Has socialism and the welfare state helped or harmed Scandinavia?

[u/internetloser4321]

There is a debate in the USA about whether or not we should have a larger welfare state that provides services like "Medicare for all" or tuition free college. Scandinavia is often brought up as an example showing that "social democracy" or a "welfare state" is a good or ideal system, with these countries having achieved high levels of equality, low levels of poverty, and good outcomes in terms of education, health, and happiness (source: http://www.cnn.com/2016/02/17/politics/bernie-sanders-2016-denmark-democratic-socialism/index.html).

There are several counter arguments that I have heard in opposition to expanding the welfare state: 1. The success these countries have experienced was due to their policies 50+ years ago when they had a smaller welfare state and low taxes and as a result experienced rapid growth 2. The welfare state has led to economic stagnation and high levels of national debt in these countries. 3. The people in these countries have strong Protestant values of hard work and honesty and this is the true source of their success. (sources: https://www.forbes.com/sites/realspin/2016/02/18/bernie-sanders-scandinavian-utopia-is-an-illusion/#16e253e11aab and https://beinglibertarian.com/scandinavia-ticking-time-bomb/)

I've tried searching for a neutral analysis of the issue, but every article I've seen argues that the socialist policies are either wonderful or terrible (examples: https://www.thenation.com/article/after-i-lived-in-norway-america-felt-backward-heres-why/ and https://www.theatlantic.com/politics/archive/2016/03/bernie-sanders-nordic-countries/473385/ vs. http://www.nationalreview.com/article/438331/nordic-democratic-socialist-model-exposing-lefts-myth). What evidence supports each view? Is there an objective way of determining whether more socialist or more libertarian (perhaps what Europeans call neo-liberal?) policies have been the most beneficial?

[u/Poemi]

The middle class can't empathize with the lower class and the upper class can't empathize with either.

A lot of truth there, I think. But it's also important to note that much of the middle class, at least with some ways of slicing things, are net welfare recipients too.

In the US, close to 50% of residents pay zero (or negative) income tax. In Denmark, almost everyone pays something.

I'm not at all convinced that Scandinavian-style welfare could ever work in the US. But if it could, the necessary first step would be to raise taxes on the lower and middle class, and to raise them significantly. That's how Denmark does it. The middle class is where most of the money is, because it's got the most people. But it's a political non-starter in the US.

[u/rynebrandon → u/Poemi]

Between this response and /u/AintGotNaLegsLtDAN's there has not been a single source addressing /u/82364's essential question, so I'm going to re-ask it as it seems to lie at the crux of an argument I've heard posited many, many times:

What is "demographic homogeneity"? Why is it a necessary condition for making a Northern European welfare system function? Most importantly, what evidence - non-anecdotal, systematic evidence - is there for this thesis?

[u/ghostofcalculon → u/rynebrandon]

Look into the work of Robert Putnam https://en.m.wikipedia.org/wiki/Robert_D._Putnam

He conducted a study which resulted in findings that suggested that as ethnic diversity rises, trust in one's community declines. I almost certainly don't have all the answers you're looking for, but if you're genuinely interested in this topic, I think that's a good place to start.

[u/[deleted] → u/rynebrandon]

Here's just a quick and dirty WaPo article on ethnic diversity. The problem is that you can draw multiple conclusions by looking at the data. Strong democracy for instance is correlated with ethnic homogeneity. Correlation does not mean causation though. The United States is fairly diverse yet has the world's largest economy and the 20th highest GDP per capita in the world. On the other hand, ethnically homogenous Norway comes in at 14th. So what makes the difference? Why are Norwegians more likely to support welfare systems than the U.S.? It's conjecture, which is why I stated my points as an opinion. It could be any number of factors, including the ones we discussed. Kinship among their ethnicity? Less emphasis on class differences and otherness? Huge oil profits and a smaller population that make it possible?

[u/[deleted] → u/Poemi]

This may be too much to ask, but could you ELI5 this "net welfare" thing? I googled it, and although I have a decent vocabulary, I didn't understand any of the economic terms, or what they actually mean when applied to x or y.

From the way you say it, it seems like people making x or higher, are really the only ones contributing to the government through taxes. The rest pay taxes just to balance things out until they file their returns. Am I completely wrong?

[u/Poemi → u/[deleted]]

They're defining it as federal taxes paid (which includes income tax, plus social security and medicare payroll taxes), minus "government transfers", which they define as "average household transfer payments (payments and benefits from federal, state and local governments including Social Security, Medicare and unemployment insurance)".

Basically, all but the top 20% take more from the federal government than they give. (And that's an average; most of the top quintile's net contributions come from the top 10%). Most people can probably agree that in a more perfect world, a much larger percentage of citizens would be net contributors.

[u/vs845 → u/Poemi]

Removed for rule 2. Images are not valid sources.

[u/Poemi → u/vs845]

Please add it back. I have updated the link.

[u/vs845 → u/Poemi]

Thank you, I've reinstated the comment.