Comments on: After “After the New Economy”

By: Jeremy Osner

Jeremy Osner — Tue, 03 Feb 2004 18:14:04 +0000

Jeez, I gotta take a CT-comment hiatus, find some other way of embarassing myself…

By: zizka

zizka — Tue, 03 Feb 2004 16:49:54 +0000

The boundaries of Sweden, Norway, and Finland, by the conventions of international law and the facts of power, include the Sami. But their displacement from the other areas, if it happened, happened prehistorically. Andrew—the US isn’t a basket case? A lot of the intense hatred of the welfare state comes from racism. The standard racist objects of hatred—Hispanics, African-Americans, and Native Americans—are all conquered peoples. (And hatred of Native Americans is intense near reservations). I think that the American tolerance of fraud and cheating is a function of ethnic diversity—as well as Southern resentment of the Yankee occupiers, and immigration from nations who had learned to cheat at home. Contrasting the US and Scandinavia was one of my goals in what I said. The free-rider problem supposedly destroys the welfar state. In Scandinavia that doesn’t seem to be happening. Why? By extension some adapted form of my argument can cover most of the Northern European nations (mostly-Germanic, ultimately) who have not usually been victims, so that for them The Government is Us rather than Them. It’s a bit stronger in Scandinavia perhaps. Perhaps I overstated my original case, but I think I’m onto something.

By: jdsm

jdsm — Tue, 03 Feb 2004 13:59:42 +0000

“a Swedish friend has described Lapps as “the gypsies of Scandinavia” and indicated that some ethnic strife exists there.” Your Swedish friend is a twit. The Sami people are not numerous enough to cause strife and there’s no racism towards them. There are some disputes with farmers over reindeer grazing rights but it’s not like anyone cares very much. The vast majority of the populations of the Nordics live a long way from Lapland. The gypsies on the other hand are the rightly called gypsies of Scandinavia and they meet the same prejudice here as they do everywhere else.

By: Jeremy Osner

Jeremy Osner — Tue, 03 Feb 2004 13:30:51 +0000

Zizka—I had the idea Scandinavia was historically populated mostly by Lapps until they were invaded and subjugated by Vikings in the early middle ages. I have no idea how close to or far from the truth this is… a Swedish friend has described Lapps as “the gypsies of Scandinavia” and indicated that some ethnic strife exists there.

By: Andrew

Andrew — Tue, 03 Feb 2004 12:56:54 +0000

zizka By this line of reasoning, the USA should be a basket case (being ruled by the Amerinds, the French, The Spanish, the Mexicans, the English, the Russians and of course the native born of European descent). As to the number of ethnicities…well.

By: zizka

zizka — Tue, 03 Feb 2004 06:49:10 +0000

This is one of my pet ideas and it gets little respect. I’ll stick with it though. It traces back to a time when I conceived of a map of the world colored according to how many different ruling groups each area had had in known history. Then I imagined a similiar map showing how many ethnic groups an area had been populated by during recorded history. Malta and the Crimea, for example, have been ruled by almost everyone. Almost the whole third world has been dominated by foreigners for long periods. Change of population is harder to describe, but England used to be essentially Welsh. Except for Finland, Scandinavia remained ethnically constant and self-governing during the whole period. Japan is the nearest other example. Switzerland might be another (an entirely different exceptionalism). What are the others? Maybe Ethiopia. A different way of saying this is to ask whether a given area has had foreign armies marching around and plundering during extensive periods. Again, Scandinavia, including Finland, really hasn’t. (Much of Germany was almost depopulated during the 30-years war, for example). I’ll keep bouncing this one around even in the face of unanimous rejection.

By: clew

clew — Mon, 02 Feb 2004 22:39:25 +0000

Well, the more trustworthy a society is, the less risky it should be to be innovative and progressive. Mutual distrust jams everyone into deadlock; cf. US labor/management relations.

