The Nordic Model

The Norwegian Labour party has made a video about the Norwegian (should have been Nordic, I suppose!) model (click on the "CC"-symbol below the video to see English subtitles):

 

 

My interpretation, based on different sources:  The main word here, I suppose, is "cooperation" - i.e. close contact between unions, employers and the government at the national level.  This has made it possible to achieve a low level of inequality in living standards, by achieving three main goals at the same time:

* Low wage inequality
* High tax level (and that way a strong welfare state)
* Low unemployment  

 

How does cooperation at the national level contribute to this?  It makes it easier to

* reduce wage inequality, and
* keep the average wage level (after taxes) so low, that the sum of wages (after taxes) plus (high) taxes does not become too high, and that way does not lead to (bankrupt businesses and) high unemployment.

Why a low level of inequality in living standards? 

*  Fairness - in general, especially poor people deserve more than they get.

*  A given amount of extra money creates more happiness if it goes to poor people, than if it goes to rich people.

*  Economic effects.  Here and here are two excellent articles by the American economist Joseph E. Stiglitz, I'll probably come back to them.

*  Social effects

 

About social effects (from "The Spirit Level" by Richard Wilkinson and Kate Pickett (2010), p. 19-20, 275, 280-1, 284):

It's almost spooky.  There is almost a perfect correlation (87 %) among 23 rich countries (in Western Europe, USA, Canada, Japan, Australia, New Zealand) between

- Income inequality and
- An index of the following health and social problems (where each problem carry the same weight - the following percentages are the correlations between income inequality and each problem-indicator):

* Trust to "most people" (- 66 %)
* Mental illness (including drug and alcohol addictions) (73 %)
* Life expectancy (- 44 %)
* Infant mortality (42 %)
* Obesity (57 %)
* Math and reading scores of 15-yearolds (- 45 %)
* Teenage birth rate (73 %)
* Homicides (47 %)
* Prisoners per 100 000 (75 %)
* Social mobility (- 93 %)


Here's the figure (source here):

This correlation (social mobility not included) is 59 % among the 50 US states.

Why these strong correlations?  I'll come back to that when I've read the book!