Friday, October 23, 2015

Bloody Scandinavian model yet again

This is based on a comment I made here.

There is a continuing line of commentary among social democrats, democratic socialists and progressivists generally to laud the Scandinavian model (aka Nordic model) as something for the US or Australia to follow. Matt Yglesias, following up from comments in the recent US Democratic Presidential candidate debate, continues this tradition (although, as one expects from Mr Yglesias, intelligently and well-informed).

Even so, I wish people would stop. Yes, looking at how other countries do things can be revealing and useful. But policy regimes evolve for specific reasons and, unless you understand those reasons, you are not going to be able to usefully apply any such lessons.

Let us leave aside whether the Scandinavian model has been oversold (pdf) (and that Nordics do even better in the US), or whether advocates understand the model as well as they think they do. Citing the Scandinavian model as a policy regime to adopt makes no sense for Australia, let alone the US.

If you are small, geographically contained, ethnically homogenous country of course you can run a social model that relies on congruent social bargaining at a relatively high tax-public good(+ extras) tradeoff. And, given the ease of information flows between officials and citizens and strong congruence in preferences and expectations, run the trade-off fairly efficiently.

None of these features apply to Australia or the US. Both are much more geographically varied (and if you don’t think that makes a difference for public policy, I invite you to take a tour around either the States of either, or the Provinces of Canada). Both are much more ethnically varied. (Over a quarter of Australians, 28%, are foreign born; around 13% of US residents are foreign born [pdf].) And ethnic diversity reduces social trust, with reduces the ability to centrally coordinate.

The biggest single public policy failure area in Australia is indigenous policy, and if you do not understand that poor information flows, divergent preferences and expectations--all due to profound differences in cultures and experiences--are central to said policy failures, you have not been paying attention. [Besides, Australia does as well as the Scandivanian countries on most indicators of well-being, including the Human Development Index, so it is not as if there is powerful motive to dramatically change policy regime.]

Similarity helps trust and communication.
One also notes that the more the US federal government does, the more popular respect for its institutions tend to fall. Over-reach beyond its useful coordinating capacity in such a large and diverse nation might have something to do with that. (And the latest substantial expansion of US federal involvement in healthcare has not been a popular success.)

Of course both US and Australia have evolved lower tax-public good+ trade offs. Indeed, as Sweden has become more ethnically diverse, Sweden itself is having increasing trouble making “the Scandinavian model” work.

The notion that public policy evolved in a way that suited the nature of the countries in Scandinavia but somehow weirdly went off the rails in Australia and the US does not make a lot of sense.

No, the Scandinavian model is not a good policy regime model for Australia or the US however much individual policies may be revealing and useful, even adaptable, to very different conditions.

[Cross-posted at Skepticlawyer.]

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