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Thursday, January 30, 2020

The Nordic Model Explained

Vital Interests: You have been living in Norway for many years and are familiar with the so-called Nordic Model - the economic, social, and cultural characteristics of Scandinavian countries.  Can you explain what the Nordic Model actually denotes.

Malcolm Langford: The Nordic model can be many things to many people. What people usually are referring to is, at its core, cooperation between labor and capital. In the early 1920s in Norway, for example, the Labour Party was a part of the Communist International, but then they broke with that ideology. During the 1930s, the so-called Social Democratic model emerged. It includes collective bargaining over wages, a strong social welfare state that covers generously a range of risks such as unemployment and disability, and a comprehensive and largely free national health care system.

In exchange, capital was largely left in freedom to expand as it wished except in particular sectors. Taxes increased and regulation expanded in the post-War era but have been significantly moderated since the 1980s. 

VI: Was there ever a plan to nationalize industries or services?

Malcolm Langford: Nationalization was particularly prominent in the '50s, and '60s.The partial nationalisation of the Norwegian oil industry in 1972 is perhaps the best known example. This was the case in almost every Western country at that time, dominating public debate and being tested in many courts. Since the 1980s, the trend has been privatization and deregulation across the economy. Similar to what we’ve seen in the U.S. That has been equally controversial raising questions about whether liberalisation has gone too far, even in the Nordic countries.

The core of the ‘Nordic Model’ largely remains though, especially the generous social welfare state. For example, if you're dismissed tomorrow as a worker, in most occupations you'll have one year at 80% of your former salary which allows you time to reorient yourself and find a new job that's suitable. As part of the Danish flexicurity model, this permits employers to more easily let go of employees - there is a strong safety net they can count on.

VI: Has there been cross-fertilization among the Scandinavian countries when it comes to the development of their social welfare programs? 

Malcolm Langford: All the Nordic countries like to compete with each other. When the five Nordic leaders dined with President Obama at the White House, the only one who talked about the Nordic region was President Obama! The five Nordic countries were instead jostling over who sat where, who talked when, and were mostly interested in talking about their own states - Norway or Sweden or Denmark. 

The Nordic countries are not socialist.

In practice, there is strong inter-country learning even if the systems do diverge in important areas. Already in the 1890s, there was the co-development of private law, and Sweden has led in social welfare policy.

In responding to globalization, Denmark was arguably the leader while Norway has led on issues like ensuring greater gender equality in corporate boards. We see a diffusion amongst the different states as time goes on.

VI: What is the primary advantage of this Nordic system? Is this a model that works for the rest of the world?  People point out that Nordic countries are fairly homogeneous and wealthy, is that a necessary characteristic?

Malcolm Langford: The five Nordic countries are very different in terms of their economic base. Norway has the luxury of  oil, Sweden’s economy is based on manufacturing, Denmark has advanced agriculture and a marine industry, and so forth.

The countries have coped also relatively well with the downsides of globalization compared to the United States. This is because of the strong welfare state. There is more support for those structurally unemployed. They have more time to adjust, change occupations, go through retraining, and so forth. For those unemployed for a longer period, you don’t have them completely dropping through the safety net losing their housing and health insurance. Likewise, looking to the future, many say that the Nordic model is best suited to coping with robotization and automation.

It also costs less. For example Americans spend twice as much or more on health care, depending on how you measure it. In Norway, there is universal healthcare, a kind of a Medicare-for-all model. In this system, the state is a bulk purchaser and can negotiate with multinational health companies to get the best deal for medicines.

There's also advantages when people don’t  fall through the cracks of the health system. Healthier people make for healthier workers, and there is less drain on ambulance services and emergency clinics which are often used by those without health insurance in the US. 

VI: A major expense for middle-class Americans is the cost of  health care. Other economic burdens include childcare and higher education. How does the state providing these services impact Nordic societies?

Malcolm Langford: Education is free all the way to masters level. Even foreigners can undertake a bachelor’s degree free and in Norway, also a master’s degree without fees. Universal and affordable childcare is perhaps one of the most important policies from an economic, let alone a gender perspective. The skills that women develop at university and workplace are maintained as women return relatively quickly to the workforce. Men also share child-caring responsibilities and privileges, in the first year they too are eligible for paid parental leave.

The Nordic model ... includes collective bargaining over wages, a strong social welfare state ... In exchange, capital was largely left in freedom to expand as it wished except in particular sectors.

This might explain why few Norwegians took up President Trump’s offer to migrate after he wondered why the United States doesn’t have more migrants from Norway?  

More seriously though, Trump’s comment plays on a different and dangerous archetype. Not the picture of a social welfare state with ultra-liberal societal attitudes, but the image of an ethnically-pure white and homogeneous state. Given that facism has a history in the region - for example, a significant number of Norwegians cooperated with the Nazis during the Second World War - the implicit focus on white Nordic heritage raised concern.

However, President Trump’s admiration seems to be short-lived. He infamously stated “Look what happened last night in Sweden” - seemingly referring critically to stories about youth criminality amongst migrant youth. 

