You want the Nordic model? Look ahead, not east

utopia_like_any_otherDuring both the independence referendum and the following general election I worked for a Scandinavian broadcaster, travelling around Scotland interviewing people about how they would vote.

Naturally, a Nordic film crew pitching up became a regular topic of conversation in the interviews themselves, especially given the promises made by the Yes campaign regarding a ‘more Nordic’ Scotland. Every Scottish household will have received a newspaper from Yes Scotland, which alongside the opportunity to win a car and an i-pad also contained a feature on Norwegian childcare, among other nods east across the sea to a better world.

So it was that four days after the referendum I was sat on a slow train from Gothenburg to Stockholm, rolling through the small settlements of ‘middle Sweden’, or Mellansverige. These small factory towns were the heartland of Sweden’s industrial development through the 20th century, and by extension important anchors in the total domination of Swedish politics by the Social Democratic Workers party for most of the postwar period.

The Sweden of today is a very different place to the idyll commonly pushed across in rosy discussions of the Nordic model, which often take on the flavour of middle class catalogue shopping. If you pitch up in Scandinavia on a press junket then you will meet lots of similarly white, educated and wealthy people. The lifestyle articles regularly pumped out in the UK and US about Nordic food, cabin lifestyles and childcare are merely the tip of a complex socio-economic iceberg. The Nordic model has a deeper, and far more important component that most foreigners never see.

When celebrity economist Thomas Piketty wrote Capital in the 21st Century, he compared a number of developed Western countries, one of which was Sweden. There was partly a practical reason for this – Sweden has some of the best and most consistent labour market data of any country in the world. More importantly though, for a period in the 1980s Sweden also exhibited a level of inequality significantly lower than any other comparable developed country. How it came to be so is complex, but the simple answer is that it was able to combine large scale social spending with an impressive industrial machine that drove its welfare economy forward.

Interestingly, even under the conservative coalition governments that ruled Sweden from 2006 to 2014 public spending as a proportion of GDP was higher than at any time under the last Labour government.

These might sound like prosaic details, but this is perhaps the single biggest driver of the Nordic model. Infrastructure, from broadband to railway lines, does not come for free. Neither does childcare, nor free university education or aid spending.

These might sound like prosaic details, but this is perhaps the single biggest driver of the Nordic model. Infrastructure, from broadband to railway lines, does not come for free. Neither does childcare, nor free university education or aid spending. John Swinney would find very little common ground with his Nordic counterparts, apart from in Iceland perhaps where the economic orthodoxy is a little different despite the ‘pots and pans revolution’.

SwedenmetroThis is where the Holyrood 2016 SNP election pitch becomes so interesting. A reluctance to reform the local tax system, or even to increase the top rate of income tax, all but rules out any real commitment to Nordic public economics. Instead there is a Scottish Government commitment to a sustainable and equitable growth economy. It means running the show without having to make any serious changes, and letting growth fill in the gaps that tax otherwise might.

The common excuse given for such political relativism is globalisation, and the idea that political economics and business and economics are now tantamount to the same thing. As Thomas Piketty acknowledges, the world is indeed very different today compared to the Social Democratic golden age of the 1960s. With migrant crises, climate change, complex shifts in wealth and ‘the global race’. We are now living in what the sociologist Zygmunt Bauman has labelled ‘liquid modernity’, a time when capital is fluid, political movements transient and the global picture chaotic. This is somewhat similar from what the Channel 4 Economics editor Paul Mason has tried to put across in his popularization of post-capitalism as a concept – reading from the old rulebook will win you no progress.

Negotiating liquid modernity is a challenge for any government, but it seems doubtful that the Holyrood council tax freeze will be remembered as a turning point in the building of a new Scotland. Sweden likes to label itself ‘the most modern country in the world, and it has started to rethink how it fits into the global picture and what role it might play. Sweden’s grand narrative of modern progress is one everyone can sign up to. For the time being though SNP Scotland seems to have put its own future on hold indefinitely.

Dominic Hinde is an academic and foreign correspondent. His first book of reportage A Utopia Like Any Other: Inside the Swedish Model is available from Luath Press and can be
pre-ordered from Word Power Books.

