Apropos of absolutely nothing, the White House released a new report
this week decrying the dangers of "socialism" — and was roundly mocked
for wasting government time on producing such a patently unnecessary and
brazenly partisan document.
But Paul Krugman
noted
that one part of the report's findings is worth taking note of: Its
criticism of European social democracies such as Denmark, Norway, and
Sweden.
"The report points out that real
gross domestic product per
capita in these economies is lower than in the U.S., and argues that
this shows the costs of an expansive welfare state," he writes. "But is a
negative assessment of the Nordic economies really right? That’s not at
all clear. "
While he doesn't question the numbers themselves — the Nordic
countries really do have lower GDP per capita than the United States —
he argued that these figures can be deeply misleading.
GDP is supposed to reflect all the things of value produced in a
given economy, and this is sometimes taken to be a measure of societal
welfare. But there are a lot of key factors that the metric leaves out.
"First, by any measure people in the lower part of the income
distribution are much better off in Nordic societies than their U.S.
counterparts. That is, there is a lot less misery in Scandinavia — and
because everyone has some chance of falling into low income, this
reduces the risk of misery for a much larger share of the population,"
he explained.
"Second, much of the gap in real G.D.P. represents a choice, not a
cost," Krugman continued. "Nordic workers have much more vacation, much
more time for family and leisure, than their counterparts in our '
no vacation nation.'"
He argued that while the rich in the United States are richer than
the rich in Nordic countries, the poor in Nordic countries are richer
than the poor in the United States. And since anyone can be at risk of
falling into the lower-income segment of the population through
misfortune or injustice, the fact that Nordic people don't have as far
too fall financially makes them all better off.
But it's not just that incomes are higher for lower-income people,
Krugman contended. Since social services, like health care and
education, are much more generous and valuable in these countries,
poorer people are better served and more prosperous than their
counterparts of equal income in the United States.
As for the rich themselves, Krugman argued that the requirements for
ample vacation time create a much better atmosphere for work-life
balance, providing intangible benefits that can't be measured. In this
way, even the higher-income people in Scandinavian economies are likely
better off and their richer American brethren.
"The bottom line is that real G.D.P. per capita isn’t everything, and
you shouldn’t uncritically use that measure to judge how social
democracy is working in Scandinavia," Krugman concluded.