And the White House’s ally, Fox News, ran a high profile critique of Denmark’s welfare state, comparing it to “socialist” Venezuela and claiming that high unemployment occurred because people didn't want to work. In response, Danish politicians and comedians pointed out that Denmark outscores the United States on key economic statistics. 

VI: You mentioned migration and refugee issues. Four or five years ago there was a significant number of refugees, asylum seekers, and economic migrants coming into the Nordic countries, what has been the backlash?

Malcolm Langford: Migration raises more complex issues about the Nordic model. On one hand, Sweden was tremendously generous during the refugee crisis in 2015. Over 100,000 migrants were accepted. In terms of European acceptance per capita, Germany and Sweden were at the top. Norway was in the middle taking 30,000, but then suddenly it and Denmark put up the barriers quite quickly. Paradoxically, Denmark and Norway now have some of the strictest refugee laws in Europe.

When the Nordic countries are critiqued for this, they have tried to have it both ways - both negative and positive branding. They sought to communicate to potential asylum seekers that immigration laws were very strict, placing cartoons in Arabic newspapers, and posting haunting pictures on Facebook. At the same time, they try to hold up a humanitarian image to the rest of the world based on their previous reputation for liberal asylum policies.

VI: How is the integration going in these countries? Are those who have been granted asylum or refugee status being integrated or are they living in separate communities - isolated and marginalized?

The countries have coped also relatively well with the downsides of globalization compared to the United States. This is because of the strong welfare state.

Malcolm Langford: It varies. It's relatively successful in Norway as people have been located in different parts of the country - although Oslo it is partly divided. Sweden struggles more with segregation in the housing market and so there are a number of questions around the success of the Swedish integration.

However, public attitudes tend to be influenced by other dynamics. One survey found that those who lived closest to the refugees were more likely to be positive about their arrival while those who had the least contact with refugees were more likely to be critical. 

VI: Are government efforts primarily focused on integration, to make all new arrivals Swedish, Norwegian or Danish? Or are they embracing multiculturalism in what had been fairly homogeneous societies?

Malcolm Langford: The American melting pot model only partly works in the Nordics. Language is especially more important. The entire public sphere happens in Norwegian or Swedish or Danish or Finnish, so learning the language is key to economic and political participation. Thus, there's strong pressure, in all countries, for people to learn the language - and by association the associated culture.

In terms of  integration in the workforce, in Sweden, they have been successful in getting people into work more quickly. However, some research indicates that Denmark and Norway might be more successful in the long run by allowing migrants more time to focus on language and re-education.

VI: What is the role of the Nordic countries with respect to European security and economic issues? What is their relationship to other powers - Russia, China, the United States? Is there a unified Nordic vision or does this differ from country to country?

Malcolm Langford: The Nordics emerged as middle powers in the Cold War, seeking to stand or mediate between East and West. While a few joined NATO, others tried to be honest brokers mediating peace conflicts or supporting the anti-apartheid movement in South Africa. It was partly ideological, seeking to show a third way between the United States and Soviets, but it was also geographic. With the Soviet Union on their doorstep, they were cautious about taking sides.

Archival research shows that in secret Helsinki negotiations in '73, for example, only Denmark took up the case of human rights. Other Nordic countries were more conciliatory, worried about the threat of their large neighbour. 

This realism has taken a new turn in recent years with greater engagement with NATO and the United States. Long-standing members Norway and Denmark have led the way. Norway was very active in 2011 in the Libya bombing and Denmark participated in the 2003 Iraq coalition.

Non-aligned countries such as Sweden and Finland, are also cooperating. In the Trident Juncture collective defense exercise in October 2018, they not only contributed substantial troops, they were actively involved in planning the exercise from the start.

Americans spend twice as much or more on health care.

One of the key reasons is the concern over Russian militarism, particularly in light of the annexation of Crimea. That sent shockwaves through the Nordics and the Baltic countries. Like Ukraine, they are neighbors of Russia. Thus, it's been alarming for these countries to watch the American withdrawal from NATO, a cornerstone of European defense.

VI: Do the small Baltic countries look to the bigger Nordic countries as protectors? Is that part of their geopolitical agenda?

Malcolm Langford: In terms of raw security, they look mostly to the U.S. The Nordics are more important for economic integration, and many of the banks in the Baltic countries are Nordic. The Nordic Council rejected the Baltic states' application for formal observer status, but there is extensive cooperation and the Nordic Council of Ministers has offices in the Baltic states.

In terms of intra-Nordic cooperation on security, politics and economics, the countries have always struggled. As they are all similarly-sized, it's not clear how direct or deep cooperation will benefit them. The EU or NATO have more to offer. However, in so-called softer areas such as culture, cooperation has been more successful.

VI: With regards to other European realities - the UK Brexit movement, for example - does that resonate and have support within the Nordic countries since they have been skeptical of the European Union?

Malcolm Langford: Immediately after Brexit, there was a rise in support for the EU in all European countries, except Norway.  But the Nordics have had their own mixed relationship with the EU. 

Many were late to join (Sweden, Finland), Denmark has many carve-outs and Norway and Iceland never joined. Norway has a particularly odd relationship with the European Union. It goes back to '72 when they had the first referendum. They viewed the EU as pro-business and pro-liberal, threatening its social welfare model and protectionism in agriculture. This perception continued into 1994 when there was a no vote of 53% against 47% for.

