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Thread: Trump vs "Nordic socialism"

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    Trump vs "Nordic socialism"

    Here is a rebuttal against his report, by two Norwegian professors. I'm not taking sides but here is a google translation of their article :

    https://translate.google.com/transla...og-Kalle-Moene

    "Trump's financial advisors warn against Nordic "socialism". The report is misleading and polemical. | Jo Thori Lind and Kalle Moene
    We do not live in normal times. Someone can take the content seriously.

    CHRONICLE

    PHOTO: Carlos Barria / Reuters NTB scanpix The
    USA has significantly higher inequality than the Nordic countries, the authors point out.
    Jo Thori Lind
    Professor of Economics, UiO
    Kalle Moene
    Professor of Economics, UiO
    November 8th. 2018 18:24


    In all areas, the US economy is better than the Nordic, concludes Trump's financial advisors. A few weeks ago, they released a 72-page report, "The opportunity costs of Socialism ." There, they want us to believe that a more social democracy implies that Americans must deny the excellent results that unregulated capitalism would give. Are they right?

    According to the report, the figures show that more social democracy (the report calls "socialism") to a limited extent motivates efforts and innovation.

    The truth is almost the opposite.


    Jo Thori Lind and Kalle Moene are both professors at the University of Oslo.
    Even when we keep the oil outside, Sweden and Norway have had higher productivity growth than the United States from 1930 to today. The Nordic region also has a higher rate of innovation, more conversion and more innovation. Moreover, it is easier to put down unprofitable businesses here than in many other countries. The gap between the most efficient and modern and the least efficient and outdated production units in operation is therefore lower here than in the United States.

    UN ranking of countries after use and development of IT technology shows a similar picture: Iceland is number 1, Denmark number 4, Norway number 8 and Sweden number 11. First down in 16th place follows the United States.

    Major welfare states - small pay differentials
    One important reason why the Nordic countries get well in these contexts are the small pay differentials and welfare state schemes.

    When highly educated labor is relatively cheap and traditional labor relatively expensive, it is profitable to mechanize and to introduce new work-saving technology. And since everyone is insured if conversion should provide temporary leave, such changes are a little controversial. The reason why there is no lasting high unemployment is first and foremost that the parties to the wage settlements agree on an average salary level that gives full employment.


    It's just collective wage agreements and social insurance schemes that have contributed to high growth, low unemployment and small differences in the Nordic region for over 80 years.

    The most important features of social democracy do not therefore expound the capitalist dynamics, they support and reinforce it.

    After average income
    Trump's financial advisors mention inequality, but attention is focused on what is happening to average revenues. Now it is somewhat unclear what data they actually use. They state the OECD as a source, but say little about how the calculations are made.

    We have reproduced the main pattern in the figures reported by the IMF's national product data per. citizen , as we have corrected for differences in purchasing power and prices between countries.

    Norway has 19 per cent higher income per inhabitant than the United States. Something is due to oil, but not everything. The other Nordic countries have lower income per inhabitant than the United States. The ranking is: Norway first, so USA and then Iceland, Sweden, Denmark and Finland.

    Corrected for inequality
    But what is the point of measuring living standards on average income in each country, as long as only a few get high income?

    To get a complete picture, one should take into account who gets the income. For example, we can follow Nobel Prize winner in Economics, Amartya Sen, who in his time suggested that national income per. citizens should be corrected for the degree of inequality in the income distribution. Greater inequality may mean that total income in the country counts less as a simple expression of the welfare of citizens.

    As is known, the United States has significantly higher inequality than the Nordic countries. When we, with a simple but accepted method, correct for inequality, we get a completely different picture. Now the United States comes second, with only Finland following. Norway is again on top because we both have the highest income per inhabitant and low inequality. Both Iceland, Sweden and Denmark are higher than the United States.

    The picture becomes even clearer if we also accept that the inhabitants of the Nordic region receive healthcare and higher education almost free of charge. Then the inequality drops further by 20 per cent, as SSB researchers Aaberge, Langørgen and Lindgren have calculated.

    Swedish in Sweden and in the United States
    Trump's advisors also make a little cramped attempt to show how much the people in the Nordic region lose weight of not living in the United States.

    The report shows how well immigrants in the United States do it, as they were Danish, Finn, Icelanders, Norwegians or Swedes. For example, according to the report, an average Swedish immigrant in the United States earns 29 percent more than the average income in the United States, while in Sweden he would earn average income about 15 percent below the US average.

    The report should therefore have a loss of 45 percent of being Swedish in Sweden rather than Swedish in the United States.


    The purpose of the report is obviously to place the Nordic countries in a poor company with low growth, major crises and limited freedom - and so to polemize against Bernie Sanders, the authors write.

    Misleading about inequality and education
    The simple math is misleading. One thing is that every citizen is considered to earn the average income. Inequality does not matter. Perhaps more important is that income to American citizens depends on when their predecessors immigrated to the United States. Those who arrived early do better than those who arrived late.

