Taxes & Economics

Debunking the Scandinavian myth

Scandinavia is a region in northern Europe. The Scandinavian Peninsula is the largest peninsula in Europe and it extends from above the Arctic Circle to the North and Baltic Seas. In the past, Scandinavia has been defined as the three kingdoms that historically shared the Scandinavian Peninsula. Today, most define Scandinavia as a region which includes Norway, Denmark, Sweden, Finland, and sometimes Iceland.

The Scandinavian countries display qualities of everything good countries should be – most stable economies, happiest citizens, and the most peaceful in the world. The main reason for this is that they pay hefty taxes. It gives them free healthcare, childcare, and schooling; additionally, you can live on unemployment benefits for most of your life. When we see them from our homes, it seems that they are socialist economies with little to no socioeconomic inequality.

Bernie Sanders single-handedly shook millions of American millennials out of their apathy towards politics by defining the term democratic socialism. He says that America must embrace this socioeconomic system that seemingly works very well in the Scandinavian countries, like Sweden, which is, by some measures, better off than the United States. Democratic socialism purports to combine majority rule with state control of the means of production.

Are they really socialist?

The Scandinavian countries are not good examples of democratic socialism in action because they aren’t socialist.

Sweden was once a “tax and pay” economy with some people having to pay more than 100% of their incomes as taxes. The government realized, after falling from 4th wealthiest to 14th wealthiest, that it needed several capitalist reforms to regain the consciousness it had once. Now, most of the means of production are owned by the private individuals and resource allocation takes place by free market economics, which means no government intervention.

No one remembers, but Scandinavia wasn’t always a watchword for social democracy. Indeed, Sweden was a free-market success story that which started as a poor country in the late 19th century. It then achieved take-off under a dynamic capitalist system into the middle of the 20th century. Its boom coincided with the time when its taxes were lower than those in the United States and the rest of Europe.

The Scandinavians are socialist in the sense that they have a hefty tax system and very generous social service system but they are capitalist in all other senses. They have low levels of interference in markets by the government, low levels of regulation, low levels of nationalization of industry and capital, and almost no protectionism.

You tell me, how can the countries be featured in “Top 25 most globalized economies in the world” and “Top countries for ease to do business” can even be near to the term “socialist”?

In response to Americans frequently referring to his country as socialist, the prime minister of Denmark recently remarked in a lecture at Harvard’s Kennedy School of Government,

I know that some people in the US associate the Nordic model with some sort of socialism. Therefore I would like to make one thing clear that Denmark is far from a socialist planned economy. Denmark is a market economy.

Comparison with the USA


If we talk particularly about Sweden, it is now less progressive than the United States. Harvard professor Gregory Mankiw writes that the wealthiest decile of Swedes carries 26.7 percent of the tax burden. In The United States, the figure is a whopping 45.1 percent. Additionally, wealth inequality is more pronounced in Scandinavian countries than it is in the United States. In Sweden, Denmark, Finland, and Norway, the top decile of earners own between 65 and 69 percent of the country’s total wealth, an astonishing figure. Sanders is apparently unaware of this reality, given that one of his primary reasons for praising Scandinavia was their low levels of wealth inequality.

Scandinavia has higher taxes and high personal debt

Even if their economies have wealth inequalities, the Scandinavian economies pay a lot of taxes to the government. According to the OECD, the average American spends 9.8 percent of his income on taxes; Swedes spend 12.3 percent, Danes 26.4 percent, Norwegians 10 percent, and Finns 12.9 percent. Perhaps because of these measures, government debt is less of a problem in Scandinavia than it is in the United States.

But that’s not true as an average Dane has a household debt equal to 310 percent of his disposable income; the number is 173 percent for Swedes. In America, the average is 114 percent. Scandinavia’s progressive tax systems fail to protect their citizens from staggering personal debt.