Comments (21)

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  1. Clive Scott says:

    Absurd argument. You are expecting the SNP to implement economic and social policies along Nordic lines armed with the Mickey Mouse powers contained in the Scotland Act and nonsense Smith Commission. What planet are you on?

    1. John Page says:

      Do you think you could have phrased that more respectfully?

      1. c rober says:

        I donth think the author is though , but given there is no narrative to mean post independence it would be a reasonable presumption.

        1. John Page says:

          I am sorry but I don’t understand your comment. Do you agree that when Bella engage contributors in good faith to produce interesting articles, it is acceptable to respond with short dismissive and disrespectful posts?

  2. bringiton says:

    The most successful economies in the world are those whose societies have acted collectively to produce that outcome.
    England’s neanderthal Tories have been pushing third world models (where the rule of law is determined by a wealthy elite) as the way to go.
    Their “No such thing as society” crede as espoused by their deity Thatcher has led the UK down the path of inequality and limited opportunities for the majority.
    Not,I am sure,what was initially intended but hijacked by the wealthy along the way in order to preserve their lifestyle and influence.
    In Scotland,the political choice is now clear,Tory third world economics and culture,or a return to collectivism.
    History shows which model has been the most successful but people are going to have to see beyond the Tory propaganda from HM Press if they are to achieve a more successful society.

    1. c rober says:

      But we can also add nulabour there too , in convincing the voter they are middle class , its removing the working class. Something that I have long said didnt work in Scotland , it has a heritage of being proud of the working class badge , as well as being the downtrodden by the true middle class system.

      This is perhaps why the SNP have capitalised on that disenfranchised voter , the socialist worker , welcoming to its mothering arms , well to a point. Not entirely of its own doing of course , thus the Westminster result.

      Which is strange considering the Holyrood elections , with a FPTP SNP routed the rest to fill Westminsters alloted Jock quota , but with D’Hondt and PR in Holyrood only serving to make the Governing more conducive than productive and without the proper levers of control.

      The next 5 years , well , it means deals , or deliberately land mining them. Where the SNP can erode the Tory unionists , whom are now flushed out of Slab – into political corners ready for hearing the click underfoot.

      I am beginnning to realise that whinge politics of the SNP is not futile so much now , but would still like to see a referndum on the creation of a People bank of Scotland.

      I know I sound like a broken dyslexic record at times , but we have to realise that if London is in the Banks pockets , and the largest debt burden we will ever personally or Governmentally have is to those banks , then remove the power or their control is that way forward.

      Using the added income powers to wean the masses off Private and High Street banks , at least for mortgages , can be done with a Peoples Bank.

      Ceeding that power to decide on EXTRA taxation and choosing how it works is that way forward.

      With the ideal way to host those banks , as well as the mortgages , being at the Council level , giving them income and competitive interest rates vs the council sourcing loans from the usual culprits.

      Why would I like to see this done , well it removes the Tory BT poisoned chalice element , and therfore a Government that would involve its people in its most affective , or affecting , decisions.

      In todays digital world , with NI numbers , smart cards and smart phones , digital decision making becomes cost effective. Simply having a internet petition for discussions within the chamber is a token chocolate teapot for involving the public , one that is easilly shot down.

      If we can bank online safely using a bank card , then perhaps that system can be used ironically combined with ones NI number for making those decisions in todays cloud.

    2. Ian Kirkwood says:

      Has anyone heard of the term social capitalism? It is a loaded name at both ends but is nonetheless an accurate description of the workings of AGR in which taxes are removed to allow enterprises to flourish but ground rents are collected to run public services. In this revenue system, you keep what you create and pay for what you use.

      Picture flourishing enterprises competing for land on which to house those enterprises. The land values rise through competition but the values are collected at say 5% a year. Collecting land rents cancels land speculation making land affordable. Redistributing the rent of land reconnects all citizens with their country, cancelling the creation of citizen outcasts — and inequality.

