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The Myth of the Scandinavian Model
From the desk of Martin De Vlieghere on Fri, 2005-11-25 19:27
This article was written by Martin De Vlieghere, Paul Vreymans and Willy De Wit of the Flemish think tank Work for All.
Americas social model is flawed, but so is Frances, the Parisian newspaper Le Monde recently wrote. According to Le Monde Europe should adopt the Scandinavian model, which is said to combine the economic efficiency of the Anglo-Saxon social model with the welfare state benefits of the continental European ones. On the eve of the EUs Hampton Court Summit (October 27), one could even read that Britain might be forced to discuss the advantages of Scandinavian models, which rely on more social security.
The praise for the Nordic model comes from Bruegel, a new Brussels-based think tank, whose aim is to contribute to the quality of economic policymaking in Europe. The think tank is a Franco-German government initiative and is heavily funded by EU governments and corporations. In October Bruegel published a study Globalisation and the Reform of European Social Models [pdf] propagating the Nordic model.
A paper [pdf] from the economics department of Ghent University does the same. This paper, Fiscal Policy Employment and Growth: Why is the Euro Area Lagging Behind, was also subsidized by the government. In the selection of data comparing the performance of EU economies, the authors arbitrarily eliminated Ireland, Spain and Portugal (three of the four best performing EU economies) from their research and added oil-producing non-EU member Norway (which has a GDP more than 20% of which is based on income from oil). It is hardly imaginable that professors of one of Belgiums major universities would not be aware of how this arbitrary selection must distort the results. Hence one must read their text as an ideological pamphlet rather than a scientific study.
However, despite Bruegel, distorted academic studies and the European medias praise, the efficiency of the major Scandinavian economies is a myth. The Swedish and Finnish welfare states have been going through a long period of decline. In the early 1990s they were virtually bankrupt. Between 1990 and 1995 unemployment increased five-fold. The Scandinavian countries have not been able to recover.
The implosion of the welfare state
In 1970, Swedens level of prosperity was one quarter above Belgiums. By 2003 Sweden had fallen to 14th place from 5th in the prosperity index, two places behind Belgium. According to OECD figures, Denmark was the 3rd most prosperous economy in the world in 1970, immediately behind Switzerland and the United States. In 2003, Denmark was 7th. Finland did badly as well. From 1989 to 2003, while Ireland rose from 21st to 4th place, Finland fell from 9th to 15th place...Lots more, it's pretty sad actually.
