What Americans Don’t Get About Nordic Countries

When U.S. politicians talk about Scandinavian-style social welfare, they fail to explain the most important aspect of such policies: selfishness.

Phelan M. Ebenhack / AP

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  MAR 16, 2016 POLITICS

Bernie Sanders is hanging on, still pushing his vision of a Nordic-like socialist utopia for America, and his supporters love him for it. Hillary Clinton, meanwhile, is chalking up victories by sounding more sensible. “We are not Denmark,” she said in the first Democratic debate, pointing instead to America’s strengths as a land of freedom for entrepreneurs and businesses. Commentators repeat endlessly the mantra that Sanders’s Nordic-style policies might sound nice, but they’d never work in the U.S. The upshot is that Sanders, and his supporters, are being treated a bit like children—good-hearted, but hopelessly naive. That’s probably how Nordic people seem to many Americans, too.

A Nordic person myself, I left my native Finland seven years ago and moved to the U.S. Although I’m now a U.S. citizen, I hear these kinds of comments from Americans all the time—at cocktail parties and at panel discussions, in town hall meetings and on the opinion pages. Nordic countries are the way they are, I’m told, because they are small, homogeneous “nanny states” where everyone looks alike, thinks alike, and belongs to a big extended family. This, in turn, makes Nordic citizens willing to sacrifice their own interests to help their neighbors. Americans don’t feel a similar kinship with other Americans, I’m told, and thus will never sacrifice their own interests for the common good. What this is mostly taken to mean is that Americans will never, ever agree to pay higher taxes to provide universal social services, as the Nordics do. Thus Bernie Sanders, and anyone else in the U.S. who brings up Nordic countries as an example for America, is living in la-la land.

But this vision of homogenous, altruistic Nordic lands is mostly a fantasy. The choices Nordic countries have made have little to do with altruism or kinship. Rather, Nordic people have made their decisions out of self-interest. Nordic nations offer their citizens—all of their citizens, but especially the middle class—high-quality services that save people a lot of money, time, and trouble. This is what Americans fail to understand: My taxes in Finland were used to pay for top-notch services for me.

The choices Nordic countries have made have more to do with self-interest than altruism or kinship.

When I lived in Finland, as a middle-class citizen I paid income tax at a rate not much higher than what I now pay in New York City. True, Nordic countries have somewhat higher taxes on consumption than America, and overall they collect more tax revenue than the U.S. currently does—partly from the wealthy. But, as an example, here are some of the things I personally got in return for my taxes: nearly a full year of paid parental leave for each child (plus a smaller monthly payment for an additional two years, were I or the father of my child to choose to stay at home with our child longer), affordable high-quality day care for my kids, one of the world’s best public K-12 education systems, free college, free graduate school, nearly free world-class health care delivered through a pretty decent universal network, and a full year of partially paid disability leave. As far as I was concerned, it was a great deal. And it was equally beneficial for others. From a Nordic perspective, nothing Bernie Sanders is proposing is the least bit crazy—pretty much all Nordic countries have had policies like these in place for years.

But wait, most Americans would say: Those policies work well because all Nordics share a sense of kinship and have fond feelings for each other. That might be nice if it were true, but it’s not, as anyone who has followed recent political debates about immigration or economic policy in Nordic countries understands. Nordics are not only just as selfish as everyone else on this earth but they can—and do—dislike many of their fellow citizens just as much as people with different political views dislike each other in other countries. As for homogeneity, Sweden already has a bigger share of foreign-born residents than the U.S. The reason Nordics stick with the system is because they can see that on the whole, they come out ahead—not just as a group, but as individuals.

Even so, surely these Nordic “socialist nanny states” pay the price in squashing entrepreneurship and business innovation? This is another refrain I repeatedly hear: Nordic countries have produced no Steve Jobs, no General Motors, and no medical breakthroughs. In short, American entrepreneurs, scientists, and other innovators have changed the world while Nordic countries fall short of taking risks and working hard. This is what Hillary Clinton implied when she responded to Sanders’s praise of the Nordic region in the first Democratic debate. “When I think about capitalism,” Clinton said, “I think about all the small businesses that were started because we have the opportunity and the freedom in our country for people to do that and to make a good living for themselves and their families… And I think what Senator Sanders is saying certainly makes sense in the terms of the inequality that we have. But we are not Denmark. I love Denmark. We are the United States of America.”

