Social Democracy: There Are Always Tradeoffs

A discussion of the pros and cons of social democracy in relation to a more capitalist system.

Ed, I don’t think any system is perfect. I am well aware of many of the problems in the earlier years of social democracy. Before the housing market got de-regulated e.g. people did silly stuff like my parents such as swapping apartments. Some payed money under the table. The “cure” was to deregulate everything. But at times I wonder if the “cure” has ended up being worse the the disease. A house is now more than 5 times the income of a couple. Back in those days it cost less than a yearly salary.

The fertility rate is dropping all over Nordics and part of the reason for tha tis that it is simply too expensive for a young couple to afford house of decent size to raise a faily. Thank deregulation for that.

The trouble is when you get government dictating, you get overreach.

Except what you describe regarding salaries has nothing to do with government overreach. What do you think? That government specified that salaries for those stacking the shelves and for the managing director? What you describe sounds like an outlier. Sure salaries have always been compressed in Norwya but you are describing an outlier. Frankly I think you are adding a little bit of exagguration there.

Ah well, I was told, that’s the plumbers and electricians who got paid in cash.

That plumbers and electricians got a good salary is not that bad. With deregulation we have now seen salaries fall so much due to import of foreign labour that Norwegians are not choosing those professions anymore. The quality of the craftmanship is in free fall. It is a tragedy really. That is a the price of free wheeling capitalism. We are loosing hundreds of years of strong craftmanship traditions, thanks to this race to the bottom. Quality of housing is falling. Historical buildings are getting very poor maintenance due to lack of skill of new craftsmen.

The schemes went on endlessly, just to ensure people got — if not direct pay — a least a decent reward.

Government never set a ceiling on the salaries you could pay. So you are not giving a fair characterization of how this worked.

Also you present a very negative characterization of this. Even in modern times Norwegian companies have these kinds of conferences and they are highly prized by employees and companies as a way to get together and have a good time, build team spirit etc. I think you choose the most negative and bleak interpretation of this as possible. In fact I have worked at Norwegian companies taken over by American companies that have ended this kind of practice. I can promise you this has not been popular at all. These get togethers have been highly valued. In fact in job interviews today, this may be selling points for companies. They tell you about this to explain how nice it is to work there.

I have had great get together like this with hackatons e.g. and gotten to know my collegues a lot better. I think these things have been great. You are really taking a glass “halft empty” look at this.

Absurdities abounded, such as it was cheaper to buy a new car in Germany, slice it in half and import it as scrap and then weld it back together in Norway.

Yes, this has always been an entertaining story but it is a long time since that trick was possible to pull. Import taxes are always going to cause stuff like that. But is that an argument against having restrictions on trade? I don’t think so. Now we got more free trade than ever, and the consequences are far from positive in every respect.

COVID19 exposed a lot of problems. With key equipment, medication etc not being domestically produced and “hyper efficient” supply chains many countries got into a very troubled state. In fact the high import tariffs we have in Norway on food, made sure that we had one of the most secure deliveries of food during the pandemic.

Your example exists because Norway taxes cars a lot. That is a deliberate choice to encourage less driving and more use of public transportation. A country must be able to make those sort of political choices for the common good of society. Finding silly examples like yours doesn’t mean that such policies are worthless.

But mostly it was drudgery, enterprise and aspiration was knocked out of most people and creativity went out the window.

Based on what? There is no statistics that suggests Norway is actually lacking in enterprising spirit or in people succeeding. There are more billionaires in Norway per capita than the US e.g. 2.8 vs 1.8 in the US. Sweden does even better with 3.2. That is an impressive number given that Norway taxes the rich a lot.

Image for post

Comedian Harald Eia has a fun take on this actually in his TED talk: Where in the world is it easiest to get rich?

Social Democracy also actually gives a lot of benefits for entrepreneurs. If you are unemployed the unemployment agency can keep paying you while you start your company. Likewise starting a company is much less risk than the US because you don’t loose health care for your kids and family. In the US starting a business means you put a lot of you life on the line and you can fall pretty far down.

Quite the contrary to your implication, Social Democracy makes it much easier to go out on a limb and do a startup: In Norway, Start-ups Say Ja to Socialism.

Despite being half Norwegian with cousins around, I couldn’t wait to get out for a more exciting life.

I have never claimed Norway is exiting, but that has less to do with social democracy and far more to do with culture, weather and low population. You cannot replicate exiting cities like London or New York in low population countries like Norway. And the culture is what it is. You will find the same in North Dakota and Minesota. Despite being in capitalist America, these are not any more existing places. Quite the contrary I would claim modern day Norway is a lot more exiting than either of those places. But preferences vary.

It’s taken over 30 years for Norway to get back on track from this utopia and it’s never left my generation. Thankfully their kids have more drive.

Back on track implies it was really ever any different. Norway has been a society with relatively small differences between people even back to Viking ages. Government has long played a significant role. The hydro-electric power that helped Norway get rich in the 1920s was mostly built out with the Norwegian government and with dugnad by local residents. The collectivist spirit very much built modern Norway from the beginning. Imagining there was some mythical “before-time” where everything was different simply betrays a limited knowledge of Norwegian history and culture.

I say this to illustrate, that with the — collective, we are all the same mindset — society is never far from being dragged down to a dull, grey consensus where uniqueness and trying to better yourself is frowned upon.

But that is Nordic culture. You cannot pin that on Social Democracy. The Law of Jante which describes so well the negative side of the conformist Nordic culture was described in a novel by Danish-Norwegian author Aksel Sandemose’s satirical novel A Fugitive Crosses His Tracks. That was published in 1933. The Norwegian labour party began governing in 1935. So you cannot pin a culture of conformity on Social Democracy when the first Social Democratic government of any length began in 2 years after the conformist culture was first made famous.

As I said no Nordic country is perfect nor is Social Democracy. However there is a tendency for detractors to pin every problem in Nordic society on Social Democracy and to explain every success story with capitalism. This is disingenuous as the Nordic success is built on a symbiosis of a between and effective state, collectivism and a thriving private enterprise all working together. The socialist mechanisms provide the well educated and healthy population which the private enterprise needs to succeed, as well as creating the high trust levels which oil the machinery of private enterprise. You cannot have successful enterprise in a society with low trust. Look at South America for examples of that.

Geek dad, living in Oslo, Norway with passion for UX, Julia programming, science, teaching, reading and writing.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store