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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Border Security: Norway’s front line against illicit butter and contraband chicken

Busted: The driver of this Passat tried to convince Norwegian Customs that the 800 containers of yogurt shown here were for his personal consumption. They didn't believe him. (Click for source.)

Busted: The driver of this Passat tried to convince Norwegian Customs that the 800 containers of yogurt shown here were for his personal consumption. They didn’t believe him. (Click for source.)

On Monday, Norwegian Customs officers were on duty along the Swedish border when they pulled over a suspicious looking vehicle bearing Swedish licence plates.

Their suspicions were confirmed when they quickly discovered that the unfortunate Swede was indeed a smuggler — and that it wasn’t the first time he had been busted by Norwegian authorities.

The Customs officers ended up seizing no less than five hundred kilograms (or 1,100 lbs.) of the dastardly Swede’s goods before they could end up on the streets of Oslo, Bergen or wherever in Norway he was destined.

Five hundred kilograms of what? Marijuana? Cocaine? Heroin? No; none of these.

“Inside his getaway vehicle – a Volvo car,” a Norwegian news site reported later that same day,”was 500 kilogrammes of raw, frozen chicken.”

“The Norwegian customs team was not particularly surprised by the Swede’s haul, however, as he has been caught doing the exact same chicken run eight times before,” TheLocal.no noted in its report.

The incident came days after a Danish visitor was stopped by Customs with 1,000 kilograms (2,200 lbs.) of meat crammed into his car.

He claimed that he was on his way to attend a football game in Trondheim, and that he planned to take the undeclared meat back out of the country with him.

This might seem absurd in Canada, where chicken is one of the cheapest of meats. But in expensive Norway, where groceries are about 50 percent more expensive than in Canada and restaurant prices are more than double what we would pay, cheap food has become a lucrative black-market commodity.

One reason for the high price of Norwegian food: the protectionist policies that Norway maintains to shield its agricultural sector, despite years of complaints from other countries throughout Europe.

Under these policies, imported frozen chicken is subject to tariffs of up to $18 Cdn. per kilogram.

Contraband chicken has consequently been a problem in Norway for years. Back in 2006, Norwegian Customs — which does not screen 100 percent of travelers arriving from low-risk countries, but instead relies upon the honour system and spot checks to ensure compliance — seized a total of 25 tons of meat of various kinds, rising to 39 tons the following year.

In addition to tariff evasion, contraband meat is considered a concern because it is “virtually never refrigerated and conditions of smuggling cars are unhygienic,” a Norwegian news site reported in 2008.

“The cars are filled with meat on the floor and in the seats,” a customs official told the reporter.

It’s not just meat that traffickers stand to make money from in Norway. Norwegian Customs’s 2011 annual report tells the tale of two inept Swedes who tried to offload 250 kilograms of illicit butter to passersby in a small town north of Oslo for 500 kr. ($89 Cdn.) per kilogram.

“That they were attempting to sell the butter outside the Prix supermarket in Beistad indicates a real lack of market analysis,” the report sardonically noted. “Supermarket customers notified the police, who in turn notified Customs and Excise.”

“The two smugglers admitted having brought the butter in via Storlien the night before. If the sales had been better, the smugglers would have pocketed NOK 125,000 [$22,180 Cdn.] for the whole consignment.”

The “butter bust” happened as Norway’s heavily protected dairy industry suffered a bad year. The barriers intended to protect the industry left Norway without a backup source to make up for the domestic industry’s poor output, resulting in empty shelves during what both bloggers and the business press called the Norwegian Butter Crisis.

As the Christmas season approached — and demand for butter for Christmas baking soared — reports began to appear of people offering hundreds of dollars online to anyone who could hook them up with some butter.

Yogurt has become another heavily trafficked item in Norway’s expensive, protected dairy market. A 2013 Swedish news report explained how one man had been caught multiple times by Norwegian Customs trying to sneak a total of 720 kilograms (1,590 lbs.) of yogurt in from Sweden.

The same man had been previously stopped trying to smuggle hundreds of kilograms of cheese into Norway in the trunk of his car.

In another case last year, police were notified of an overloaded Volkswagen Passat arriving on a ferry from Sweden. The vehicle turned out to be loaded up with 800 containers of yogurt, along with large quantities of chicken and powdered milk.

Despite the driver’s pleas that he had purchased all 800 containers of yogurt for his personal consumption, his purchases — valued at more than $3,500 Cdn. — were confiscated and destroyed by customs officers.

The world’s best countries

Earlier today, The Economist declared Somalia the unfortunate winner of the British newsmagazine’s ultimate booby prize — The Worst Country on Earth. Previous winners Afghanistan and Turkmenistan would undoubtedly have been relieved to be rid of the title if they weren’t preoccupied with all their other problems.

At the same time, The Economist’s writers put out a challenge to readers to nominate the best country on Earth.

Naturally, I’d be inclined to nominate Canada — but I decided instead to open up a spreadsheet and do a quick calculation of where the 20 highest ranking nations in the latest United Nations Human Development Index stood in three other widely consulted indicators of good government: Transparency International’s Corruption Perceptions Index, the Switzerland-based Institute for Management Development’s World Competitiveness Scoreboard and Vision of Humanity’s Global Peace Index.

There are three things I should note here. First, I was forced to drop Iceland and Liechtenstein because of incomplete information. Second, in the Human Development Index rankings, I treated two countries with the same raw score as being tied, which is something the Wikipedia article does not do. Third, countries that did not finish in the Human Development Index Top 20 were excluded as not meeting a vital minimum standard for being considered as one of the world’s 10 best-run countries.

I calculated each country’s average ranking across the four indexes. Wherever there was a tie, I used each country’s worst score — its weakest link — as the tie-breaker. As the countries were ranked from best to worst, the closer a country’s average ranking came to ‘1’, the better.

Keep in mind that this is just for fun, and something I had no intention of working all night on — other people might have other methodologies and criticisms of this one.

Without any further ado, here is a countdown of the world’s ten best-run countries.

Luxembourg

#10 -- Luxembourg, average rank 11.5 (Copyright © Albert Nagy; from Panoramio)

The Netherlands

#9 -- The Netherlands; average rank 11.0 (Copyright © yo-rafael; from Panoramio)

New Zealand

#8 -- New Zealand; average rank 9.25 (Copyright © funtor; from Panoramio)

Australia

#7 -- Australia, average rank 9.0 (Copyright © Daniel Meyer; from Panoramio)

Switzerland

#6 -- Switzerland, average rank 9.0 (Copyright © wx; from Panoramio)

Finland

#5 -- Finland, average rank 9.0 (Copyright © picsonthemove; from Panoramio)

Canada

#4 -- Canada (yay!), average rank 7.0 (Copyright © Lukas Novak; from Panoramio)

Norway

#3 -- Norway, average rank 6.25 (Copyright © Matthew Walters; from Panoramio)

Denmark

#2 -- Denmark, average rank 5.75 (Copyright © KWO Tsoumenis; from Panoramio)

And now the grand prize winner as the world’s best-run country:

Sweden

#1 -- Sweden, average rank 5.5 (Copyright © Adam Salwanowicz; from Panoramio)

The others:

11. Japan (12.5)
12. Ireland (12.5)
13. Austria (12.75)
14. Belgium (18.75)
15. France (22.5)
16. Spain (28.25)
17. United States (29.00)
18. Italy (41.75)