Scandinavian Models Look Great, But...

Liberals have long pointed to Scandinavian countries as model societies. The liberal refrain was if, but only if, America adopted the Scandinavian Model (a high-tax, high-spend welfare state also known as the Nordic Model) could Americans enjoy the benefits that made Scandinavian life nearly ideal. Whether government redistributionist policies or the Nordic people themselves created exceptionally livable communities is debatable. What is not debatable, however, is that Denmark, Sweden, and Norway have routinely topped, and continue to top, lists of the world's most prosperous nations and the world's happiest people. Even Shakespeare would be impressed with the state of Denmark.

Despite continuing to dominate livability surveys, it hasn't been smooth sailing for the Vikings' descendants the past twenty years. The early 90s financial crisis strained Scandinavian welfare states. The utopian model could no longer be financed. In order to continue their profligate spending the Scandinavian states would need to increase taxes to rates unpalatable to their citizens. Instead, Scandinavian governments tweaked the model. Public spending shrunk considerably, privatization rose precipitously. The Economist dubbed the shift Scandinavia's "Next Super Model":

In the 1970s and 1980s the Nordics were indeed tax-and-spend countries. Sweden's public spending reached 67% of GDP in 1993. Astrid Lindgren, the inventor of Pippi Longstocking, was forced to pay more than 100% of her income in taxes. But tax-and-spend did not work: Sweden fell from being the fourth-richest country in the world in 1970 to the 14th in 1993.

Since then the Nordics have changed course -- mainly to the right. Government's share of GDP in Sweden, which has dropped by around 18 percentage points, is lower than France's and could soon be lower than Britain's. Taxes have been cut: the corporate rate is 22%, far lower than America's. The Nordics have focused on balancing the books. While Mr. Obama and Congress dither over entitlement reform, Sweden has reformed its pension system. Its budget deficit is 0.3% of GDP; America's is 7%.

On public services the Nordics have been similarly pragmatic. So long as public services work, they do not mind who provides them. Denmark and Norway allow private firms to run public hospitals... Milton Friedman would be more at home in Stockholm than in Washington, DC.

Less than twenty years later cracks are surfacing in the Next Super Model. Profligate spending, overtaxation, and even the financial crisis of the past half-decade are not to blame this time around. Instead, another recent article from The Economist notes what is to blame or, more specifically, who is to blame for burdening the new Scandinavian model:

Mass immigration is posing serious problems for the region. For the Nordic countries to be able to afford their welfare states they need to have 80% of their adults in the workforce, but labour-force participation among non-European immigrants is much lower than that. In Sweden only 51% of non-Europeans have a job, compared with over 84% of native Swedes. The Nordic countries need to persuade their citizens that they are getting a good return on their taxes, but mass immigration is creating a class of people who are permanently dependent on the state.

Torben Tranaes, of Denmark's Rockwool Foundation Research Unit, calculates that in the mid-1990s immigrants in their 40s -- the age group that generally contributes most to the public budget -- paid only marginally more in taxes than they received in benefits. In Sweden 26% of all prisoners, and 50% of prisoners serving more than five years, are foreigners. Some 46% of the jobless are non-Europeans, and 40% of non-Europeans are classified as poor, compared with only 10% of native Swedes...

High immigration is threatening the principle of redistribution that is at the heart of the welfare state... immigration is making people less willing to support redistribution.

Immigrants are reaping welfare benefits far in excess to their percentage of the respective Scandinavian states they now call home, and far in excess to what the immigrants have paid into the system. Couple that with a higher immigrant crime rate than that of native Scandinavian people and a growing culture rift, and, of course, there will be resentment.

The reason this article is appearing on American Thinker and not a comparable Norwegian Thinker or Danish Thinker (if any such sites exist) is because the lesson is universal to the West. Mass immigration of people with higher rates of government dependency will strain a welfare system to such a degree that the welfare system must either be revamped (as we saw in Scandinavia two decades ago) or taxes must be raised. President Obama stated last week that:

"There is no doubt we need additional revenue coupled with smart spending reductions in order to bring down our deficit."

