Viking Economics (14 page)

The twentieth-century descendants of the Vikings figured out that the individualistic charity model of the nineteenth century simply could not alleviate poverty. In each country, the designers turned against programs for the poor and created universal systems instead.

I grew up among hardworking people who were compassionate but began to worry if someone appeared to be shirking their share of the labor. That reflexive worry is triggered by talk about people “on welfare”—why are they benefiting while I’m working and paying taxes? In Nordic countries the worry is also present. I suspect that if the Nordics had the American system, most of their political support for quality assistance to the poor would evaporate.

Arguably, what motivates Nordics to pay high taxes for services is that the services are universal rather than targeted to a subgroup of “the needy.”
Everyone
benefits from quality health care, schools, transportation and pensions, but those who benefit most of all are the political majority composed of the working and middle classes. When someone proposes chipping away at the quality of universal systems, a political defense is mounted by the majority almost regardless of the party they belong to. The Norwegian Progress Party and the Danish People’s Party, for example,
are branded as “right-wing” because of their anti-immigration stance, but both parties pledge to safeguard the continued high quality of universal services, which in the United States would put both of these “right-wing parties” well to the left of the Democratic Party. The Progress Party has even urged that some of Norway’s oil income should be diverted from the pension fund to be used to enhance universal services!
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In Norway, all babies can be born in birth centers and hospitals without regard to income, and all moms and dads can take time off from work with pay to take care of the young ones. All parents have access to day care. All parents, whatever their means, automatically get a family allowance for children below the age of 18. This applies to all adopted children, and to same-sex parents.

Education is free to all, as is retraining for a new job and support while looking for one. Public transportation is subsidized for all, and so are tickets to the new opera house in Oslo.

When they need assisted living, Norwegian elders have a choice of whether to move to a retirement center or stay at home. Most stay in their homes, while between one-third and one-fourth choose to move. Those who stay home can receive between a few hours a month to a few hours a day of extra assistance. The cost of the service is subsidized for all, but there is a charge. Unusually for Norway, means-testing enters into the pricing of this service: if an elder’s income falls below a certain threshold, he or she is charged only a nominal amount.

The Norwegian love for freedom and flexibility shows up in
the eldercare system. Most implementation is left to local authorities, in order to encourage innovation and allow for local differences. An OECD study found that Norway and Sweden were among the top three countries in providing eldercare. Since elders are particularly vulnerable to poverty, and in the Nordic countries elders live practically forever, the attention to elders through universal programs goes a long way toward eliminating overall poverty.
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Rent control, cooperatives, and public responsibility for the supply of shelter creates affordable housing for all. Rural areas are subsidized, so farmers and people brought up in the countryside aren’t put at a disadvantage. Disability benefits are available whether or not one has a background of wealth. Single-payer health insurance for all with small co-payments make very expensive treatments available to working-class as well as rich people.

Some critics deride the Nordic design as a “nanny state,” picturing passive inhabitants dependent on swollen welfare programs that meet their every need from womb to tomb.

Part of this misunderstanding comes from carelessly labeling the Nordics as “welfare states” in the sense of the U.S. word “welfare.” Believing that the word means the same thing in both systems leads critics completely astray.

The Viking descendants turned
against
the “welfare” system that they formerly had—and that we mostly still have in the United States—and replaced it with universal services. The Nordics are not actually welfare states. They are “universal services states.”

If the Vikings had simply pumped up their programs for the poor, today they
would
have nanny states with monstrous bureaucracies, little freedom or equality, and disempowered populations.

I am one of those Americans who would not want a “nanny state.” The Nordics don’t want one, either, and so they have built something very different. The new design was built in the 1930s by empowered citizens who took charge of their own country. Together they created a cooperative system for meeting needs that most people have at various points in their lives.

That being said, the Viking-economics model is a work in progress. The Nordics’ biggest achievement may be in refusing to think of themselves simply as objects of mysterious “market forces.” Freedom means accepting agency. Citizens freely debate economic design proposals; changes become the intentional acts of a democracy.

I attended a lecture in which then–Health Minister Karl Evang gave a concrete example of what a difference the universal-services paradigm makes. He said that when the Norwegian Labor government initiated universal health care, it realized that many people had poor teeth. If the service started out by covering dentistry, the new system would go bankrupt.

In that postwar time, Norway had nothing like the wealth of the United States, where dentistry could perhaps have been included when President Harry Truman proposed launching a universal single-payer health system.

The creators of the Norwegian system researched the problem of dental health. They found that in postwar Norway, poor and working-class people were drinking little milk because it was expensive. They found a universal solution: subsidize milk for all children and then, when Norway could afford it, create universal
free dental care for all children to the age of eighteen—who by then didn’t have as many cavities.

