- A culturally homogenous population.
- Consistent baseline of productivity vis-a-vis resources and assets that NEVER goes down, unless the population goes down. IOW, no scarcity... of anything. The success of the Norwegians — the Beverly Hillbillies of Europe — can’t be imitated. Previously a peasant nation, the country now has more wealth than it can spend: Colossal offshore oil deposits spawned a sovereign wealth fund that pays for everything.
- A demographic of "the rich" (however your society defines that) that is willing to give up a significant (80% or more) of their income & wealth to the State for redistribution.
- A democratically elected government that can equitably distribute the surplus of "the rich", on a consistent basis.
- No innovation allowed - this wastes resources and assets best used for redistribution. This is what makes the so-called "Nordic Model" attractive. \Homogenous population - check. The cultural phenomenon of "Lagom" (pronounced [ˈlɑ̀ːɡɔm]) is a Swedish word with no direct English equivalent, meaning "just the right amount".The Lexin Swedish-English dictionary defines lagom as "enough, sufficient, adequate, just right". - check.
- Many ideas and innovations are international public goods (copyrighted, but not trademarked-again, a cultural tradition). This should make the Nordic model more sustainable over time.
- Societies differ a great deal in their innate level of cooperativeness. This is a key to making the Nordic model work. I wouldn’t try the Nordic Model in France, much less in the United States.
- The Nordic countries generally take a light hand in regulation, capital income taxation, and many of the public welfare programs pay people to work and not to sit at home on their behinds. Furthermore given the extensive subsidies to child care, which encourage female labor force participation, the high marginal tax rates do not discourage labor supply as we might at first think.
- Government policy is often most usefully thought of as socially endogenous. Higher levels of cooperation, and lower levels of corruption, mean that people will choose more government. The government they get will work better than government works elsewhere. The point is not that all choices are efficient, but rather there is a selection bias in the data we observe on government size and performance. Nordic welfare states are large, in part, because they work relatively well.
The long-term consequences of a slightly lower growth rate are in any case troubling, no matter how well a society works at any moment in time. Many prosperous nations in Western Europe have large welfare states. This leads unsophisticated observers to sometimes assume that high tax rates and high levels of government spending do not hinder growth. Indeed, they sometimes even conclude that bigger government somehow facilitates growth. After all, government in Sweden is larger than it is in many nations that have lower living standards.
The Nordic countries maintain their dynamism despite high taxation in several ways. Most important, they spend lavishly on research and development and higher education. All of them, but especially Sweden and Finland, have taken to the sweeping revolution in information and communications technology and leveraged it to gain global competitiveness. Sweden now spends nearly 4 percent of GDP on R&D, the highest ratio in the world today. On average, the Nordic nations spend 3 percent of GDP on R&D, compared with around 2 percent in the English-speaking nations.
The Nordic states have also worked to keep social expenditures compatible with an open, competitive, market-based economic system. Tax rates on capital are relatively low. Labor market policies pay low-skilled and otherwise difficult-to-employ individuals to work in the service sector, in key quality-of-life areas such as child care, health, and support for the elderly and disabled.
This analysis puts the cart before the horse. It is possible for a nation to become rich and then adopt a welfare state. There is even a relationship studied in academic literature, known as Wagner’s Law, which revolves around the tendency for policy makers to expand the size of government once nations obtain a certain degree of prosperity, but for poor nations that adopt the welfare state, however, are unlikely to ever become rich. This sequence is important. Nordic nations became rich, and then government expanded. This expansion of government has slowed growth, but slow growth for a rich nation is much less of a burden than slow growth in a poor nation.
Excessive government diminishes growth with punitive taxation and sucking up capital that should go to the private sector for business development. And although the Nordic countries’ relatively free markets mitigate the damage caused by high taxes and high spending, the burden of government social welfare systems, is hindering economic performance. The Nordic Model is preferable to the Continental or Corporatist Model of nations such as France and Germany, which combines welfare state policies and corporate interventionism. But the Nordic Model does not look very impressive when compared to the United States.
While this system may sound ideal to some, the Nordic model of social capitalism is difficult to export outside of the Nordic countries. It is difficult to export precisely because it is based on a strongly-held set of values by a relatively small, homogenous population. For those fond of the Nordic model, it is unfortunate that the world is a much messier place, comprised of a multitude of cultures that hold very different values, whether based on religion, geography, economics, or history, to name but a few influences. And, when you look at heterogeneous countries like the U.S.A., or even Canada, China or India with multiple cultural influences, the Nordic model becomes even more unsustainable
Footnote- An aging population puts a serious a strain on the social services available and creates a shortage of working-age contributors to the tax base without immigration. Meanwhile, immigration is eroding the homogenous values of these countries while raising their social costs, and suddenly you have the local population reexamining their attitudes to that Nordic model of social capitalism.
Further footnote -
The Scandinavian countries have survived Socialism because they are completely homogeneous in an ethnic and cultural sense: remember Lagom! Over 90% of the populations of each Scandinavian nation are made up of people who descend from their home-nation. In other words, they are mostly all on the same page. This is not to mention the fact that they had been some of the wealthiest and healthiest nations in the world for decades before they began implementing Socialist policies around 1970. In terms of global ranking, they were actually better off in most areas before they became more Socialist.
While I understand that Bernie Sanders and most 18-24 year olds are in love with the Aryan culture of Scandinavia, America is a diverse republic founded in rugged individualism. There are nearly 40 different ethnic groups represented by over a million people in America, not to mention the obvious cultural diversity that occurs in each region from sea to shining sea. Scandinavia is made up of about 26 million people in total, and they are essentially clones.
Speaking of Scandinavia in a discussion about America is an apples to oranges logical fallacy.
Lastly, the foolish argument about the variations between Socialism and Communism by citing all of our "social programs" - Theocracies, monarchies, oligarchies, democracies, Capitalist societies, and most others have defense programs (volunteer in free societies, obligatory in Socialist societies), parks, schools, fire departments (which are local in America, not federal), and whatever else. These are not products of Socialism. They are products of society itself in some form or another. All forms of government have some kind of overlap. Socialism is not at all special, new. or "progressive". It's just one of many collectivist "Utopias" that guarantees a bigger government which is just as corruptible as any other government.
