Saturday, August 17th, 2019

Twilight of the Scandinavian Welfare State

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Part of me says I’ll believe it when I see it, but the Scandinavians and the Finns are getting impatient for reform of the welfare state.

With the loss in Denmark last week, Sweden is now the only remaining country in the Nordic region run by a social-democratic prime minister. But even there it wasn’t the left that won the latest election. The combined support for the three parties on the left was almost the same in 2014 as in the previous election. The center-right government of Fredrik Reinfeldt lost because many voters abandoned it for the anti-immigration Swedish Democrats. Recent polls show that the Swedish Democrats continue to make inroads—and are close to being the party with the most male voters—while the Social Democrats struggle in the polls. Much of the region has been following the same pattern.

The Danish Social Democrats are, however, an exception, ever since they began embarking on a courageous dialogue with the electorate about the need to modernize the welfare state. Two years ago, for instance, the government published a report showing that 400,000 Danish citizens had limited economic incentives to work due to high taxes and generous benefits. This in a country with a working-age population of less than three million. The Social Democrat government promised to increase the incentives to work, but acknowledged that 250,000 individuals would continue to have little incentive even after the reforms.

American liberals like to ask why we can’t be more like the Scandinavians. Here’s a good example of why not:

The Danish diaspora living in America, for example, has a lower level of poverty and a 37% higher standard of living than their cousins back home. This shouldn’t come as a surprise, since numerous studies show that high taxes and generous welfare benefits are impairing the Danish economy. Welfare dependency easily translates into widespread social poverty.

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