      1. Ian Kirkwood says:

        There are massive rewards for the country that chooses AGR at 100% as its revenue system. That should be Scotland. Countries with a large measure of AGR (but retaining low levels of income tax for example) are Hong Kong, Taiwan, Singapore etc. With rent-as-revenue they overtook our economy long ago.

  3. Bert Logan says:

    It not ‘take the Nordic model’ in my eyes, its learn from those models while adapting/fixing their problems, rather like we learned from neoliberalism – its only about the 1%.

    We cannot do this until we have total control via indepdendence. The current ‘tax powers’ are woefully inadequate to do anything other than papering over cracks – cracks induced by the Westminster neoliberal agenda. The Labour party should be destroyed for their complicity in the Vow/Smith process. The Tories – well, its their MO.

    1. Ian Kirkwood says:

      Holyrood can REDUCE income tax and raise a land tax (AGR/LVT) now!

  4. Phil says:

    ” A reluctance to reform the local tax system, or even to increase the top rate of income tax, …….” seems to be the core of Hinde’s analysis on why, on current evidence, this new SNP government will not propel Scotland toward a more equalitarian, Nordic style society.

    Yes Clive, there are insufficient powers at this time, and the absurd, Mickey Mouse ‘Smith’ will never deliver much that will be useful. That does not make Hinde’s premise absurd. It shows why this SNP government should keep its short-term actions and reactions closely focussed on the fundamental movement toward a more fair and more productive society – all the while pulling off the New Zealand gambit of simply behaving like a sovereign nation until no one recognises us to not be so.

    Unlike Conservatives in Scotland and Labour in Scotland and Lib-Dems in Scotland the SNP has no foreign power to placate. But there are imposed budgetary and specific policy restrictions.

    Hopefully most Scots have already shown that movement toward Hinde’s implied higher social cost yielding higher social gain is acceptable. Just as most of the Westminster-tholed UK elite have no use for wider social gain so long as their position is maintained.

    Hinde has given us a small, useful window into the Nordic situation. To succeed we must know what our objectives are and what the implications of their attainment are.

    1. c rober says:

      THe nordic dream has its nightmares too.

      Gone are Saab , Volvo just how many times has that had a stay of execution.

      Norway with its Soverign wealth fund has though weathered the storm , an oil based income , that only took the interest out , and even then very little , knowing that price goes down as well as up.

      The Uk though never used a wealth fund , spent it propping up the UK and removing industry as the weighted part of the economy to be replaced with services and banking , the lions share of GDP based predominately in London and the South East.

      So Scotland needs to think outside of that box , Holyrood will never get those levers , without ironically the creation of a Public Bank , using what little taxation powers it has , and where the voter chooses the long term wealth of Scotland regardless of independence , negating the poison chalice element that would see Holyrood in a negative way.

      1. c rober says:

        Forgot to add Norway still has shipyards , very good modernised ones , something that also aligns it with Scotland of old.

        1. Alf Baird says:

          To say there are “insufficient powers at this time” is a misnomer. As Andy Wightman MSP of the Greens and others have shown, a well thought out land tax introduced by Holyrood would chase every offshore unionist banker, landowner etc (and their over inflated asset values which we pay for, and which would collapse) out of Scotland back to Cayman, Guernsey and Bahamas as fast as Usain Bolt can run. Its a pity we have a unionist (UK ‘Home’) civil service in Scotland, who would seek to thwart such a policy. However the ‘power’ to tax land is already there.

          1. Ian Kirkwood says:

            The Scottish Land Revenue Group pushes for the same.They call it AGR (Annual Ground Rent) which is synonymous with LVT. Are we aware revenue raised on land is free of the deadweight losses of taxation that amount to at least £1 lost for every £1 raised? Thus, implementing AGR would turn Scotland’s £12 billion deficit into a sustainable and growing £12 billion surplus (Professor Roger Sandilands).
            It’s an option available to Holyrood NOW — to do something different to rescue Scotland from eternal annual deficits (and perpetually growing debt) that are chosen by deliberate government tax policy just to keep site owners flush.

          2. Alf Baird says:

            Thank you Ian, and I forgot to mention AGR/LVT probably also represents a rather good way to rectify and overcome the numerous public sector mistakes over PFI contracts, allowing for claiming back much of the excess profits and fees as it were.

