Scandinavian Unexceptionalism
The sceptical case: prosperity preceded the welfare state, not the reverse.
Summary
Nima Sanandaji published this short book with the Institute of Economic Affairs, arguing that the Nordic countries' social and economic outcomes are not produced by their welfare states and that the international left has drawn the wrong lesson from them.
His argument has three parts. First, the Nordic countries achieved high incomes, long life expectancy, low inequality and high levels of social trust before their large welfare states were built, mostly between 1870 and 1936 under limited government and open trade. Second, the period of largest government expansion, roughly 1970 to 1990, coincided with relative economic decline, particularly in Sweden, where the country fell from near the top of the international income rankings. Third, descendants of Nordic emigrants to the United States show outcomes comparable to or better than those of people in the Nordic countries themselves, including higher incomes and low poverty rates, which he takes as evidence that culture rather than policy produces the results.
The argument is contested at each step. Critics point out that the emigrant comparison suffers from selection, that self-reported ancestry in American data is unreliable, that measures like life expectancy and inequality did improve substantially during the welfare state period, and that the Nordic countries' own reforms since the 1990s retained large welfare states while changing their mechanisms. Sanandaji writes for a think tank with a stated position, and the book is advocacy. It is worth reading for the historical timing argument, which is real, and should be set against the empirical work on Nordic social mobility.
Key takeaways 7
- The Nordic countries achieved high incomes, long life expectancy and high social trust before their large welfare states were built.
- Sweden's relative economic decline coincided with the period of largest government expansion between 1970 and 1990.
- Descendants of Nordic emigrants in the United States show incomes and poverty rates comparable to those in the Nordic countries.
- Sanandaji argues that cultural characteristics including trust and work norms produce the outcomes attributed to policy.
- Nordic reforms since the 1990s introduced competition, school choice and fiscal rules while retaining public financing.
- High measured social trust in these countries predates the welfare state and may be a cause of its feasibility rather than an effect.
- The emigrant comparison suffers from selection effects that the book does not adequately address.
Who should read it
Readers who want the sceptical case against attributing Nordic outcomes to welfare state policy, read alongside its critics.
Similar books 6
Chosen by shared topics, the entries that hold them, and the people who recommended both.
Firm-level study of how Nordic companies reorganised for global production.
Economists' report on how small open economies combine flexibility with heavy taxation.
Popular and partisan, but the clearest short account of the Nordic bargain.
The euro's design flaws traced back through the postwar monetary system.
How the Greek economy actually works: its product markets, courts and firms.
Structural reading of why the growth model was fragile from the start.
Where it sits in the reference 2
Topics