    In fact, Americans with Nordic ancestors do not make it particularly good compared to other European immigrants. The gap between being British in the United Kingdom and in the United States is, for example, greater than the gap between being Swedish in Sweden and in the United States.

    Equally misleading will be when the report states that free education in the Nordic countries does not give a particularly high return. It does not take into account that in the Nordic countries, the income differentials are small through the compression of wages. Therefore, it is naturally low private economy return on education. While the private economic return of education is obviously much higher in the United States.

    But in both the United States and in Norway, it is the social return of education that matters most. It is the one that helps to increase overall income and welfare. But here, Trump's advisors have nothing to contribute.

    Someone can take the content seriously
    We read the report from Trump's financial advisors mostly as an outlay for internal use. It gives a skewed and inadequate picture of the economic institutions in the Nordic region compared with the United States. Nor does it respond to who in the United States could have had a better life if the US economy was turning more in a northern European direction.

    It also does not control the point. It paves the way for a discussion of the Soviet Union and China, Cuba and Venezuela, but does not mention, for example, the high economic growth in today's China. The purpose is obviously to place the Nordic countries in a poor company with low growth, major crises and limited freedom - and so to pole against Bernie Sanders.

    Normally, the danger that the report becomes the prevailing truth in the US will be small. Until then, the point of controversy is too strong and the intellectual reason for weakness. But we do not live in normal times. Therefore, someone can take the content seriously."

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  3. #2
    Really, the comparison should be thought of as "American socialism" vs "Nordic socialism", since both nations have socialistic programs. (In the US, the most notable socialistic programs are "Social Security" and "Medicare".)

  4. #3
    Senior Member Colonel's Avatar
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    Quote Originally Posted by njtom View Post
    Really, the comparison should be thought of as "American socialism" vs "Nordic socialism", since both nations have socialistic programs. (In the US, the most notable socialistic programs are "Social Security" and "Medicare".)
    Per definition Socialism implies that the government takes ownership over the means of production. The Soviet Union qualified as a Socialist state. Norway never has and the government owns far fewer companies now than it did 30 years ago. In the US the term Socialism is typically employed either as a smear or as a completely relative term. Meaning that anything that is more "socialistic" than the speaker is termed "socialism".

    The correct term is "social democratic". Which implies social programs as you mentioned, and then both the United States and Norway qualify as "social democratic", just to various degrees. Even the policies of Bernie Sanders are "social democratic" but what is most often the case with politicians is that they tell the public the direction they would like society to take right now, which may be different to the end goal that they envision for the future of their choice. Bernie Sanders may or may not be a Socialist by persuasion or by agenda, I wouldn't know. The political parties that when combined got 91.6 % of the vote during the last election here in Norway certainly do not have outright Socialism as their future goal. The next 6% I'm not sure about, the last 2.4% I am sure about.

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  6. #4
    Quote Originally Posted by Colonel View Post
    Per definition Socialism implies that the government takes ownership over the means of production. The Soviet Union qualified as a Socialist state. Norway never has and the government owns far fewer companies now than it did 30 years ago. In the US the term Socialism is typically employed either as a smear or as a completely relative term. Meaning that anything that is more "socialistic" than the speaker is termed "socialism".

    The correct term is "social democratic". Which implies social programs as you mentioned, and then both the United States and Norway qualify as "social democratic", just to various degrees. Even the policies of Bernie Sanders are "social democratic" but what is most often the case with politicians is that they tell the public the direction they would like society to take right now, which may be different to the end goal that they envision for the future of their choice. Bernie Sanders may or may not be a Socialist by persuasion or by agenda, I wouldn't know. The political parties that when combined got 91.6 % of the vote during the last election here in Norway certainly do not have outright Socialism as their future goal. The next 6% I'm not sure about, the last 2.4% I am sure about.
    Yes, I was using the "watered down" definition of socialism, not the classical definition.

    As I see it, all developed nations have some form of mixed economy:
    1) Privately-held firms producing the majority of the goods and services.
    2) Prices determined by supply and demand.
    3) Government regulations designed to address externalities; i.e., costs of production borne by society as a whole rather than by the producing firms.
    4) Transfer payments designed to (somewhat) mitigate the wealth and opportunity differentials that would otherwise exist in a completely free market.

    Clearly, the Scandinavian nations place a greater emphasis on items 3 and 4, as compared to the US, but no nation, including the US, is completely "free market."

  7. #5
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    The Socialist states of the cold war era are completely gone, aren't they ? Even North Korea allows some form of free market economy to operate at the ground level.

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    Senior Member Ezekiel 33's Avatar
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    Quote Originally Posted by njtom View Post
    Really, the comparison should be thought of as "American socialism" vs "Nordic socialism", since both nations have socialistic programs. (In the US, the most notable socialistic programs are "Social Security" and "Medicare".)
    Except Social Security wasn't supposed to be used like it is. It was not intended for someone who is disabled. It was for someone who has contributed to it their whole life, to supplement their retirement. I am not saying that there should not be some sort of help for disabled persons, just that it should not come from SS.

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