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Viking Economics: Review

In Cost, Democracy, Environment, Human rights, Justice, Nonviolence, Peace, Politics, Public Health, Race, War on June 8, 2017 at 9:17 am

Review of George Lakey’s Viking Economics: How the Scandinavians Got It Right – and How We Can, Too (2016)

By LeRoy Moore, June 2017

In  January 1979 I met George Lakey at a two-week nonviolence workshop of the Movement for a New Society in Philadelphia. Lakey is a Quaker who for many years taught at Swarthmore College. Author of many books, the latest is Viking Economics. He writes on this topic because we in the U.S. can learn much from the Scandinavian countries about revamping our economy, strengthening democracy, abolishing poverty and creating a society which is fair and just for all.

At the turn of the 20th century the Scandinavian countries were marked by economic hardship, lack of jobs, low wages, long working hours, no security, no health care and education only for those who could pay for it. In the 1970s, when Lakey visited Norway, he found full employment, scant poverty, an efficient infrastructure, plus free health care, education and retirement benefits for all its citizens. His book is a history of what happened, with pointers on how the U.S. might follow their example.

The biggest recent change in the economy of the U.S. and Britain was the 1980s move of Reagan and Thatcher to free corporations to make money that purportedly would trickle down to benefit everyone. This “neoliberal gospel” rapidly spread across the world. By the end of the 20th century it was practiced in the U.S. not only by virtually all Republicans but also by many Democrats, like Bill Clinton. “Too often,” Lakey says, “governments have implemented support measures without charging those responsible for the problems properly,” resulting in “privatization of profits and socialization of costs.”

After the global economic collapse of 2008 the International Monetary Fund (IMF) urged austerity, “bailing out the owning class at the expense of the majority of the people.” Iceland countered this with its own strategy: “Increase taxes on the rich, reduce taxes on the working class, force banks to write off mortgages for households under water.” The IMF, referring to health care as a “luxury good,” urged the Icelandic government to cut its health-care funding. Challenging the IMF, ordinary Icelanders refused “to accept responsibility for the frenzied behavior of their bankers.” Nobel Prize-winning economist Paul Krugman, said, “Where everyone else bailed out the bankers and made the public pay the price, Iceland let the banks go bust and actually expanded its social safety net.” Iceland was the hero of the 2008 economic crisis. It survived better than any other nation.

Norway’s story is quite distinct. Late in the 19th century its workers union created the Labor Party that admitted only union members. They rejected the Marxist idea of collectivizing agriculture in favor of protecting family farms. After the Russian revolution of 1917, they joined the Communist International at Lenin’s invitation. By the 1930s the country was highly polarized, as evidenced by Vidkun Quisling’s founding a pro-Nazi political party with a uniformed paramilitary wing that attacked striking workers for their employers. This spurred an increase of conscientious objection which in time led to the Labor Party’s “completely socialist society” that laid the foundation for what Lakey found in Norway in the 1970s. A U.S. economist wrote, “The three things we Americans worry about – education, retirement and medical expenses – are things the Norwegians don’t worry about.”

Researcher Markus Jantti wondered about the chance for upward mobility for young people. How could those from families in the bottom fifth of earners leap to the top fifth. He found that both males and females in Norway, Denmark and Sweden had a much better chance of making this leap than their counterparts in the UK and USA. In Lakey’s words, “It turns out that freedom (shown by mobility and innovation) and equality are not necessarily opposed. In fact, . . .equality supports freedom.” In the Nordic economic design, “the more equality, the more freedom.”

Scandinavian countries had powerful trade unions at just the time unions were being weakened and destroyed in the U.S., England and other countries. They also had far more cooperatives, including banks. “Co-op banks,” says Lakey, “are financially more stable and less likely to fail than shareholder-owned institutions, . . . since they aren’t driven by a need to make profits for investors and huge bonuses for managers.” There are co-ops in all realms: industry, agriculture, dairy, housing, utilities, as well as wholesale and retail operations, and more.

