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European Economic Policy and Social Justice

by DowneastDem Fri Dec 30th, 2005 at 12:08:20 PM EST

The Berlin-based think tank berlinpolis recently released a study on European economic models and social justice.  You can download the study in either German or English HERE.

The authors identified three dominant economic models in Europe: the continental model, the Anglo-Saxon/liberal model, and the Scandinavian model.

They then sifted through statistics pertaining to key social and economic categories: poverty, access to education, employment and family policy.

The Scandinavian model turns out to be the most just and the most successful. The Scandinavian countries provide high-quality universal services for all families and needy individuals, and scored higher in all fields than the EU average.

Question to this group: How transferable is the Scandinavian model to other EU countries?  Why is the Anglo-Saxon liberal model always held up to be the most competetive and sustainable model?

Welcome to ET...and to the ongoing debate on this subject...though now will have to go read this and report back! Thanks for bringing this work to light!

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia
by whataboutbob on Fri Dec 30th, 2005 at 12:19:50 PM EST
It would be nice to see statistics on wealth inequality for the same countries. The other factor that might be an influence is the spending on non-social support programs by the governments.

In the US, for example, there has been a pronounced shift in both income and wealth distribution over the past 30 years to the top 1-2%.

Similarly, the federal government spends about 50% of the discretionary budget on militarism. With this sort of pattern many argue that the rise in poverty and the stagnation of the working class is inevitable. So, it may not be so much the social polices, but the amount of money allocated that is a factor.

We really need a few economists from other parts of the world to contribute to these discussions!

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Fri Dec 30th, 2005 at 01:35:53 PM EST
The poverty rate in the US really hasn't changed dramatically since the 1960s, when Johnson began pushing through the War On Poverty as part of The Great Society.  We sort of hit a plateau.

But you're right about the change in distribution and especially about the nauseating, enormous military budget.  Note, however, that thirty years ago we began to see the decline of unionized manufacturing labor, too.  The jobs began to shift to the Deep South or overseas.  (China is so the new Japan.)  I think much of it is a result of structural change, and less the result of government policy, though government policy has clearly shifted to being beneficial to the wealthy, with the exception of the Clinton years (which, overall, I would count as being slightly more beneficial to the poor and working-class).

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Fri Dec 30th, 2005 at 01:44:12 PM EST
[ Parent ]
Good questions.  The Scandinavian "model" has always baffled the free-marketeers, because it achieves strong growth with generous social welfare.  Part of the reason, I've read, is because Scandinavian countries use very long-term economic policies.  The idea -- and it's not wholly unlike the Japanese strategy of two or three decades ago -- is, again from what I've read (and I admit that I'm not incredibly familiar with their policies), to tilt the scales toward small businesses.  They're able to grow and become multinationals (or large nationals), and the cycle repeats itself.

So the economy can remain dynamic, keep revenues up, and sustain the social welfare.  That's a horribly watered-down explanation, but hopefully it makes some sense.  They also have oil, and, given the relatively inelastic demand for oil, they can tax these businesses at high rates, passing the bill on to consumers elsewhere (though Scandinavian citizens do, I believe, pay very high prices).

Whether any of these strategies are sustainable, in the long run, is anybody's guess.  (I'm not going to pretend to know the answer.)  I think much of the talk about the Anglican "model" results from the shock of Britain maintaining high growth rates, low unemployment, and strong wage growth while the world went into recession in 2001.  Britain was one of the few success stories, so, naturally, the press, think tanks, and academics ran to defend the "model".

Economies reflect the cultures they result from and govern (and they govern more than a government could ever dream of).  So, to some extent, countries have to find the balance that best-fits their cultures.  Businesses and wealthier people may not mind paying higher taxes in Sweden, but they may mind it in Britain or Switzerland, so the effects can be very different.

Just a few thoughts.  Great topic.  I hope everybody will join in.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Fri Dec 30th, 2005 at 01:37:42 PM EST
AFAIK only Norway got oil.
And there IIRC the profits from the state owned oil company go into a trust fund. Sort of a "savings account" for the time "after oil".

Neither Denmark, Sweden or Finland do have any significant oil fields so that´s not an explanation for them.
In Finland a good education system seems to be one advantage.

by Detlef (Detlef1961_at_yahoo_dot_de) on Fri Dec 30th, 2005 at 04:37:12 PM EST
[ Parent ]
Or possibly Galbraith's argument that an economy that looks after its people is better placed to compete in a modern economy than one that treats them as interchangable cogs has some weight...
by Colman (colman at eurotrib.com) on Fri Dec 30th, 2005 at 05:12:11 PM EST
[ Parent ]
On that, I have no doubt that he's right (depending on what he means by it).  You'll get no argument from me about the government's role in preparing and helping citizens in the modern economy.  But how does he propose we look after people?

