ROSS GITTINS. Viking economics: How Nordic nations debunk a Scott Morrison mantra (SMH 9.10.2019)Oct 11, 2019
I’d like to tell you I’ve been away working hard on a study tour of the Nordic economies – or perhaps tracing the remnant economic impact of the Hanseatic League (look it up) – but the truth is we were too busy enjoying the sights around Scandinavia and the Baltic for me to spend much time reading the books and papers I’d taken along.
But since I always like telling people what I did on my holidays (oh, those fjords and waterfalls we saw while sailing up the coast of Norway to the Arctic Circle!), I’ve been looking up facts and figures in a forthcoming book comparing the main developed countries on many criteria, by my mate Professor Rod Tiffen and others at Sydney University (including me).
As the economy weakens and interest is at an all time low there are calls for the government to hand out more tax cuts.
But first, the travelogue. Prosperous countries have a lot in common but Scandinavia is different. I have seen the future and, while some might regard it as political correctness gone mad, it looked pretty good to me.
One aspect in which the Nordics (strictly speaking, Finland isn’t Scandinavian because it’s a republic rather than a monarchy and because the Finnish language bears no relation to Danish, Swedish or Norwegian) are way more advanced is the role of women.
All of them have had female prime ministers or presidents, they have loads of female politicians and we were always seeing women out at business functions with their male colleagues.
Governments spend much more on childcare and they’re big on men actually taking paid paternity leave. They have “family zones” in trains and we were struck by how many men we saw by themselves pushing prams.
They’re much more relaxed on sexual matters. These days, any new building in Sweden will have unisex toilets, with rows of cubicles and not a urinal to be seen. Neat way of sidestepping debates about which toilet transgender people should use.
The Nordics are well ahead of us on environmental matters. They’re bicycle crazy (a big health hazard for tourists who don’t know they’re standing in a bike lane) and drive small cars.
They’re obsessed with organic food and even hotel guests are expected to recycle their paper and plastic. One hotel we stayed at in Copenhagen was so concerned to save the planet its policy was to make up the rooms only every fourth day.
The Norwegians have made and, unlike the rest of us, saved their pile by selling oil to the world but you get the feeling it troubles their conscience. So, like the other Nordics, they have ambitious targets to move to renewables and, to that end, are making more use of carbon pricing than most other countries.
The truth is, I’ve long wanted to see Scandinavia for myself. It’s a part of the world that most politicians and economists prefer not to think about. Why not? Because its performance laughs at all they believe about how to run a successful economy.
Everyone in the English-speaking economies knows big government is the enemy of efficiency. The less governments do, the better things go. The lower we can get our taxes, the more we’ll grow.
Just ask Scott Morrison. As he loves to say, no one ever taxed their way to prosperity. What’s he doing to encourage jobs and growth? Cutting taxes, of course. That’s Economics 101 – so obvious it doesn’t need explaining.
Trouble is, the Nordics have some of the highest rates of government spending in the world and pay among the highest levels of taxation but have hugely successful economies.
The Danes pay 46 per cent of gross domestic product in total taxes, the Finns pay 44 per cent, the Swedes 43 per cent and the Norwegians 38 per cent (compared with our 28 per cent).
Measured by GDP per person, Norway’s standard of living is well ahead of America’s. Then come the Danes and the Swedes – at around the average for 18 developed democracies (as are we) – with the Finns just beating out the Brits and the French further down the list.
The Nordics are also good at managing their government budgets.
We all know unions are bad for jobs and growth and we’ve succeeded in getting our rate of union membership down to 17 per cent. Funny that, the Nordics still have the highest rates (up around two-thirds), so, do they have lots of strikes? No.
The four Nordics are right at the top when it comes to the smallest gap between rich and poor, with Canada, Australia, Britain and the United States right at the bottom.
Other indicators show that (provided you ignore the long snowy winters) the Nordics enjoy a high quality of life and not just a high material standard of living.
Note this, I’m not claiming that the Scandinavians are more economically successful because of their big government and high taxes. No, I’m saying that, contrary to the unshakable beliefs of many economists and all conservative politicians, there’s little connection between economic success and the size of government.
So how do the Scandis do it? I read this on the wall of an art museum in Aarhus, Denmark: “In a society we are mutually interdependent. Strengthening the spirit of community, we improve society for all of us as a group but we also provide each individual with better opportunities for realising his or her own potential.”
Ross Gittins is the Herald’s economics editor.