|Fredrik Reinfeldt, Prime Minister of Sweden, speaks during the session 'Confronting New Realities: The Nordic Experience' at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 28, 2011. © World Economic Forum swiss-image.ch/Photo by Michael Wuertenberg
The Nordic model was on display at the World Economic Forum in Davos,
Switzerland last week and the government's of the regions produced a brief
report on what has long been admired by the Left but is also getting attention
across the political spectrum as governments scramble to make their economies
Prime Minister Jens Stoltenberg Norway said his country has
succeeded at combining a social welfare state with an efficient,
market-oriented economy and spreading the wealth in the process.
It’s not just Norway’s oil income that’s fueled the country’s
success, he stressed. “It’s completely possible to ruin an economy,
even with oil money,” Stoltenberg told newspaper Dagens
Næringsliv (DN) before leaving for Davos.
“We have shown that it’s possible to have a society where we value fair
distribution of wealth along with dynamic private business,” Stoltenberg
said. “But we still have our unsolved problems.” Nor is it realistic for
other countries to copy the Norwegian model or the systems of other Nordic
countries that also sustain high standards of living.
Sweden's centre-right government said:
"In a short period, the Swedish tax
burden, particularly on low and middle income earners, has decreased markedly.
In total, the implemented stages of the in-work tax credit and our declared
reform ambitions equate to around 2 percent of GDP in 2011. Sweden is therefore
making excellent progress in its ambition to shape income taxes in a way that
counters marginal effects and poverty traps and enduringly raises the employment
Labour market policy has also been reorganised to focus on activity and
adjustment. Alongside clearer requirements and rules for transfers and benefit
payments, this has discernibly lowered the thresholds into the labour market. In
addition, reforms to the sickness insurance system, with improved support and
more paths back into work, mean that in a short space of time Sweden has lifted
itself off the bottom of the Western world’s sick leave league.
In a time when other countries have acted for more closed borders and increased
protectionism, Sweden is a clear exception. We have a solid reputation in
efforts to increase free trade and bring down border barriers. Moreover, Sweden
has proved that even a small and trade-dependent economy can assert itself
relatively well in the face of growing global competition. We are among the top
countries in world rankings for factors such as competitiveness, technology and
innovation climate. Sweden’s investment in research, at nearly 4 percent of GDP,
is exceeded only by Israel in the OECD statistics."
The Economists's columnist Bagehot, whose column this week is on the Nordic
in a blog note
in relation to Europe's past worries about competitiveness: "The single biggest reason that Europe was
not the most dynamic and competitive knowledge-based economy in the world, I
argued, was that lots of Europeans (perhaps most) did not want to live in such a
competitive place. For sure, they want to stay rich and comfortable, and they
know that globalisation is a threat. But lots of Europeans are not prepared to
do anything about it, if it means taking shorter holidays, working longer hours,
graduating more quickly or retiring much later."
Every country has its pluses and minuses and I recall a Belgian remarking
that the Swedes were the most boring people in Europe.
Aithníonn ciaróg, ciaróg eile (One
hedgehog recognises another), I thought to myself!
During the property bubble, Ireland set 2013 as
the target to be recognised as a 'world-class knowledge economy' as if it could
be achieved in an unreformed broken governance system.
The report for Davos,
The Nordic Way
(pdf), says that in international comparisons, not least the World Economic
Forum’s global competitiveness index, the Nordic countries are almost always found at or near
In one meta-index that is an aggregate of 16 different global
indices (competitiveness, productivity, growth, quality of life, prosperity, equality etc)
the four main Nordic countries - - Sweden, Norway, Denmark and Finland -- top the
What are the reasons it asks? Is there such a thing as a common
“Model” particular to the Nordics and if so, will it last? Is it sustainable, even
transferable to other parts of the world?
The report provides what it terms bits and pieces of
what the governments believe are some plausible explanations for the relative success of the
Nordic societies. It says if these experiences can improve the understanding of
their way of doing
things and if it inspires debate and development in other parts of the world,
they will be
They say shared values are also about sharing values and experiences with
The fact that Nordic countries showed resilience during the
recent financial crisis largely seems to be the result of previous deep crises in the
Nordic region in the 1980s and 90s. During these crises, the Nordic countries renewed
and modernized their respective economies in ways which sometimes constituted a
break with previous regulations and tax systems.