Be nice to America. Or we'll bring democracy to your country.
by Drew J Jones (pedobear@pennstatefootball.com) on Sat Dec 31st, 2005 at 11:23:05 AM EST
[ Parent ]
It does seem that Scandanavian numbers should be looked at with and without Norway, because the North Sea oil impact on their small population intuitively would seem to skew the numbers.  But my hunch is Scandanavian numbers would still be very good.  

But then I wonder what impact a very stable society, with a strong shared vision of the values and culture of the country would have.  In relative terms, the Scandanavian countries have had far less impact from immigration, in terms of new cultures, religion, values, etc.  And it is interesting that the impact of new population groups in Germany and France have caused challenges over the past years.

I doubt there is an apriori answer to this--is immigration and resulting challenge to existing norms good or bad?  IMHO it has been clearly positive for the US throughout its history.  

Just wondering about some of these social impacts, and their impact on the hard economic numbers that we see when these comparisons are made.

by wchurchill on Fri Dec 30th, 2005 at 10:31:23 PM EST
[ Parent ]
Back in September, I posted this comment with regards to the impact of oil income on the overall economy:
Norway is obviously benefiting from the significant income that the oil sector provides.  The state budget for 2005 estimates income of NOK 838 billion (1USD=6.28NOK at today's rate).  Income derived from the petroleum sector is estimated to NOK 285 billion - hence, income excluding oil sector is NOK 553 billion.  Expenditures, excluding the oil sector was NOK 627 billion - requiring a transfer from the Petroleum Fund of NOK 74 billion, i.e., 11.8% of total expenditure.  (Sorry, no link to English doc - here's the pdf from the Ministry of Finance in Norwegian).

There is wide political consensus that the income from petroleum sector is to benefit the whole society over the next several generations.  The objective is to transfer the net cashflow from the oil sector in its entirety to the Norwegian Petroleum Fund and that only the real annual gain on that portfolio is transferred to the state budget for expenditures.  We're not quite there yet - the total nominal gain for the fund is estimated to NOK 43 billion.  I have been unable to find the estimate for real gain, which is obviously a bit lower.

(links to documentation in original comment)
by ask on Sat Dec 31st, 2005 at 06:15:17 AM EST
[ Parent ]
There are cultural issues that have to be disentangled from this discussion. For example, one problem you're going to have to consider is why Minnesota has such a good economy while Louisiana has such a lousy economy. Both states operate under the same Federal laws, have the same population, are roughly the same size, etc. Does it have anything to do with Minnesota being full of Scandanavians? Does that imply anything about Scandanavians in Europe?
by asdf on Fri Dec 30th, 2005 at 05:45:52 PM EST
Careful.  You're opening the gates to more French-bashing. ;)

Maybe it's because Minnesota is so fucking cold (it was -25F at one point last year), so workers feel the need to keep moving -- thus allowing them to get more done, while people in Louisiana lazily soak up their warm weather....

...Yeah, I've been reading Freakonomics too much.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sat Dec 31st, 2005 at 11:26:57 AM EST
[ Parent ]
Are you implying that Nordic populations have a stronger work ethic?

I think it comes down to education.  BMW and Mercedes located their plant facilities in South Carolina and Alabama respectively, only after they obtained commitments from both states to establish worker apprentice programs in both states (along with huge tax incentives). Today, they achieve the same quality in those plants as they do in Stuttgart or Bavaria.  

Dialog International

by DowneastDem (david.vickrey (at) post.harvard.edu) on Sat Dec 31st, 2005 at 11:57:39 AM EST
[ Parent ]
Are you implying that Nordic populations have a stronger work ethic?

A professor of mine, in a class on Eastern Europe economies, used to lecture us about which people were the hardest-working.  He, being a Serb who loved to make fun of himself, claimed the Serbs were the most lazy, along with the Latinos.  He said the Germans, Chinese and Japanese were the best workers.  The Americans, Brits, and French were somewhere in the middle, and everyone else didn't matter.

He also said that anywhere you find high concentrations of Orthodox Greeks, you'll find little development.

Very odd man, but he always made the class interesting.

I agree that most of it comes down to education, but the South has a lot of work to do on that front.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Sat Dec 31st, 2005 at 12:16:18 PM EST
[ Parent ]
Ha! In the US Mercedes has been rated as one of the least reliable brands for several years. My mechanic agrees.

I have also heard stories of technical training manuals that had to be rewritten as picture books because of the limited literacy of many workers in the South.

Education is certainly a factor.

Do not feel safe. The poet remembers.
Czeslaw Milosz

by Chris Kulczycki on Tue Jan 3rd, 2006 at 03:26:01 PM EST
[ Parent ]

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