Contented Norway, Stressed-Out America: A tale of two countries, and what their governments spend the people’s money on

Nearly five years ago, The Economist published a front cover featuring a scruffy-looking Viking, accompanied by the words: “The Next Supermodel: Why the world should look at the Nordic countries.” While the world’s bigger countries and current and former superpowers struggled with their problems, the Nordic countries — Iceland, Norway, Sweden, Denmark and Finland — seemed to have their act together, winning praise over and over again for their healthy economies, relatively low crime rates and high standards of living.

Over the intervening five years, not much has changed. The Nordics continue to be strong performers in all the areas that matter. When this blog looked at countries’ performance across four indices last May — the Human Development Index, the Corruption Perceptions Index, the World Competitiveness Scoreboard and the Global Peace Index — the Nordics constituted at least four of the world’s 10 best countries, with Denmark taking the number-one spot. (Canada ranked either fourth or sixth, depending on whether you ranked each country by its “weakest link” or by its average score.)

Now there’s more good news for the Nordics. John Helliwell, Richard Layard and Jeffrey Sachs of the New York-based Sustainable Development Solutions Network have released their 2017 World Happiness Report, and concluded that Norway, Denmark, Iceland and Switzerland were the world’s happiest societies in the 2014-16 period.* They credit Norway’s high ranking on “mutual trust, shared purpose, generosity and good governance”, as well as good management of its oil reserves, and using the proceeds from it to prepare for a better future instead of spending it all as it comes in.

“Mutual trust, shared purpose, generosity and good governance” are not words, however, that would describe 2017 in our neighbour to the south. The United States has had a memorable 2017 for all the wrong reasons — and it showed in its rank. As noted:

The USA is a story of reduced happiness. In 2007 the USA ranked 3rd among the OECD countries; in 2016 it came 19th [Note: this might be a typo — the report’s data tables show the U.S. in 14th place; it was the U.K. that was in 19th place]. The reasons are declining social support and increased corruption . . . and it is these same factors that explain why the Nordic countries do so much better.

The authors particularly singled out the U.S. government’s priorities for criticism. As they bluntly note on page 180:

America’s crisis is, in short, a social crisis, not an economic crisis . . . This American social crisis is widely noted, but it has not translated into public policy. Almost all of the policy discourse in Washington DC centers on naïve attempts to raise the economic growth rate, as if a higher growth rate would somehow heal the deepening divisions and angst in American society. This kind of growth-only agenda is doubly wrong-headed. First, most of the pseudo-elixirs for growth — especially the Republican Party’s beloved nostrum of endless tax cuts and voodoo economics — will only exacerbate America’s social inequalities and feed the distrust that is already tearing society apart. Second, a forthright attack on the real sources of social crisis would have a much larger and more rapid beneficial effect on U.S. happiness.

One could only imagine the authors’ alarm that, having just passed controversial tax reform legislation, there is now talk of targeting America’s already modest social safety net for deep cuts. As the New York Times reported on Dec. 2:

As the tax cut legislation passed by the Senate early Saturday hurtles toward final approval, Republicans are preparing to use the swelling deficits made worse by the package as a rationale to pursue their long-held vision: undoing the entitlements of the New Deal and Great Society, leaving government leaner and the safety net skimpier for millions of Americans.

Speaker Paul D. Ryan and other Republicans are beginning to express their big dreams publicly, vowing that next year they will move on to changes in Medicare and Social Security. President Trump told a Missouri rally last week, “We’re going to go into welfare reform.”

In fact, the core items of the social safety net already constitute a relatively small share of total U.S. local, state and federal government spending. Organization for Economic Cooperation and Development (OECD) data show that, in 2015, only 21 percent of total government spending was dedicated to what the OECD classifies as “social protection”; that is, sickness, disability, old age, housing and unemployment support.

This already puts the U.S. toward the bottom of OECD nations in terms of the percentage of local, regional and national government spending on social protection. Indeed, given the low priority their own governments give to their well-being, not to mention other abuses like drawing local electoral boundaries to guarantee one-party rule, why shouldn’t Americans feel bitterly resentful toward their governments?

In Norway, social protection was a significant 40 percent of all government spending in 2015 despite an unemployment rate of just four percent that year and 75 percent of all Norwegians aged 15-64 having a job — one of the highest rates in the world.

That spending paid off, according to a 2017 OECD report on Norway. Not only has it helped provide the sense of well-being that the lack of prompted many Americans to vote for Donald Trump in 2016, but it is something the OECD recommended that Norway leave intact (emphasis mine):

Fiscal reform should not aim to significantly reduce the scope of Norway’s comprehensive welfare programmes and public services. These are integral to its socio-economic model, playing a key role in making economic growth inclusive and keeping well-being high. Given the fiscal rule, this means that taxation will remain high compared with many countries. Consequently, a pro-growth tax mix, strong labour skills and easier regulations for doing business are needed for the business sector to thrive in global markets.

As we end 2017, revolution is in the air as like no other time in the past 50 years, if not the past 100 years. Some look to the hard-left for solutions to the high level of anxiety, some to the hard-right. What the world could really use, though, is a bit of Nordic sense by protecting not jobs, not industries, but people.

 

* – Canada ranked seventh in the World Happiness Report, just behind Finland and the Netherlands. New Zealand, Australia and Sweden rounded out the top 10.

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About theviewfromseven
A lone wolf and a bit of a contrarian who sometimes has something to share.

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