Monday, August 22, 2005

The Problem with the Scandinavian Model

On the libertarian blog today, Megan McArdle refers to a simple explanation by Zimran Ahmed why the U.S. will never be like Finland. Mr. Ahmed was responding to an editorial published recently in the Washington Post about Finland by Richard Kaiser that praised Finland's smooth running welfare state, where everything from medical care to schooling to benefits funtion seemlessly:

Finns have one of the world's most generous systems of state-funded educational, medical and welfare services, from pregnancy to the end of life. They pay nothing for education at any level, including medical school or law school. Their medical care, which contributes to an infant mortality rate that is half of ours and a life expectancy greater than ours, costs relatively little. (Finns devote 7 percent of gross domestic product to health care; we spend 15 percent.) Finnish senior citizens are well cared for. Unemployment benefits are good and last, in one form or another, indefinitely.

The editorial continues with a more detailed description on all the amenities and supposed benefits Finland's policies have brought about. For those who are quick to remind themselves on the lack basic social services in the U.S., Kaiser's article imparts lessons that should appeal to most Americans. Yet his praise for Finland is just one of a long string of articles and reports that have over the years highlighted the Scandinavian social model, often overlooking one important and determining factor as to why it cannot be universally applied: homogeneity. Mr. Ahmed basically points out that:

People respond to incentives. In a tiny, homogeneous country, group norms can take the place of monetary rewards. If you identify strongly with your neighbours then you care if they shun you. But the US is 50 times larger than Finland and very heterogeneous -- people here don't care much about what their neighbours think because 1) their neighbours are not neccessarily much like them and 2) they keep changing. In this kind of soceity group norms simply will not work. If my neighbours in Boston stopped talking to me, I honestly would not notice.

The fact that social norms play a significant role in the success of welfare states also point to these systems' weakness. As soon as the populations of these historically homogenous countries turn heterogenous due to immigration, the social norms soon become fractured between rival communities. There is a direct correlation between the emerging heterogeneity of national populations and the rise of nationalistic or anti-immigrant political parties. This is often the result of a sense of betrayal within the native population that the benefits of the welfare state was intended to complement the existing social norms, but no longer are. Immigrants from radically different backgrounds were not supposed to be part of this closed system. Native citizens begin to see immigrants as a threat to this originally happy balance. If one were to closely study the agenda items of far-right parties like the Front Nationale in France, the Republikaner in Germany or Jorg Haider's party in Austria, they all have in common the resolve to reverse immigration, not because of its ill effects on the free market economy, but rather because of the drain of welfare resources they present. The fact that all of these European extremist parties are associated with racism is no coincidence. In defending the nation they are not only protecting language and culture within a defined territory (the very definition of a nation) but also the institutions that promote social cohesion to reinforce a singular national identity. Whether it's "La France pour les Francais" or Hitler's use of 'Das Volk' these concepts are closely wed with the exclusive privileges enjoyed by those belonging to the nation. Those outside the national group by default are excluded from these privileges. Rather than to expand the definition of who can belong to the nation to eliminate exclusion, most Europeans are inclined to continue excluding outsiders, since their very identity as part of the national ethnic group is at stake. Especially when most Europeans are socialized since birth in valuing their communal identity, as opposed to the embrace of individuality in America, national identity is far more significant matter and inviolable.

An article for the Hudson Review by Bruce Bawer is one of the better written essays on understanding the divide between Americans and Non-Americans about how the U.S. is perceived. For Keiser to arrive at such an admiring judgement of the Fins requires a low estimation of American virtues. He describes his own country as "a society driven by money, blessed by huge private philanthropy, cursed by endemic corruption and saddled with deep mistrust of government and other public institutions. Finns have none of those attributes." Bawer contradicts much of what Keiser idealizes in the Finnish, or for that matter the Norwegians, with whom he has lived among for quite a few years. He points out that in spite of America's deficiencies, it wields a cultural magnetism which many young Europeans find irresistible, regardless of the efficient structure of their welfare systems:

This experience was only part of a larger process of edification. Living in Europe, I gradually came to appreciate American virtues I’d always taken for granted, or even disdained—among them a lack of self-seriousness, a grasp of irony and self-deprecating humor, a friendly informality with strangers, an unashamed curiosity, an openness to new experience, an innate optimism, a willingness to think for oneself and speak one’s mind and question the accepted way of doing things. (One reason why Euro- peans view Americans as ignorant is that when we don’t know something, we’re more likely to admit it freely and ask questions.) While Americans, I saw, cherished liberty, Europeans tended to take it for granted or dismiss it as a naïve or cynical, and somehow vaguely embarrassing, American fiction. I found myself toting up words that begin with i: individuality, imagination, initiative, inventiveness, independence of mind. Americans, it seemed to me, were more likely to think for themselves and trust their own judgments, and less easily cowed by authorities or bossed around by “experts”; they believed in their own ability to make things better. No wonder so many smart, ambitious young Europeans look for inspiration to the United States, which has a dynamism their own countries lack, and which communicates the idea that life can be an adventure and that there’s important, exciting work to be done. Reagan-style “morning in America” clichés may make some of us wince, but they reflect something genuine and valuable in the American air. Europeans may or may not have more of a “sense of history” than Americans do (in fact, in a recent study comparing students’ historical knowledge, the results were pretty much a draw), but America has something else that matters—a belief in the future.

Read it all.

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