The Nordic Model vs the rest of Europe
The word Scandinavian model is actually silly because it refers to the economies of the nordic countries. Unfortunately even well known news paper seem to confuse the term scandinavian with nordic. Thus a Swedish economist when asked about the Scandinavian model, said there was no such thing but there was a Nordic model.
Apart from clearing up that, I didn't actually get into what makes the nordic model different from the rest of europe. It was too much about the difference between the anglo-saxon and the nordic, which is not very helpful in explain what is different with the nordic model.
This is basically from what I have been able to interpret from different articles.
Labor market flexibility
Despite having the highest taxes in Europe, and biggest and most extensive government, nordic labor market is far more flexible than continental europe and southern europe. It is easier to both fire and hire workers in nordic countries than in Germany, France, Portugal etc.
Active state involvement in labor market
In southern and continental Europe the state might protect your job better than in Nordic countries but there is little push from government to actually get people into jobs. In Nordic countries on the other hand government is actively pushing people into employment. If you are unemployed you have to accept work offers, otherwise you don't get any benefits. Even if this means you have to move to another part of the country. If it is not possible to find work for you, there are usually programs for retraining or re-schooling. In essence, nordic countries don't let people just sit on their butt and wait for a job to come their way.
High unemployment benefits and rights
To accept the increased job insecurity in nordic countries, workers are given higher benefits when unemployed and government is more active in getting unemployed in work. Frequently government will create sort of bogus jobs just to keep people in some sort of work.
High level of participation
Nordic government try very actively have as large portion of the population as possible in work. This means assistance for disabled people, as well as generous welfare benefits aimed at women and families with small kids. This means that unlike other European countries most women in Nordic countries are working full time. I believe this is part of the deal with high taxation. In a child unfriendly country, women would have to stay home to look after the children. There will only be one salary, the husbands. To be able to support both economically taxes have to be low. But if government spends more money on childcare, this requires higher taxes, but since it allows both women and man to work, they will still be left with a larger income.
Living in the Netherlands which also has a welfare system, I am actually quite surprised by how common it is for women to stay home and look after their kids or work part time.
Solidarity and compromise
In this respect I think the Nordic model is quite similar to the dutch polder model. Society moves forward by including everybody in the discussion and making compromises for all parts. This is especially true for the labor market. In nordic countries most employees and employers are organized in two big organizations. These organizations sit down and discuss salaries and working conditions. When this has been agreed on both parts stick to the agreement. This creates stability and predictability in the labor market which is important for business planning.
In other countries like France and Italy for instance, confrontation seems to be the name of the game. Strikes and confrontations happen at random times. There is little predictability. And like Britain there is hardly any spirit of compromise between employees and employers. They seem rather to view each other as enemies. Because of this the organizations are not able to work out compromises to solve future problems together. Instead it seems to be about seeing how much you can get from the other part through force.
Can the nordic model be successfully applied elsewhere?
Many countries look to nordic countries as some sort of success formula. Unfortunately I don't think it would work in most places. Each country has its own unique culture and values. This makes each country more or less receptacle to different economic and political systems.
The model depends a lot on peoples willingness to compromise. Nordic culture is not very confrontational so this can work. However I doubt that could work in e.g. France or the US. One can just read about labor conflicts in the US. They are usually very confrontational. Frequently in the past it has also been rather violent. In France you have the farmers and transport workers that block the highways. I think each country has to play on its own strengths and weaknesses.
America can play on its individualism and desire to be different. Something it already does. France can play on its strong intellectual culture. Unlike the nordics it is admired in France to be highly intellectual and educated. But each strength breeds its own weakness that one should look out for. An elitist culture like the French can easily breed confrontation because the ones not in the elite feel marginalized.
Apart from clearing up that, I didn't actually get into what makes the nordic model different from the rest of europe. It was too much about the difference between the anglo-saxon and the nordic, which is not very helpful in explain what is different with the nordic model.
This is basically from what I have been able to interpret from different articles.
Labor market flexibility
Despite having the highest taxes in Europe, and biggest and most extensive government, nordic labor market is far more flexible than continental europe and southern europe. It is easier to both fire and hire workers in nordic countries than in Germany, France, Portugal etc.
Active state involvement in labor market
In southern and continental Europe the state might protect your job better than in Nordic countries but there is little push from government to actually get people into jobs. In Nordic countries on the other hand government is actively pushing people into employment. If you are unemployed you have to accept work offers, otherwise you don't get any benefits. Even if this means you have to move to another part of the country. If it is not possible to find work for you, there are usually programs for retraining or re-schooling. In essence, nordic countries don't let people just sit on their butt and wait for a job to come their way.
High unemployment benefits and rights
To accept the increased job insecurity in nordic countries, workers are given higher benefits when unemployed and government is more active in getting unemployed in work. Frequently government will create sort of bogus jobs just to keep people in some sort of work.
High level of participation
Nordic government try very actively have as large portion of the population as possible in work. This means assistance for disabled people, as well as generous welfare benefits aimed at women and families with small kids. This means that unlike other European countries most women in Nordic countries are working full time. I believe this is part of the deal with high taxation. In a child unfriendly country, women would have to stay home to look after the children. There will only be one salary, the husbands. To be able to support both economically taxes have to be low. But if government spends more money on childcare, this requires higher taxes, but since it allows both women and man to work, they will still be left with a larger income.
Living in the Netherlands which also has a welfare system, I am actually quite surprised by how common it is for women to stay home and look after their kids or work part time.
Solidarity and compromise
In this respect I think the Nordic model is quite similar to the dutch polder model. Society moves forward by including everybody in the discussion and making compromises for all parts. This is especially true for the labor market. In nordic countries most employees and employers are organized in two big organizations. These organizations sit down and discuss salaries and working conditions. When this has been agreed on both parts stick to the agreement. This creates stability and predictability in the labor market which is important for business planning.
In other countries like France and Italy for instance, confrontation seems to be the name of the game. Strikes and confrontations happen at random times. There is little predictability. And like Britain there is hardly any spirit of compromise between employees and employers. They seem rather to view each other as enemies. Because of this the organizations are not able to work out compromises to solve future problems together. Instead it seems to be about seeing how much you can get from the other part through force.
Can the nordic model be successfully applied elsewhere?
Many countries look to nordic countries as some sort of success formula. Unfortunately I don't think it would work in most places. Each country has its own unique culture and values. This makes each country more or less receptacle to different economic and political systems.
The model depends a lot on peoples willingness to compromise. Nordic culture is not very confrontational so this can work. However I doubt that could work in e.g. France or the US. One can just read about labor conflicts in the US. They are usually very confrontational. Frequently in the past it has also been rather violent. In France you have the farmers and transport workers that block the highways. I think each country has to play on its own strengths and weaknesses.
America can play on its individualism and desire to be different. Something it already does. France can play on its strong intellectual culture. Unlike the nordics it is admired in France to be highly intellectual and educated. But each strength breeds its own weakness that one should look out for. An elitist culture like the French can easily breed confrontation because the ones not in the elite feel marginalized.
posted by Adam Smith at 13:13
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