At the same time that President Obama was calling for reduced spending and additional revenue (read: increased taxes), the president was spearheading a drive for over eleven million illegal immigrants to be granted amnesty. The issue with illegal immigrants being granted citizenship, other than the laws against illegal immigration, is that recent a 2011 study by the Center of Immigration Studies(CIS) revealed the following:

In 2009 (based on data collected in 2010), 57 percent of households headed by an immigrant (legal and illegal) with children (under 18) used at least one welfare program, compared to 39 percent for native households with children.

Immigrant households' use of welfare tends to be much higher than natives for food assistance programs and Medicaid. Their use of cash and housing programs tends to be similar to native households.

A large share of the welfare used by immigrant households with children is received on behalf of their U.S.-born children, who are American citizens. But even households with children comprised entirely of immigrants (no U.S.-born children) still had a welfare use rate of 56 percent in 2009.

Immigrant households with children used welfare programs at consistently higher rates than natives, even before the current recession. In 2001, 50 percent of all immigrant households with children used at least one welfare program, compared to 32 percent for natives.

So which is it, Mr. President? Do you want a more Nordic outcome characterized by a higher standard of living and greater citizen happiness or do you want mass immigration? The lesson from Scandinavia is that mass immigration of people with a higher rate of welfare dependency jeopardizes the welfare system. The federal government is already encouraging Americans to go on food stamps and is expanding welfare spending. To additionally grant amnesty to eleven million illegal immigrants who have a higher rate of welfare dependency (per the CIS study) is unsustainable without taxing other citizens, including the middle class, at a higher rate to finance the growing welfare state. Nordic countries shifted right rather than place too high a burden on their respective nation's citizens. The Nordic nations set aside their ideals and adopted a new more practical model. It would be a wise move, Mr. President, if you modeled your plan after Norway. We all know, though, that for better or worse (generally worse) -- you'll do it your way.

James R. Kaminski is an attorney and writer living in Washington, D.C.

Liberals have long pointed to Scandinavian countries as model societies. The liberal refrain was if, but only if, America adopted the Scandinavian Model (a high-tax, high-spend welfare state also known as the Nordic Model) could Americans enjoy the benefits that made Scandinavian life nearly ideal. Whether government redistributionist policies or the Nordic people themselves created exceptionally livable communities is debatable. What is not debatable, however, is that Denmark, Sweden, and Norway have routinely topped, and continue to top, lists of the world's most prosperous nations and the world's happiest people. Even Shakespeare would be impressed with the state of Denmark.

Despite continuing to dominate livability surveys, it hasn't been smooth sailing for the Vikings' descendants the past twenty years. The early 90s financial crisis strained Scandinavian welfare states. The utopian model could no longer be financed. In order to continue their profligate spending the Scandinavian states would need to increase taxes to rates unpalatable to their citizens. Instead, Scandinavian governments tweaked the model. Public spending shrunk considerably, privatization rose precipitously. The Economist dubbed the shift Scandinavia's "Next Super Model":

In the 1970s and 1980s the Nordics were indeed tax-and-spend countries. Sweden's public spending reached 67% of GDP in 1993. Astrid Lindgren, the inventor of Pippi Longstocking, was forced to pay more than 100% of her income in taxes. But tax-and-spend did not work: Sweden fell from being the fourth-richest country in the world in 1970 to the 14th in 1993.

Since then the Nordics have changed course -- mainly to the right. Government's share of GDP in Sweden, which has dropped by around 18 percentage points, is lower than France's and could soon be lower than Britain's. Taxes have been cut: the corporate rate is 22%, far lower than America's. The Nordics have focused on balancing the books. While Mr. Obama and Congress dither over entitlement reform, Sweden has reformed its pension system. Its budget deficit is 0.3% of GDP; America's is 7%.

On public services the Nordics have been similarly pragmatic. So long as public services work, they do not mind who provides them. Denmark and Norway allow private firms to run public hospitals... Milton Friedman would be more at home in Stockholm than in Washington, DC.

