The Nordic countries are known to be among the wealthiest countries globally measured in per capita GDP. Their economy is characterized by a large public sector, and stable inflation with excellent exchange rates. Their citizens are known to enjoy the most favorable standards of living because of the many welfare benefits and a social safety net that embraces everybody. However, there are some misconceptions concerning the Nordic countries economy.
On the annual Index of Economic Freedom created by the Heritage Foundation, the Nordic countries are well listed. Denmark, Finland, and Sweden rank in the top 15 countries on the business freedom indicator, which measures how well private sector regulations are enforced by governments. This is an indication that the economies of the Nordic countries are doing well.
Looking at this economic report, it’s evident that the top economic positions are occupied by countries with greater economic, political, and social development. The other similarity among these countries is the country’s high tax rates. In these countries low and middle-class citizens endure high taxation rates.
Understanding the misconceptions concerning the Nordic Countries Economy
You might argue that the countries flourish because the high-class citizens do their due diligence in paying taxes. However, things are not as they seem on paper. Let us look at some misconceptions that American and non-Nordic countries have towards Nordic countries.
Nordic countries provide their citizens with a high standard of life
The high standard of life is sustained by the high rates of tax. Even though it is argued that a high percentage of taxes come from upper-class members. This widely-extended view is fundamentally wrong especially when looking at how the economy is run. It is evident that the hefty taxes in Scandinavia are fairly regressive.
The lower and middle classes are mostly responsible for carrying the economic burden which lowers the citizen’s quality of life. For instance in Sweden, Taxpayer-funded private actors are permitted to profit from political rents and rigidities that are believed to be unsustainable, causing a deadweight loss for society. The “welfare-industrial complex,” as it is sometimes referred to, is made up of influential vested interests that have successfully captured the government.
Nordic countries have altruistic economic policies
This is another misconception about the Nordic country’s economy. The Nordic nations are renowned for their democratic policies, including those about higher education, paid parental leave, healthcare, and child care. But, according to a Finish Journalist Anu Partanen, these policies are self-serving and have nothing to do with altruism.
Many citizens in Finland do not truly feel the effects of these universal policies. Even though the policies have a lot of benefits such as the Finnish baby box, in reality, it is barely enough for the natives. You cannot say that you can fully depend on the baby box for all your needs. At the end of the day, parents spend way more than what the government offers.
The countries are socialists
Another widespread fallacy is that the Nordic nations are inherently socialist. Even though they have strong social policies, these countries are far from being socialists. While non-Nordics are busy campaigning for social democracy against so-called welfare states, the Nordics are making no effort to persuade them to follow their model.
Instead, they appear pleased to solve their issues collaboratively among themselves. At the end of the day, they are routinely placed at the top of lists of the world’s happiest people.
Fair and equal treatment of both immigrants and locals
Countries like Sweden adhere to a strict form of internationalism. Powerful political activists in the government have created laws to guarantee that new immigrants are granted equal access to social welfare benefits, arguing that a person’s place of birth should not decide the right to benefit
This is a huge misconception because there is a high rate of unemployment among immigrants with low education levels in these countries. This is not equity if the natives with the same educational background can access jobs while immigrants are denied the same education level. For instance, in Finland and Sweden, highly educated immigrants have a high jobless rate as compared to the natives.
Reasons behind Nordic countries’ success
The low-income discrepancy among Nordic countries has for years captured the world’s attention. In developed countries, the gap between the poor and rich keeps growing each waking day. That is not the same with Nordic countries for they keep excelling in being the model of economic growth.
Truth be told, poverty rates in Nordic countries are lower than in other parts of the world. Nonetheless, it has long been established that the poverty rate among non-Nordic countries such as America, which are descended from immigrants from the Nordic countries is currently half that of other Americans. This tells you that most of the worldwide views concerning the Nordic countries’ economic state are not correct.
Without a doubt, the five Nordic countries have made a name for themselves despite the misconceptions surrounding their economy. These countries have so much in common and have gone a step ahead to exploit the returns of globalization. There economic bases are pretty solid which explains their high standards of living.