The Nordic countries have long served as a “realistic utopia” for the left.
The high wages, generous welfare states and forward-thinking social policies of Sweden, Finland, Norway, Denmark and Iceland have long convinced social democrats that significant change is possible without a violent revolution. Indeed, policies that seem like pipedreams elsewhere have become entirely banal in the far north.
Into this tradition falls the new book The Nordic Edge by Australian researchers Andrew Scott and Rod Campbell. Launched last week by the Nordic Policy Centre, a joint venture between Deakin University and The Australia Institute (TAI), the book implores Australians to look to northern Europe for policy inspiration from taxation to diplomacy to electric vehicles.
As TAI’s executive director Ben Oquist writes in the book’s introduction: “There is only one thing more powerful than an idea whose time has come, and that is an idea that has already arrived.”
Do these Scandophiles have a point?
For instance, the United Nations’ latest Sustainable Development Report dropped earlier this month, which measures countries’ progress on poverty, hunger, health, education, and more. Finland took out the top spot, followed by Sweden and Denmark.
Australia, conversely, dropped to 35th place overall and was ranked dead last on climate action. We clearly have much to learn.
The secret to their success
The causes of Nordic advantage have long been debated, usually with a healthy dose of ideological rancour.
Conservatives and centrists often argue that Nordic nations’ egalitarian programs are only enabled by deregulated, “free market” economies. Cut-throat capitalism brings in the riches needed to finance feel-good redistribution.
But Matt Bruenig of the People’s Policy Project has comprehensively debunked this framing, pointing to much higher levels of government ownership and employment, union power and workplace regulations in Scandinavia compared to the Anglosphere.
The real Nordic secret sauce is an ingrained acceptance of much higher taxes in exchange for public goods, in contrast to the small-government proclivity of the US and UK.
Can the strategy be replicated?
Sceptics often claim that Scandinavians only support high taxes because their communities are relatively “monocultural”. Swedes may be happy to see large portions of their income redirected to blonde-haired, blue-eyed beauties like themselves, but multicultural societies like the US and Australia breed too much resentment to foster a sharing ethos.
This may once have been a plausible claim. But, as Scott and Campbell illustrate, the Nordic nations have become increasingly multicultural in recent decades, accepting a large number of refugees. Tensions have emerged, but they have not yet imperilled the bloc’s commitment to strongly progressive taxation and transfers.
If “red tape” and immigrants aren’t to blame then, why doesn’t Australia look more like Finland or Denmark? Scott and Campbell suggest it could and should — nothing is holding us back but our own closed-mindedness to models beyond the Anglosphere.
Road to socialism is paved with ‘middle-class welfare’
But in trying to free our minds from “path-dependent” myopia with a policy smorgasbord, The Nordic Edge under-emphasises some structural traps Australia has set for itself in raising both welfare payments and wages to Scandinavian levels.
For instance, Scandinavian welfare systems provide predominantly universal benefits, available to all citizens. This increases public support and makes them harder for miserly politicians to scrap — they’re not just depriving an easily-demonised underclass but the whole community.
Conversely, the Hawke government pivoted Australia away from a previously universal welfare model towards means-testing. While this might seem like targeting benefits to the neediest, simple progressive taxes can be far more effective equalisers and don’t undermine class solidarity.
Look again to the north
This isn’t the first time Australia has looked to Scandinavia for policy inspiration. Hawke sent a delegation of unionists to the Nordic states to steal their best ideas nearly 25 years ago. Perhaps it’s time for another such trip.
Last week, TAI also launched the Carmichael Centre, a research hub named after former Australian Council of Trade Unions (ACTU) official Laurie Carmichael, who led the mission.
The resulting report proves prophetic in hindsight, recommending against moving towards enterprise bargaining which, similarly to means-testing, atomised Australian workers. Conversely, the Nordic countries’ industry-wide bargaining and democratic workplace structures lock unions and employers into raising overall living standards through productivity instead of lecherous profiteering.
Alas, the report was mothballed as our economy fell into the early 1990s recession and the conservative press screeched against efforts to “Swedenise” Australia. The ACTU later accepted Keating’s plan for enterprise bargaining, which it is now walking away from after years of anaemic wage growth.
TAI’s latest efforts are a welcome invitation for Australians to reconsider northern Europe’s leading policy example. Progressive policymakers should heed its advice, lest we look back on the compounding effects of our mistakes and know that, once again, we were shown a better way.
Want to learn about Nordic policy solutions that Australia should note? Subscribers to Mandarin Premium can listen to the authors of the brand new book The Nordic Edge discussing their work at a Mandarin Talks webinar, Wednesday July 14. Click here to find out more.