Less than twenty years later cracks are surfacing in the Next Super Model. Profligate spending, overtaxation, and even the financial crisis of the past half-decade are not to blame this time around. Instead, another recent article from The Economist notes what is to blame or, more specifically, who is to blame for burdening the new Scandinavian model:

Mass immigration is posing serious problems for the region. For the Nordic countries to be able to afford their welfare states they need to have 80% of their adults in the workforce, but labour-force participation among non-European immigrants is much lower than that. In Sweden only 51% of non-Europeans have a job, compared with over 84% of native Swedes. The Nordic countries need to persuade their citizens that they are getting a good return on their taxes, but mass immigration is creating a class of people who are permanently dependent on the state.

Torben Tranaes, of Denmark's Rockwool Foundation Research Unit, calculates that in the mid-1990s immigrants in their 40s -- the age group that generally contributes most to the public budget -- paid only marginally more in taxes than they received in benefits. In Sweden 26% of all prisoners, and 50% of prisoners serving more than five years, are foreigners. Some 46% of the jobless are non-Europeans, and 40% of non-Europeans are classified as poor, compared with only 10% of native Swedes...

High immigration is threatening the principle of redistribution that is at the heart of the welfare state... immigration is making people less willing to support redistribution.

Immigrants are reaping welfare benefits far in excess to their percentage of the respective Scandinavian states they now call home, and far in excess to what the immigrants have paid into the system. Couple that with a higher immigrant crime rate than that of native Scandinavian people and a growing culture rift, and, of course, there will be resentment.

The reason this article is appearing on American Thinker and not a comparable Norwegian Thinker or Danish Thinker (if any such sites exist) is because the lesson is universal to the West. Mass immigration of people with higher rates of government dependency will strain a welfare system to such a degree that the welfare system must either be revamped (as we saw in Scandinavia two decades ago) or taxes must be raised. President Obama stated last week that:

"There is no doubt we need additional revenue coupled with smart spending reductions in order to bring down our deficit."

At the same time that President Obama was calling for reduced spending and additional revenue (read: increased taxes), the president was spearheading a drive for over eleven million illegal immigrants to be granted amnesty. The issue with illegal immigrants being granted citizenship, other than the laws against illegal immigration, is that recent a 2011 study by the Center of Immigration Studies(CIS) revealed the following:

In 2009 (based on data collected in 2010), 57 percent of households headed by an immigrant (legal and illegal) with children (under 18) used at least one welfare program, compared to 39 percent for native households with children.

Immigrant households' use of welfare tends to be much higher than natives for food assistance programs and Medicaid. Their use of cash and housing programs tends to be similar to native households.

A large share of the welfare used by immigrant households with children is received on behalf of their U.S.-born children, who are American citizens. But even households with children comprised entirely of immigrants (no U.S.-born children) still had a welfare use rate of 56 percent in 2009.

Immigrant households with children used welfare programs at consistently higher rates than natives, even before the current recession. In 2001, 50 percent of all immigrant households with children used at least one welfare program, compared to 32 percent for natives.

So which is it, Mr. President? Do you want a more Nordic outcome characterized by a higher standard of living and greater citizen happiness or do you want mass immigration? The lesson from Scandinavia is that mass immigration of people with a higher rate of welfare dependency jeopardizes the welfare system. The federal government is already encouraging Americans to go on food stamps and is expanding welfare spending. To additionally grant amnesty to eleven million illegal immigrants who have a higher rate of welfare dependency (per the CIS study) is unsustainable without taxing other citizens, including the middle class, at a higher rate to finance the growing welfare state. Nordic countries shifted right rather than place too high a burden on their respective nation's citizens. The Nordic nations set aside their ideals and adopted a new more practical model. It would be a wise move, Mr. President, if you modeled your plan after Norway. We all know, though, that for better or worse (generally worse) -- you'll do it your way.

James R. Kaminski is an attorney and writer living in Washington, D.C.