Yet, Norway has an agreement with the EU which allows access to their inner market. The result is that in the Brexit discussions, there is talk about the Norway model. However, Norway doesn’t have a say in the making of EU directives. The price of access to the common market is implementing approximately 70% - 80% of the EU directives. This makes the model more unpalatable for a larger or prouder country like the United Kingdom.

VI: Is the rise of ultra-right groups a serious issue in Nordic countries?

This realism has taken a new turn in recent years with greater engagement with NATO and the United States... One of the key reasons is the concern over Russian militarism, particularly in light of the annexation of Crimea.

Malcolm Langford: We've seen across all European countries a rise in national populism - both far right and ultra rights. In Denmark, far right parties made their mark quite early, gaining a significant percentage of the vote in the '90s and participating in the coalition government in the early 2000s. That's one reason why Denmark has the strictest laws on asylum in all of Europe.

In Norway, the Populist Party has hovered around 15% and has spent the last six years in coalition government - leaving only last week in protest. In Sweden, the Swedish Democrats are breathing down the necks the other party's, gaining around 20% of the vote in Sweden. They're unlikely to form a coalition government in Sweden (yet) but they are already having a strong effects on policies.

VI: Governments have to take increased populist sentiments into account in order to appease that part of the population?

Malcolm Langford: Exactly. We have seen more restrictive policies on immigration but also a cutback to social benefits not enjoyed by the middle class. Although the irony remains that some conservative parties in the Nordic region promote policies that are to the left of moderate American Democratic candidates.

Moreover, the paradox of Brexit is that support surged afterwards for the EU. The rise of Trump has also been a problem for some far-right populist parties. They don't always wish to be associated with him. In the British election campaign, Boris Johnson avoided meetings with Trump - he is unpopular with some parts of the conservative constituency. So the rise of populism triggers also a counter-liberalism, and in practice stronger polarisation.

VI: Looking at other geopolitical realities, are the Nordic countries concerned about the Arctic? The Nordic countries are active in that region but there is also major power activity, mostly from Russia and China with the United States somewhat on the sidelines.

Malcolm Langford: Trump's attempt to purchase Greenland definitely put a spotlight on Arctic politics, both mineral extraction and maritime policies. Part of the reason for the Greenland maneuver is Trump's trade war with China, there is a risk of the United States being denied access to needed rare minerals from China. Greenland has an abundance  of these rare minerals which are needed for batteries, mobile phones and that kind of thing.

Beyond Greenland, with the melting of snow and ice, it's easier to get at natural resources below the continental shelf, and at the bottom of the sea. 

Norway is in the thick of it because of its role in the Arctic Council, through the Svalbard Treaty, which regulates access around Northern arctic islands. There is considerable  pressure from China and Russia to access this area. Particularly Russia at the moment, but China is increasingly using the Northern passage for shipping and making its presence known.

Immediately after Brexit, there was a rise in support for the EU in all European countries, except Norway.

One can also raise questions around Norway's own exploitation of the Arctic region, it's issuing of new oil licenses, banning of fishing by EU trawlers of snow crabs so it secures for itself a multi-billion dollar business.

VI: Are there conflicting claims for territory in the Arctic region, or are the boundaries pretty well defined? 

Malcolm Langford: The Nordic boundaries were mostly settled by the ‘50s after Norway and Denmark resolved territorial disputes. Where the conflicts mostly arise are with non-Nordic resource rights. This is where there is  a lot of conflict at the moment.

VI:. To bring our conversation back to the 2020 elections, what should the candidates understand about the Nordic model? Certainly labeling and dismissing the Nordic system as “socialist” is a false view?

Malcolm Langford: Definitely, the Nordic countries are not socialist. Norway does have a socialist left party and even a red party, but they're in the minority and even they don't necessarily fulfill all the criteria of socialism. To be sure, there's always going to be downsides with social democracy, for example, high gas taxes in Norway. There's also a rationale for that, basically the tax is calculated on the basis of how much damage driving does.

The state has a little bit more control over what you do, it writes your tax return for you, for example, and sends you a draft. Being part of the Nordic welfare state means accepting a little bit more of the state in one's life. Not everything goes to plan on gender equality for some reason. For example, in the U.S. there's more female business managers than there are in Norway, because of the way the family economic pie fits together. We're still struggling with migration. I think the United States is further ahead in understanding diversity and how to embrace diversity and create more space for different cultures, within a national identity. That's still something that the Nordics are struggling with.

 
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Malcolm Langford is a Professor of Public Law, University of Oslo. He is Director of the  Centre on Experiential Legal Learning (CELL), a Centre of Excellence in Education (SFU), and Co-Director of the Centre on Law and Social Transformation, Chr. Michelsen Institute and University of Bergen.  A lawyer and social scientist, he leads the research project, Nordic Branding: Politics of Exceptionalism and his publications span human rights, international investment, international development, comparative constitutionalism, technology and the politics of the legal profession.

Read Jill Goldenziel’s interview on The Grim Circumstances of Refugees and Migrants