The Basics;
Social Welfare in Europe and Scandinavia
“Hey, Curmudge, cramming a topic this big into a brief blog
posting requires us to be frugal with examples and also to assume that the
reader possesses some knowledge of the subject.”
“Right, Julie, and we’ll also assume that the reader will
Google any issue for which he finds our hyperlinks to be insufficient. And further, we’ll defer health care
under socialism until later because we discussed Health
Care Elsewhere two years ago.”
“I know the basics, Old Guy. In a socialist economy, there are no private
corporations. All factories and
companies belong to the state, and all workers are state employees. This system so restricts personal
freedom that a true socialist country will tend to have a totalitarian
government.”
“The effect on one’s freedom under capitalism vs. socialism
has been described by Milton Friedman (1). ‘In a capitalist society, one can openly advocate and work
for socialism. However in a
socialist society, one can’t advocate capitalism because all jobs are under the
direct control of political authorities.’ In that situation, one’s job would be in jeopardy. Here is a surprising story from
Friedman’s book: ‘Prior to the outbreak of World War II, Winston Churchill was
not permitted to talk over the radio to the British people to warn them of the
menace of Nazi Germany. The
British Broadcasting Company (BBC) was a government monopoly and his position
was too controversial.’ “
“Wow, Curmudge.
Even a little bit of socialism can be damaging. In our search for curmudgeonocracy,
let’s start with extreme examples.
The former Soviet Union had a communist government (socialism controlled
by a single party). One reason for
its failure was its vast size and diversity, i. e., it was a complex
system. As we discussed two
years ago, such a system cannot have a single point of control, e.g.,
Moscow, which is required by socialism.”
“China is another example that we don’t want to
emulate. It calls itself
communist, but it does have some private enterprise. Some individuals have become extremely rich, because crony
capitalism is rampant. That plus
limited political freedom would keep me on this side of the Pacific.”
“Then let’s look in the other direction, Old Guy, toward
Europe. Although most European
countries have tinkered with socialism, they now have significant private
ownership of manufacturing plus a government-run cradle-to-grave social welfare
system. In France and southern
Europe (Spain, Italy, Greece), industry is highly regulated (almost impossible
to fire a worker; 35-hour work week in France), and the countries spend money they
don’t have on welfare programs.
Efforts to balance an economy are met with strikes and riots. These can be interesting places to
visit, but I wouldn’t want to live there.”
“Right as usual, Julie. Here’s a sad quote
about France, dated January 7, 2014: ‘France’s economic sickness is
primarily due to its overbearing state, horrendously high tax levels, insane
regulations, absurd levels of inefficient public spending and generalized
hatred of commerce, capitalism, success and hard work.’ “
“But what about Scandinavia? I’ve heard that those countries—especially Sweden—are
hotbeds of successful socialism.”
“Well, the beds aren’t as hot as believed, and their
success—as well as their socialism—aren’t total according to the Swedish think
tank, Captus. The government owns only about a
quarter of the country’s productivity.
Sweden’s well-known industries, such as Volvo and Ikea, were founded
before socialism took over. More
recently, at the end of the 1990’s, ‘the median household income in Sweden was
the equivalent of $26,800, compared with $39,400 for U.S. households.’ And that was before taxes, which in
Sweden are among the highest in the world. The most onerous is their value-added tax (VAT), which is as
high as 22.5% on most foods.”
“There’s more, Curmudge. In Sweden workers can earn up to 570 paid days off per year
(not a typo), and unemployment benefits are so generous that ‘productive Swedes
often join the ranks of the unemployed as a form of early retirement.’ Historically, Sweden’s success was
based on its homogeneous population and strong work ethic. Now, ‘by college, many of the young
people have been programmed to join the unemployed and collect benefits.’ No wonder the government is having
trouble making ends meet.”
“Before we leave Sweden, Julie, let’s share the somewhat
different view of Paul Krugman,
a left-leaning economist who writes for the New York Times. He points out that in Denmark and
Sweden taxing and spending are handled locally and efficiently and with the
consent of the local populace.
‘The Nordic social democracies just happen to be places which do
everything in entirely the opposite manner to which most American liberals
argue things should be done.’ “
“Our last stop in Scandinavia is
Norway. ‘Most production in
Norway is done by privately owned businesses. These businesses are effectively regulated and taxed at much
higher levels (than in the U.S.) to pay for a vast array of cradle-to-grave
social services.’ As you learned,
Curmudge, when you visited Norway a few years ago, everything that isn’t free
is very expensive.”
“That’s for sure, Julie. When I looked at a small bottle of the local aquavit
(distilled spirits), the sticker shock drove me back to the beer counter (and
beer was also expensive). Overall,
Norway looked like a pretty nice place to live, assuming that one could live
without sunlight from November to January (60 days without sun in Tromsø).”
“But there’s a catch, isn’t there, Old Man? The other countries with
cradle-to-grave welfare can’t afford what they are promising to their
people. Norway is different
because…”
“…Because Norway has a continuous influx of cash from their
oil wells in the North Sea.
Instead of demonstrating the value of social welfare, Norway
demonstrates the value of geography.
And speaking of the North Sea, in our next posting we’ll cross it and
talk about socialism in Great Britain.
Then hopefully we’ll wrap up our consideration of socialism.”
Kaizen Curmudgeon
(1) Friedman, Milton Capitalism
and Freedom p.16-19 (1962, The
University of Chicago Press)
Link to posting from blog archives: Docs on a Treadmill –7/15/10
No comments:
Post a Comment