Written by Nick Licata
Credit: WORLD BOOK map
And does it matter if it is not socialist, but would benefit the average American?
Washington Post Columnist Fareed Zakaria in an op-ed accused Bernie Sanders’s repeated exultation of the Northern European countries of Denmark, Sweden and Norway as examples of the kind of economic system he wants to bring to the United States as being an unrealistic fantasy; Sanders either ignores or misunderstands their policies.
When it comes to supporting working people, Zakaria notes that none of these countries has a minimum wage. In addition, they have adopted a “flexicurity” policy that combines flexible labor markets that allow employers to hire and fire workers easily, without excessive regulation or litigation. Although that is balanced with favorable benefits.
Zakaria points out that while Sanders admires these countries’ economic policies, their tax practices do not match his intent that “Billionaires should not exist.” Sweden and Norway both have more billionaires per capita than the United States. Remarkably either they do not have inheritance taxes (Sweden and Norway) or are at 15 percent (Denmark). Meanwhile, the US level is at 40 percent.
Worse yet, Zakaria says that taxes in the Scandinavian countries fall disproportionately on the poor, middle and upper-middle class. For example, Denmark’s highest top income tax rate is 55.9% which is levied on anyone making 1.3 times the average national income, using that same formula in the US anyone making above $65,000 would be taxed at that level. Meanwhile, these states have a national sales tax, referred to as a value-added tax, of 25%, while sales taxes in the US average only 6.5%.
These facts could make for killer TV attack ads by Republicans against Sanders and democratic candidates from conservative areas if the message is to make the US like the Scandinavian countries without mentioning their benefits. John de Graaf, co-author of the best-selling book Affluenza: The All-Consuming Epidemic, says that while he considers Zakaria’s description fairly accurate in many ways, it is deceptive in others.
For instance, these countries do have billionaires, but they have far lower rates of poverty and almost zero homelessness. They do not have official minimum wages, but the prevailing wages are set by union/government/business agreements, apply to almost all workers and are over $20 an hour, with most workers receiving very generous family, sick and vacation leave.
Even with high taxes, Scandinavians have quite high disposable incomes. Subsidies and “social housing” make housing affordable to all, and medical care is mostly free, although some co-pays and deductions do exist. When looking at workplace comparisons, Flexicurity is a popular system with businesses there, but it is coupled with very generous unemployment compensation, job training, workforce development, which companies pay for.
It is true that their corporate taxes appear lower than in the US but they are much better enforced — fewer loopholes. For example, data from 2010 showed while Sweden had an official corporate tax rate of 25% their companies ended up paying 22%. The US had an official rate of 35%, but an actual rate of 9%. Our approach breeds distrust in the honesty of our tax system.
To measure inequality in a country, a common metric is the GINI coefficient, with a lower score indicating greater equality in wealth among the population. The Scandinavian countries are close to 3.0 while the US is at about 4.5. Surveys comparing our citizens to theirs reveal that they are happier than Americans by a fairly wide margin, and much more secure in their lives.
The takeaway from Zakaria’s and de Graaf’s descriptions of the Scandinavian political-economic model is that calling those countries socialist is a stretch if not outright wrong. The Scandinavians and their leaders don’t consider themselves as living in socialist countries.
Socialism has many different faces depending on the angle of your view. From America, those countries may appear to be socialist. That is understandable given that our dominant political culture, which for well over a hundred years, has seen any government regulation of the marketplace and provision of economic assistance to the populace as socialistic.
Such an expansive definition of socialism renders the term useless as a guide for determining public policy. It leads to sloganeering, both pro and con, on any policy that alters the current economic structure of our nation. Ironically both Trump and Sanders, have pitched their main message as overhauling our economic system. But, in radically different ways. Trump’s message emphasizes that maintaining the racial order that benefits white ethnic groups is necessary for our security. Sanders wants greater economic equality to create better-living conditions for everyone. Trump calls his system capitalistic and Sanders calls his socialistic.
The problem that Sanders and the Democratic Party candidates face, is that the percentage of voters 45 and older is twice the number voting under the age of 29, as was shown in the most recent 2018 congressional elections as reported by the census data. The older set of voters have grown up with a negative image of socialism, and reinforced by past and current authoritarian governments that call themselves socialistic. In reality, China, Venezuela, and Cuba are not socialist, just authoritarian anti-democratic governments that provide some level of benefits to their populace that a free marketplace would not.
Sanders has and will continue to condemn all authoritarian governments, but that does not change people’s perception of socialism overnight. He is being forced to spend time informing the public on the difference between authoritarian versus democratic socialism, without being sucked into distinguishing the more than two dozen different kinds of socialism that, for instance, Wikipedia identifies. However, this educational effort is hindered by the fact that no matter how progressive, there is no economically developed, democratic country that calls itself socialist. Sometimes more progressive countries have Socialist Party governments and sometimes they don’t, but their democracies remain functioning with economics that reflects both capitalistic and socialistic elements, regardless of the change in their political leaders.
Sanders has defined his socialism as democratic socialism and points to the practices in the Scandinavian countries of what he is talking about. However, in many interviews he is more general, defining socialism as a democracy that has achieved economic justice, social justice, environmental justice, and racial justice. That describes an ideal state; one that does not exist now and may never exist. By Sanders saying he is a socialist, he is basically saying that he wishes to work toward those goals, much like what he sees the Scandinavian countries pursuing. But those goals do not inherently result in a socialistic country. They rather reflect the will of the voters within a democracy, not thrown out of balance by the influence of money.
Sanders’ political objectives are really reminiscent of those pursued by President Franklin D. Roosevelt, and before him Theodore Roosevelt, particularly when he ran as a populist candidate for President. This is despite Sanders’ admiring and producing a documentary on the socialist and union leader Eugene V. Debs, who garnered 6% of the vote in the 1912 general Presidential election. That was the highest watermark that any socialist presidential candidate has ever received. If Sanders wants to go much beyond that level, he must unite the Democrats as a presidential candidate. To do that he needs to reevaluate how he is crippling his own message by clinging to terminology that older generation voters have identified as poisonous to our freedoms. Instead, Sanders should echo the statement he made in the now-defunct magazine called Vermont Affairs in 1986, “…all socialism is about is democracy.”
Arguing that many Scandinavian public policies promote higher standards of living and happiness, is a strong rational argument. But, don’t sell those countries as socialist, which they are not. Having proportional electoral systems has resulted in all of them having coalition governments from time to time. Often those other parties are Christian parties and on occasion, those coalitions have even attracted the support of right-wing parties.
The bottom line is that Scandinavian countries maintain robust democracies providing services and policies that work to meet the social and economic needs of all of their citizens. That is the lesson that we can take away from their experience. And, it must be the political message of whoever is the Democratic candidate, if the Democrats are to energize people of all ages to vote in a new president who represents those values.