Beyond Labels

A 360° Discussion of Foreign, National and Local Policy Issues

The right to have an opinion

Scott offered “double the speaking time” of anyone who reads both articles for this week’s discussion, and suggested that reading it “should only take 10 minutes.”

I read it and I spent way more than 10 minutes (not counting the time I’ve spent writing this). So I’d like triple the speaking time, please. See my comment at the end about “The right to have an opinion.”

The WSJ article is a rehash of the longer report. The longer report may be factually correct but it’s misleading.

The author argues that there’s no “democratic socialism in the real world.” Scandinavian countries aren’t really socialist, and he gives us a quote from a Danish Prime Minister to back him up. Unless you read the quote carefully. Then maybe not so much.

A quick trip to Wikipedia helps us understand the difference between Socialism which is “a range of economic and social systems characterised by social ownership of the means of production and workers’ self-management,” and one of the systems, the Nordic Model, described more fully as Social Democracy, which is “a political, social and economic philosophy that supports economic and social interventions to promote social justice within the framework of a liberal democratic polity and a capitalist mixed economy.”

So maybe there’s no such thing as “Democratic Socialism” but there is such a thing as Social Democracy, as practiced in Scandinavia.

And the Prime Minister is right: “Denmark is far from a socialist planned economy. Denmark is a market economy.” In other words, it’s a Social Democracy, according to the Wikipedia definition.

The purpose of any system of government is to produce a set of outcomes–or make them more likely. What you call the system that gets you those outcomes matters very little. So let’s skip to page 8 and talk about outcomes. Here are the graphs the report presents.

Let’s start with the Gini coefficient, a measure of income disparity. A coefficient of 1 means one person gets all the income. A coefficient of 0 means everyone gets the same. If you’re in favor of income equality, you want a lower index. If you’re a radical you want a zero index, but most people agree that some inequality is fair and even good. The Scandinavian Gini coefficient shows that outcomes are much more equitable than the US–and especially with adjustment for taxes and transfers. So that sounds good.

However, you define poverty, the rate in the Scandinavian countries is a third that of the US. Sounds good.

However you define workers’ rights, they are a third better than in the US. Sounds good.

95% of students at public universities, where tuition costs are 10% of US costs. Sounds good.

Ease of “hiring and firing” is less in Nordic countries. But that really means: you can’t get fired as easily. Sounds good if you are a worker.

Flexibility of wage determination sounds not-so-good, until you pull off the covers and see that since the Nordic unionization rate is high, most workers are paid according to collective bargaining agreement. So it means that most people are paid according to negotiated job descriptions. Likewise collective bargaining coverage. If you’re a pro-labor person, these are good outcomes.

The only graph that looks bad for the worker is this one:

What a surprise! The labor share of GDP in the US looks almost twice as high as the Scandinavian countries. Labor gets more in the US!

That means however screwed labor is in the US, labor is screwed twice as badly in Scandinavia.

Oh, wait a minute. Look at the numbers: 53% versus 56%. So it’s not way higher. It’s a little higher. Hmmm. I wonder why the graph was laid out that way? Possibly to mislead us? Nah! Nobody at JP Morgan would do that.

What is the labor share of GDP anyway? Turns out that it can include both the labor of the wage earner and the labor of the CEO. So maybe the labor share of GDP in the US is higher because of all those fat cats paying themselves so much.

Still, who’s getting the other half. If it doesn’t go to labor it goes to capital. Which means what?

Capital means both rich individual investors and the owners of investment funds. Some investment funds are owned by rich folks but some are pension and retirement funds which benefit working people. The split between rich folks capital and pension and retirement capital might be the same in both countries–or it might be different.

Remember the Gini coefficients? If anyone wants to bet, I’d go for the split being more in favor of working folks (and by that, I don’t mean CEOs, even though they work) in Scandinavia than in the US. But I could be wrong.

So here we have a don’t-call-it-a-socialist-democracy that provides education, job security, equitable income, and government-paid healthcare for all of its citizens. Yes, Scandinavians do have to make co-pays when they go to the doctor. But that factoid is misleading–at least in the case of Sweden (I only checked one country, assuming its representative.) In Sweden a medical copayment might run 100 Skr. But that’s….oh, that’s only about $10.00.

Still these things add up. But

A patient never has to pay more than a total of SEK 1,100 for medical consultations in the course of 12 months – any consultations exceeding SEK 1,100 are free of charge.

For prescription medication, nobody pays more than SEK 2,250 in a given 12-month period.

I didn’t dig through the weeds to find out what the copay would be for knee surgery. Maybe someone else wants to do that. But a hospital stay is 100 Skr/day in Sweden. About $10 bucks.

I recommend people read this article from Farnam Street on doing the work required to have an opinion.

I don’t think I’ve met the letter of the criteria, but I do think I’ve met the spirit and earned the right to have an opinion. 🙂

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