  5. ELF says:

    “…John Swinney would find very little common ground with his Nordic counterparts, apart from in Iceland perhaps…”

    As an erosion of a fanciful projection, I sort of agree. Yet, given ‘Third Way’ transformation of Social Democracy in e.g. Denmark, then counterparts aren’t too hard to find. It just forestalls a comparison of neoliberal convergences, however contingent they remain. Here’s Swinney in Norway in 2014, extolling the competitive virtues of Social Enterprise across government:
    “What the Procurement Reform Bill does is essentially open up the market of possibilities for different social enterprises to gain access to public sector contracts and opportunities […] What we’ve done in Scotland is take a very focused approach right across government to encouraging more development within the third sector and the social enterprise community. That’s been right across government, it’s not been in different compartments […] and it’s given a much greater prominence to the opportunities for the social enterprises sector…”
    John Swinney, Ferd Sosiale Entreprenører 2014
    Given the under-reporting of waves of national strikes in Iceland (actions in response to imposed labour restructuring following re-election of the right and early IMF repayment ‘austerity’) any such common ground ought to be of more concern. Looking at the list of occupations, just about everyone went on strike in 2015/16, with even the police pulling ‘sickie strikes’ or ‘solidarity flu’.

  6. Iona says:

    Tax rises in Scotland just now are only to counter the Tory austerity assault. Let’s tax Scot’s more to counter the policies of a Government they didn’t elect!!! A Government which in turn will reduce the block grant so that we never move forward. Really! That makes sense, does it? Not to me.

    Post independence … now that’s a different matter. With all the economic levers to best use tax rises to move our country closer to that Nordic model, now that is something I would like to see.

    1. John Page says:

      I think we could have a thorough debate about this re Income Tax but I would refer to Ian Kirkwood’s advocacy of a LVT/AGR above…….this is something many of us want after independence and we can do it now. It would be transformative in so many ways. I think Andy Wightman has carried out detailed modelling to move from existing business rates/council tax to a LVT on a revenue neutral basis. A Scottsh Govt could do this initially but then move to partially shift the burden from income to land with progressive benefits in terms of enterprise, employment as well as changing the supply of land for housing.
      There are better and more articulate advocates for this than I am, but I would like to see a non party Yes Group (no doubt there is a better name) carrying out persuasion on this LVT tax idea, a written Constitution for Scotland etc etc to get cracking with ideas to make Scotland flourish and especially to inspire our young people who have (on the turnout figures last week) not been inspired by party politics
      Thank you

      1. Ian Kirkwood says:

        Today the Scottish Land Revenue Group has written to John Swinney in response to two reasons given by letter from Holyrood as to why AGR/LVT does not figure in SNP Council tax replacement recipe despite the clear call for such by the tax commission. These were 1. It is not widely understood and 2. Impacts on institutions are unknown.

        In its letter the SLRG expresses its wish solve issue 1 by working together with Holyrood to help broaden understanding of AGR and the widespread benefits it would bring. To this end it has built a facebook page to try to make AGR’s massive reforming power understood. But parties or administrations adopting AGR will make a bigger impact.

        To address issue 2 the SLRG has requested that resources within John Swinney’s department be made available to crunch the numbers and assess not only the impacts on institutions but also the benefits that would accrue to Scots. It is the duty of government to investigate fiscal measures that promise to advantage citizens. And the Finance department at Holyrood has the figures at its finger tips. SLRG’s three economists have also been placed at Holyrood’s disposal.

        We are talking about a measure which if adopted would turn Scotland’s £12 billion deficit into a £12 billion and growing surplus to be shared between the public and private sectors (Sandilands). Can Holyrood afford to ignore AGR? No. Nor do we want to borrow more each year for ever (threatening Indy) to stay solvent. Because we have the option not to.

    2. Alf Baird says:

      As John notes, I think Iona misinterprets AGR/LVT, which might rather have more of a focus on the likes of offshore tax haven corporates and PFI ‘operators’ who continue to exploit the public and the public purse relatively unhindered.

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