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The Economist: Nordic Countries Reinventing Capitalism

The special feature in this week’s Economist focuses on something we highlighted here on the blog yesterday: the Nordic countries, long darlings of blue model partisans in the United States, have been aggressively experimenting and innovating their way to something that looks strikingly post-blue.

Yet they’ve managed to pull it off without destroying the prospects for their middle class. It turns out that dismantling monolithic social programs and empowering individuals to make choices does not necessarily lead to a dystopian future. At the same time, these countries haven’t rejected the state out of hand either. Rather, they’ve managed to work in certain market insights into how they’ve organized their societies:

[…] the new Nordic model begins with the individual rather than the state. It begins with fiscal responsibility rather than pump-priming: all four Nordic countries have AAA ratings and debt loads significantly below the euro-zone average. It begins with choice and competition rather than paternalism and planning. The economic-freedom index of the Fraser Institute, a Canadian think-tank, shows Sweden and Finland catching up with the United States (see chart). The leftward lurch has been reversed: rather than extending the state into the market, the Nordics are extending the market into the state. [Emphasis ours. –VM]

Do read the whole thing—not just the opening essay. Towards the end, The Economist cautions that what these countries have achieved may not be replicable elsewhere. Of course we agree. The U.S. is fundamentally a different place than Sweden, and many of its reforms just wouldn’t take over here. But as an object lesson in thinking outside the box, the Scandinavian experiment is worth paying close attention to.

What’s especially worth noting is this: to a large extent the American left today has become a backwater intellectually. Due to the hold of groups like the public sector unions, too much Democratic policy work remains timid, stuck inside the blue box. To a distressing degree, the Democrats have become a lobbying party for the producers of government services rather than an effective advocate for those who need them.

On the other side of the divide, too many Republicans have been so invested in the fight to limit the state that they haven’t paid enough attention to the reinvention of the state. They haven’t grasped the connection between the effective design and efficient administration of the state and the limitation of state power and authority.

Whether your chief interest lies in the use of government power to protect the poor and advance the general welfare or in restricting the cost and the mission creep of government, you need to focus much more than most Americans do on how to make government sleeker, less intrusive and more flexible.

The one area in American life where real progress has been made along these lines is in school reform, where despite venomous opposition from entrenched interest groups like the teacher unions, deep blue cities like Washington DC and New Orleans have begun deep reforms in the way education is delivered. There are plenty of Democrats as well as Republicans engaged in this movement and while, as can only be expected not every experiment succeeds, we are clearly moving in some hopeful directions.

Both Republican and Democratic think tanks and policy centers need to put much more attention on the nuts and bolts of how government services are actually produced and delivered. We can always fight, and perhaps we always should fight, about how much government we need and about how authority should be distributed between the federal, state and local levels. But making government better—faster, cheaper, more responsive—should be on everybody’s to do list.

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