Finally, and perhaps most surprisingly, Sweden’s public education system is ranked lower than that of the United States. According to the OECD, Sweden ranks 30 of 37 in math and 24 of 37 in reading. The United States, meanwhile, is 27 of 37 in math and 25 of 37 in reading. Norway and Denmark are both ranked better than the United States, but not by much. These realities destroy the pervasive myth that “socialist” Scandinavian schools are the best in the world.

The other side of the story

Visitors say Danes are joyless to be around. Denmark suffers from high rates of alcoholism. In its use of antidepressants, it ranks fourth in the world. Its fellow Nordics, the Icelanders, are in front by a wide margin. Denmark’s productivity is in decline, its workers put in only 28 hours a week, and everybody you meet seems to have a government job. Oh, and as The Telegraph put it, it’s the “cancer capital of the world.”

Law of Jante

One of the most country’s most widely known quirks is a satirist’s crafting of what’s still known as the Jante Law — the Ten Commandments of Buzzkill. “You shall not believe that you are someone,” goes one. “You shall not believe that you are as good as we are,” is another. Others included “You shall not believe that you are going to amount to anything,” “You shall not believe that you are more important than we are” and “You shall not laugh at us.” This law is just something which is deceiving us of them being equal, happy, sharing and caring, and what not.

Denmark is a land of 5.3 million homogeneous people. Everyone talks the same, everyone looks the same, and everyone thinks the same. They are so much obsessed with averageness that the shipping tycoon Maersk McKinney Moller, the richest man in the country before his death in 2012, avoided the national shame of being a billionaire by climbing the stairs to his office every day, attending meetings until well into his 90s and brown-bagging his lunch.

The things, which are exciting and happening for us, for them are another bunch of depressing things. For example, once a woman excitedly mentioned at a dinner party that her kid was first in his class at school, she was met with icy silence. So Danes operate on principles which are about 100,000 years old — if you find it, share it, or be shunned.

Law isn’t the only downside

tax scandinavia.png

The flip side of the famous “social cohesion” is that outsiders are unwelcome. Xenophobic remarks are common. It’s considered a disgrace when someone tries to steer the conversation toward anything anyone might disagree about. This is why even the Danes describe Danes as boring.

In addition to paying enormous taxes, Danes have to pay more for just about everything. Books are a luxury item. Their equivalent of the George Washington Bridge costs $45 to cross. Health care is free, which means you pay in time instead of money. Services are distributed only after endless stays in waiting rooms. Pharmacies are a state-run monopoly, which means getting an aspirin is like a trip to the DMV.

Other Scandinavian countries raise other questions about how perfect the nearly perfect people really are. Iceland’s famous economic boom turned out to be one of the history’s most notorious real estate bubble.

Finland, which tops the charts in many positive surveys, is also a leader in categories like alcoholism, murder (highest rate in Western Europe), suicide, and antidepressant usage. Although their overall alcohol consumption is near the European average, they binge-drink more than almost any other country on the continent. The suicide rate is 50 percent higher than in the US and more than double the UK rate. Party guests, even at upscale gatherings, report that around 11:30 at night, things often turn into a fight.

So, the next time someone says gives an example about Scandinavia, let them know what actually goes on in there.

3 comments on “Debunking the Scandinavian myth

  1. Although I generally agree with you and your article, you can not blame all of the flaws on their economy too, as you didn’t do the reverse.
    Many of the flaws that you said, can be caused by cultural issued and a lot other factors. But I do agree with you on all other points.

    Liked by 1 person

    • The main motive was to show the whole story, whether it is due to cultural reasons or other reasons. We generally have a good image in mind about the Scandinavian economies and their people, so I had to mention all the points so that there is a balance between the good and the bad.

      Liked by 2 people

  2. George Moncaster

    This is something that I find hard to explain to fellows and peers, however this article beautifully helps me sum up why this form of government only works under a special set of conditions, and isn’t applicable to larger states. The perspective is well presented also, great work.

    Liked by 1 person

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