Scandinavian welfare state reform

Scandinavian welfare state reform August 26, 2016

As I reported from my recent sojourns in Scandinavia, the vaunted “welfare state” the Nordic states are known for is much more complex than we Americans realize, with the generous government benefits co-existing with extraordinarily free economies and a culture fixated on hard work and personal responsibility. (Might all of this be due to the Lutheran doctrine of vocation?)

Nima Sanandaji, the son of Swedish immigrants, has written a book on this subject, including a treatment of recent attempts to reform some of its dysfunctions, especially in the way it has sapped the initiative of immigrants who do not share the work-and-responsibility culture.  Sanandaji sums up his book in an essay excerpted and linked after the jump.

From Nima Sanandaji, Nordic Welfare State Failure Would Surprise American Progressives | National Review:

In my recently published book Debunking Utopia — Exposing the Myth of Nordic Socialism, I deal with the fact that Nordic countries have become the No. 1 argument to promote socialism in the U.S. and the rest of the world. Most of the arguments put forward by the Left regarding the benefits of large welfare states hinge on the Nordics. However, as I explain in my book, the social success of Nordic countries depends on a culture that puts uniquely strong emphasis on work and individual responsibility. Its social success predates the welfare state and is even stronger among Nordic Americans, who don’t live in a democratic-socialist welfare state, than in the Nordic countries themselves. Equally interesting is that even in the Nordic countries, overly generous welfare policies have caused serious issues. Detailed research shows that over time, people have adapted their norms to suit the system, becoming ever more likely to overuse its benefits. Those with immigrant backgrounds, in particular, are often trapped in welfare dependency (as was my family, growing up in Sweden).

U.S. fans of generous welfare policies often hold up Denmark as the prime model of a welfare state. They would be astonished to know what is actually happening in that country. The former government of Denmark was run by the Social Democrats, but even they realized that the culture of dependency on public handouts is eroding responsibility, draining tax money, and hampering economic development. Bjarne Corydon, Denmark’s Social Democratic finance minister at the time, made international headlines in 2013 by pointing to the need to reduce the generosity of transfer systems in Denmark. Corydon explained that it was no mere coincidence that the government was reforming taxes, welfare aid, and the system for early retirement: “The truth is that we are in full swing with a dramatically positive agenda, which is about strengthening and modernizing the welfare state, and the result of the change will be a much better society than the one we have today.” The leading Social Democrat went as far as to formulate a new vision for the future of the welfare state: “I believe in the competition state as the modern welfare state. If we are to ensure support for the welfare state, we must focus on the quality of public services rather than transfer payments.”

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