishes its index of economic freedom, on which countries are rated by their lack of encumbering regulation. In 2018, Hong Kong was first, followed by the U.K. in eighth place, Sweden in 15th place, the U.S. in 18th place, and Norway and Finland in 23rd and 26th places, respectively.
U.S. House member Alexandria Ocasio-Cortez is the fresh face of quasi-socialist initiatives, often in tweets, although they echo what Sanders has been saying for years.
On “60 Minutes”, Anderson Cooper said, “When people hear the word socialism, they think Soviet Union, Cuba, Venezuela. Is that what you have in mind?”
Ocasio-Cortez laughed. “Of course not. What we have in mind and what my policies most closely resemble is what we see in the U.K., in Norway, in Finland, in Sweden.”
In 2016, Sanders said, “We should look to countries like Denmark, like Sweden and Norway, and learn from what they’ve accomplished.”
Said Danish Prime Minister Lars Lokke Rasmussen, “Some people in the U.S. associate the Nordic model with some sort of socialism... Denmark is far from a socialist planned economy. Denmark is a market economy.”
What these countries have are larger welfare states and stronger labor organizations pulled by the Clydesdales of capitalism. American socialists are right about one thing: It may be a model worth emulating.