By: jdsm

jdsm — Mon, 02 Feb 2004 21:08:00 +0000

zizka, If I may say, I think you have a slightly charicatured view of Scandinavians. Interestingly, Norway, Sweden and Finland could all attribute their success to different things. Finland, it should be noted, has had nothing like the uninterrupted independence of the others and of course Norway and Denmark were occupied during WW2. Finland only became independent from Russia in 1917 and fought its own costly battle again with Russia during WW2. Sweden has benefitted from neutrality and Norway from oil. Finland really is the big success story, though the poorest of the bunch. They only finished paying reparations to Russia in the ‘60s. In my view the Nordics have honesty on their side as I mentioned before. What they also have is a far more progressive outlook than some other countries. Finnish businessmen are forever complaining at the conservatism and tired working methods of their colleagues in Germany and Britain imparticular.

By: Bob

Bob — Mon, 02 Feb 2004 20:33:17 +0000

Zizka – The Scandinavian economies are not the only “unusual” small economies in western Europe. Like the Scandinavian countries, the Netherlands also rates low on political corruption. It is arguably the most libertarian in Europe on drug control, it is certainly socially permissive and, in contention with Britain, the least religious country in Europe. For all that, through the 1980s, the Netherlands managed to sustain an incomes policy by consensus of a severity that would not have been feasible in the large economies had their respective governments attempted one: “[In the Netherlands] real wages increased only very slowly, at less than 1 per cent a year on average between 1979 and 1990. Wage differentiation between various sectors remained very low compared to other countries. . . In 1979 Dutch gross wages were 44 per cent higher than in the three neighbouring economies. However, because of the high productivity performance in Dutch manufacturing, the level of labour cost per unit of output was only sightly above the average for France, Germany and the UK in 1979. The very successful moderation of the rise in in hourly compensation in the Netherlands during the 1980d led to a remarkable improvement in the unit labour cost performance of Dutch manufacturing. At the end of the 1980s, the Dutch unit labour cost position compared to France, Germany and the UK was even better than during the 1950s or 1960s.” – from “Economic Growth in the Netherlands” in N Crafts and G Toniolo (eds): Economic Growth in Europe Since 1945 (CUP, 1996). Economics is not (just?) a “historical science” as there are common processes at work in market economies but the parameters of the behavioural functions differ as between different economies. And the Dutch have a very strong tradition in economic modelling. With the outstanding performance of the Dutch economy, that helps to explain why the “Poulder Model” is sometimes upheld in Europe as an example other European countries might emulate. It perhaps also explains why the Dutch government has been the most incensed in the EU at the breaches of the Eurozone’s Stability and Growth Pact by France and Germany. The Dutch seem to be a little impatient with those whom they regard as slow learners. The trouble is that the governments of large economies have a far more challenging task generating a political consensus than the Dutch do in spite of their libertarian ways in other directions. Perhaps the sociologists can explain the paradox.

By: zizka

zizka — Mon, 02 Feb 2004 17:31:49 +0000

I think the tundra with its abundant reindeer supplies should be discounted as a factor in the Scandanavian economy. (Well, tundra worked for Canada too, but not Russia.) With Scandinavia I think that the ethnic homogeneity combined with these countries’ histories of virtually uninterrupted independence (except from each other) means that there’s a lot more trust and also a lot less tolerance of cheaters. My understanding is that Scandinavians are sexually fairly loose but pretty stodgy about graft and fraud—exactly the opposite of American conservatives, especially from the South. Foreign occupation, especially for long periods, leads to cynicism and suspicion of government and validates all sorts of cheating and fraud. (That might even be part of the story in the American South). And ethnic heterogeneity is colorful and fun, but it makes people less willing to pay taxes which are percieved to be spent on The Other. If economics is a historical science, then outliers and exceptions like Sweden and (much more) Japan are really very important. But if the attempt is to establish general theoretical laws, especially if your “laws” are intended to lead to The Moral Of The Story, you end up sweeping the exceptions under a rug. Japan seems to be the big anomaly for any economic theory or theory of development, which to my mind should mean that everyone is studying Japan—but it doesn’t work that way. Japan’s present stagnation, of course, allows us to say that Japan Has Failed, but (even granting that) the Japanese story 1850—1990 is one of the most amazing in history.

By: Bob

Bob — Mon, 02 Feb 2004 16:56:34 +0000

Henry – There may not be much left of the literature but the series of public sector strikes in France, not least over reform of pension entitlements to meet valid sustainability concerns, may nevertheless indicate a substantive reality.