The Nordic countries have virtually wiped out poverty. How did they do this? When it comes to work and poverty, these countries are refreshingly different. In Norway, “jobs, free training and support are available, and working is important for self-respect and the economic productivity of the country. In short, the government’s policy is full employment.” Single parents are encouraged “to hold jobs by having free or affordable childcare available at the work site or near the home.” In addition, “all babies can be born in birth centers and hospitals without regard to income, and all moms and dads can take time off from work with pay to care for the young ones. All parents have access to day care. All parents, whatever their means, get a family allowance for children below the age of 18. . . . Education is free for all. . . . Public transportation is subsidized for all.”

Scandinavians rejected the welfare state and replaced it with “universal services” – “a cooperative system for meeting needs that most people have at various points in their lives.” Instead of regarding the poor as needy, they treat everyone as equal. All work, and all benefit. How they treat crime is important. Rather than punish those who have done wrong, they rehabilitate them, so they can rejoin the community and become taxpayers as soon as possible. The best way to eliminate crime is to give the criminal a job. A study showed “a high association between employment and staying out of trouble.”

Getting everyone to work actually reduces the hours that an individual works. Norwegians work the least number of hours of all the countries of Europe. They are entitled to 25 vacation days every year. There is gender equity. Fathers get a paid leave to care for children. Parents receive a total of 52 weeks of parental leave with full pay. A new mother “has the right to two hours of break time each day to permit breast-feeding.” Also, “either parent has the right to stay home with sick children at least twenty days per year.”

Health care is available to everyone, paid for by the community, not the individual. Lakey says the “so-called ‘market efficiency’” of the U.S. “is actually ‘market wastefulness’ So wasteful in fact that despite the Affordable Care Act (so-called ‘Obama Care’) tens of millions of Americans don’t get covered at all, and countless others who are insured still don’t get the treatment they need.”

Of course, quality health care, free education, good housing, convenient transportation, etc. are expensive. Taxes are high in the Nordic countries. But for them “it’s a truism that paying high taxes results in getting high value.” They seek equality by reducing taxes of the working and middle classes and increasing taxes on the rich – the opposite of what the IMF recommends and what often happens in the U.S. British researchers found that “inequality highly correlates with negative statistics in physical health, mental health, drug abuse, education, imprisonment, obesity, social mobility, violence, teenage pregnancy, and child well-being.”

To again consider violence, Norway experienced a terrorist attack in 2011, when Anders Breivik massacred 69 young people of the Workers’ Youth League and injured 110 more. Labor Prime Minister Jens Stoltenberg, in a speech the next day, said “the proper response to the violence was ‘more democracy, more openness.’” At the memorial service he quoted a girl in the Youth League: “If one man can show so much hate, think how much love we could show, standing together.”

Lakey’s final chapter focuses on the U.S. He thinks the reason we don’t have universal health care is “because special interests prevented the majority from getting what it was ready for.” He says so much of the U.S. government is out of touch with ordinary citizens. The Supreme Court’s “Citizens United decision . . . opened the floodgates for billions of dollars to enter the electoral system.” But the problem is deeper. An AARP study found that where there are differences “the economic elite – and not the majority—almost always got their way. . . . (T)he majority does not rule – at least in the causal sense of actually determining policy outcomes.”

“It is obvious,” Lakey says, “that the United States is falling in international ratings of equality and freedom and that the policies of both parties are dominated by the economic elite.” But he sees hope in our history of social change by nonviolent means, our growing experience with worker-owned cooperatives, our increased positive appraisal of socialism, and our increasing awareness of the Nordic alternative (to which his book contributes much).

“Change,” he says, “requires hard work. . . . Movements need organizers, communicators, advocates, funders, nurturers, musicians and artists, nonviolent warriors, and ‘foot soldiers,’ as well as visionary designers. All those were present in the Nordic movements that challenged a thousand years of poverty and oppression, took the offensive, and built democracy.”

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