In reality, however, Nordic nations have produced what is, by any metric, an impressive output of successful entrepreneurs, international businesses, and brands. Sweden has Ikea, H&M, Spotify, and Volvo, to name a few. From Denmark have come Lego, Carlsberg, and one of the world’s largest pharmaceutical companies, Novo Nordisk. A Swede and a Dane co-founded the video calling service Skype. The core programming code of Linux—the leading operating system running on the world’s servers and supercomputers—was developed by a Finn. The Finnish company Nokia was the world’s largest mobile phone maker for more than a decade. And newer players like Finland’s Supercell and Rovio, creators of the ubiquitous video games Clash of Clans and Angry Birds, or Sweden’s Mojang, the publisher of the equally popular video game Minecraft, are changing the face of online gaming.

Nordic countries are well-ranked when it comes to helping facilitate starting a business. At the most basic level, what the Nordic approach does is reduce the risk of starting a company, since basic services such as education and health care are covered for regardless of the fledgling company’s fate. In addition, companies themselves are freed from the burdens of having to offer such services for their employees at the scale American companies do. And if the entrepreneur succeeds, they are rewarded by tax rates on capital gains that are lower than the rate on wages.

The reason Nordics stick with the system is because they can see that they come out ahead—not just as a group, but as individuals.

Nordic economies go through cycles like all countries, and they make mistakes like everyone else—Finland is in the midst of a recession right now, whereas the Swedish economy is doing phenomenally well. As in any region, some Nordic companies eventually crash and burn, and others never get off the ground. Some continue to dominate their market for decades. This is all as it should be in free-market, capitalist economies—which is what Nordic countries are. In fact, as capitalist economies the Nordic countries have proven that capitalism worksbetter when it’s accompanied by smart, universal social policies that are in everyone’s self-interest.

From my Nordic-American perspective, I’m actually surprised by how many Americans discount Bernie Sanders’s policy proposals  because at their root they’re no different from what the Nordic countries have already proven works. I understand why Sanders supporters believe in his vision, and I can assure them that they are not being the least bit naive.

The problem is the way Sanders has talked about it. The way he’s embraced the term socialist has reinforced the American misunderstanding that universal social policies always require sacrifice for the good of others, and that such policies are anathema to the entrepreneurial, individualistic American spirit. It’s actually the other way around. For people to support a Nordic-style approach is not an act of altruism but of self-promotion. It’s also the future.

In an age when more and more people are working as entrepreneurs or on short-term projects, and when global competition is requiring all citizens to be better prepared to handle economic turbulence, every nation needs to ensure that its people have the education, health care, and other support structures they need to take risks, start businesses, and build a better future for themselves and for their country. It’s simply a matter of keeping up with the times.

Americans are not wrong to abhor the specters of socialism and big government. In fact, as a proud Finn, I often like to remind my American friends that my countrymen in Finland fought two brutal wars against the Soviet Union to preserve Finland’s freedom and independence against socialism. No one wants to live in a society that doesn’t support individual liberty, entrepreneurship, and open markets. But the truth is that free-market capitalism and universal social policies go well together—this isn’t about big government, it’s about smart government. I suspect that despite Hillary Clinton’s efforts to distance herself from Sanders, she probably knows this. After all, Clinton is also endorsing policies that sound an awful lot like what the Nordics have done: paid family leave, better public schools, and affordable day care, health care and college for all.

The United States is its own country, and no one expects it to become a Nordic utopia. But Nordic countries aren’t utopias either. What they’ve done has little to do with culture, size, or homogeneity, and everything to do with figuring out how to flourish and compete in the 21st century. In the U.S., supporters of not only Bernie Sanders and Hillary Clinton, but also of Donald Trump, are worried about exactly the kinds of problems that universal social policies can help solve: worsening income inequality, shrinking opportunity, the decline of the middle class, and the survival of the ordinary family in the face of globalization. What America needs right now, desperately, isn’t to keep fighting the socialist bogeymen of the past, but to see the future—at least one presidential candidate should show them that.