By: Henry Farrell

Henry Farrell — Mon, 02 Feb 2004 16:23:35 +0000

Re: the literature on ungovernability, Philippe Schmitter’s opinion in “Interest Intermediation and Regime Governability in Contemporary Western Europe and North America” is close to my own. His take (summary from my notes) – much of the literature on ungovernability was événementielle, overextrapolating or overreacting from short term trends. Another chunk of it was the predictable reaction of “spokesmen for decadent political elites and the declining social classes. …Although intellectuals and even academics in the past often were found in the front ranks encouraging and celebrating the declining governability of decadent regimes and ruling principals, today most have retreated to the back ranks of passive mourners, leaving the actual pallbearing to politicians and economists” (209) If one eliminates overreactors and reactionaries, not much is left of the existing literature.

By: Bob

Bob — Mon, 02 Feb 2004 14:14:11 +0000

jdsm – I accept admonitions respecting Post hoc ergo propter hoc. However, there is persuasive evidence for believing it is easier for governments in countries with small populations to generate a consensus in support of national incomes policies than it is for large country governments. And it seems to me inconceivable that the high sales tax levied on new car purchases in Denmark could be applied in the larger European countries without an electoral backlash. High population densities in east Asian countries have been invoked to account for the fast diffusion of innovative technologies there and with good reason. About 40% of Japan’s population is distributed along the coastal plane between Tokyo and Osaka making easier and less costly to trial market new consumer products. Taken together, it seems that the population size and density of a country are not factors to be dismissed out of hand in considering the extent of popular support for government policy. At various times in the last several decades, there have been national media debates in some European countries as to whether country X has become “ungovernable”. Admittedly, there was likely much froth to media debates and “ungovernability” is an elastic term but there could also be something substantive at stake, such as a fracturing of social consensus.

By: jdsm

jdsm — Mon, 02 Feb 2004 13:27:48 +0000

I’m always a little irked by people who argue that the success of the Scandinavian countries in delivering prosperity and very good welfare can be discounted because they are a)small and b)have low population densities. It always strikes me as a little ad hoc. The matrix of factors that go into the successes and failures of any country can be interpreted to explain anything. That said, bob’s point about corruption is in my view one of the important factors. The culture of the Nordics plays a very important factor and a central part of that culture (in as much as they can be lumped together) is a commitment to honesty, hard work and social democracy. When people justify great inequalities of wealth on incentive grounds, they fail to take account of the fact that people come from different starting points. In America’s individualist culture, it may well be true that they need huge incentives to put in the hard work. In the Nordic countries it is not. It’s just what you do because that’s the way it’s always been. Living and working here after having come from the UK I have been struck by how negative an attitude they have to “taking a sicky” here. It was par for the course in the UK. This is only one aspect of course, but if I’m right in the importance of culture, it shows that the economic system must fit the culture. It may well be that the US and Britain could not function as social democracies, while the Nordics can.

By: Bob

Bob — Mon, 02 Feb 2004 12:21:04 +0000

Henry, “There are real dangers in celebrating the counter-movement against neo-liberalism without spelling out a clear alternative vision of what globalization and the New Economy should involve.” You may be interested to know of a relating paper on: Globalisation and Social Spending, co-authored by Paul De Grauwe, the distinguished Belgian economist, and Magdalena Polan, both at the Center for Economic Studies, KU Leuven: http://www.econ.kuleuven.ac.be/ew/academic/intecon/Degrauwe/PDG-papers/GlobalisationAndSocialSpending.pdf The Scandinavia countries are unusual on several counts, not least because they rank as having low levels of perceived corruption by European standards on the index of Transparency International, which perhaps reminds us that there are many ingredients in the broth. Sweden is often upheld as a unique recipe and it certainly is. With a population a bit larger than that of the Greater London Area (although not metropolitan London’s), Sweden’s land area is just over 80% larger than the United Kingdom’s. On comparative Tax Systems in European Union Countries (2002), this by Isabelle Joumard of the OECD is illuminating: http://www.oecd.org/dataoecd/15/57/2968128.pdf