The sheer efficiency of a comprehensive and universal healthcare system shows up in study after study. The United States spent over 16 percent of its gross domestic product for health care in 2013, according to the OECD. That’s almost twice as much as Norway and Iceland spend. Nevertheless, the Nordic countries keep their citizens healthier than the United States does. Ellen Nolte and Martin McKee looked at sixteen high-income countries in the OECD, analyzing deaths that occurred before age seventy-five from causes like treatable cancer and diabetes, childhood infections, and complications from surgeries. They found that tens of thousands of Americans died annually during the period they studied because the U.S. system was less effective than the universal systems.
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Another way to look at this comparison is through per-capita spending on health care. In 2013, Denmark spent $4,553 per person on average, and Sweden $4,904. The United States spent nearly double: $8,713, and even so left millions uninsured. All four of the countries studied for this book have higher life expectancies and lower suicide rates than the United States.
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Economist Dean Baker proposes another intervention that could dramatically reduce the United States’ swollen health-care costs. Baker, head of the Center for Economic and Policy Research, has a history of being ahead of the curve; as early as 2002 he published his warning that the United States had a housing bubble that would lead to disaster. Baker also sees systemic waste in the healthcare system that creates crises for some families and hardship for many others. He proposes that the government simply buy up patents that, left in the hands of pharmaceutical companies, enable
them to overcharge for drugs. The hundreds of billions of dollars Americans now spend on prescription drugs could fall to one-tenth that amount. Even the government would realize savings on this universal plan, because most drugs would then cost $5 to $10 per prescription, much closer to the prices paid in other countries. People who are presently forced to choose between buying their medicine and buying adequate food would experience immediate relief.
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International researchers investigating the causes of the spike in winter deaths among older people have brought attention to what they call fuel poverty—people’s inability to buy enough fuel, at today’s higher energy prices, to keep their homes warm. According to a 2013 report, an estimated 5,000,000 UK households—19.2 percent of the total—are now in fuel poverty, nearly the worst of the sixteen European countries studied.
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“A household is considered to be in fuel poverty if more than 20 percent of its total income is spent on adequate heating,” according to the story in
The Independent
.

It seems that the British should have a much easier time keeping their homes warm in the winter than people in much colder countries, like the Swedes. Surprisingly, the UK has a 23 percent higher rate of excess deaths in the winter than Sweden.

Do Swedes pay less for their electricity and find it therefore easier to heat their houses against wintry storms? No, electricity prices are higher in Sweden, and the Swedish per-capita average income is about the same as that of the British, so the Swedes have no advantage there.

Researchers finally found the culprit. British homes lose three times more heat than Swedish ones—because of poor insulation.
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Norway, Iceland, and Denmark join Sweden in having little fuel poverty, despite their much colder winters. The universal principle works again: Nordic housing, much of it built by cooperatives and the state, is well insulated. The Nordics chose another universal economic design feature that reduces poverty and saves lives.

Comparing track records shows universal programs winning, hands down.

For a very long time, criminologists have noticed a connection between poverty and crime. For that reason, it’s not surprising that Norway has a very low crime rate, as do the other Viking descendants. Sweden has one of the lowest incarceration rates in the world—70 per 100,000. Norway and Denmark are nearly as low, at 73 and 74 per 100,000.
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United Nations statistics show more generally that more unequal countries have higher rates of imprisonment than more equal countries. The U.S. rate is over four times higher than that of the UK, which in turn is far higher than the Nordics.
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The Nordic rarity of actual crime doesn’t, however, prevent Icelander Arnaldur Indridason, Swede Henning Mankell, and Norwegian Jo Nesbø from making a lot of money writing imaginative crime novels!

Iceland’s scarcity of crime even attracted the attention of the
BBC, which did a story, “Why violent crime is so rare in Iceland.”
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Iceland made international headlines in 2013 when police shot a man to death for the first time since the founding of the republic in 1944. The shooting was precipitated by a mentally ill man firing at the police with his gun. Nevertheless, the nation went into grieving and the police department, without saying that the shooting was wrong, expressed its own deep sadness. Icelandic police are unarmed and must request a gun for a specific occasion.
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Although Iceland is the nation that identifies most strongly with the ancient Vikings culturally, it joins the other three descendant nations in opposing violence. The criminal justice systems of the four reflect this thinking. When Norwegians, for example, send someone to jail, they do not look for additional ways to punish the prisoner. Because freedom matters so much to them, they see the deprivation of freedom by itself as a significant loss. They therefore set up correctional institutions for rehabilitation. Norway has no capital punishment or life sentencing. Prison terms are short and families are encouraged to stay close to their incarcerated member.

Repeat offenses are among the lowest in the world. Their prisons are not training schools for a life of crime; instead they are part of an economic system that wants offenders to rejoin the community—and become taxpayers as soon as possible.

Even with this track record Norwegians try to bring criminality lower still by working closely with offenders on job training and job placement. The process begins in the prison itself, where programs focus on rehabilitation rather than punishment.

British reporter Ryan Duffy visited the island prison of Bastøy in 2010 and was shocked to see drug dealers and murderers running ferries, operating farming equipment, and playing soccer. There were no walls or chains, and the guards carried no weapons.

Time
magazine reported that “within two years of their release, 20 percent of Norway’s prisoners end up back in jail. In the UK and the United States, the figure hovers between 50 percent and 60 percent.”

Norwegians recently showed the stubbornness I talked about in the beginning of this chapter, and they decided on another experiment. They built an expensive new prison, Halden, with an even more radically “soft” rehabilitation program. They expect to see, over time, the Halden graduates setting new records for going straight.

Because Norway has an extensive social-science research industry, studying and restudying all the anti-poverty measures mentioned in this chapter, you can believe that they are studying their effort to reduce criminality to a minimum. One of the most recent criminological studies looked at every prisoner released between 2003 and 2006 and tracked his or her employment record, along with possible arrests.

The study found that there was a high association between employment and staying out of trouble. Once again, the investment in job rehabilitation and training and job placement created a win-win-win: the former inmates and their families won, crime was reduced, and more people took a step out of poverty.