Facebook’s Entry into the World’s Payment Systems
Facebook is a company which has been growing at a breakneck speed. Within a decade, the company has already started dominating the advertising industry. However, now, Facebook has decided that it needs to diversify from the advertising industry. Following the example set by Chinese companies, Facebook also believes that communication and payments go hand in […]
Six Sigma Team Dynamics
A surprising number of projects begin without considering the human resource aspect in mind. If a Six Sigma project were to be initiated without a project charter or without an explicit data collection plan, it would be considered lunatic behaviour. However, the same cannot be said about the Six Sigma team. Countless Project leads have […]
Sourcing Strategies and Procurement Processes
Not long ago, purchase function was seen to be a desk job, monotonous paper work, dull and passive and more of an administrative function. The purchase managements were the fall guys whose only aim was to keep feeding shop floor and avoiding stock out situation. Today the situation has changed totally. Procurement function is considered […]
America’s Municipal Debt Problem
The American federal debt problem is well known. There are famous debt clocks which are tracking the increase in American federal debt. However, that calculation does not take into account the true scale of America’s debt problem. This is because the American federal debt is out of control. This is a known fact. However, many […]
International Monetary Fund: A Closer Look
The International Monetary Fund (IMF) is often in the news. Every now and then some countries approach the IMF when they need funding to save their failing economies. Almost every educated person on earth has heard about the IMF. Also, everybody thinks that the IMF is a global institution with almost unlimited access to money. […]
The Vikings were some of the most brutal people that the world has ever seen. The nations that they built were carved out of violence. However, their descendants have turned out to be the most caring and civilized people on the planet. Today, the Scandinavian way of life is a role model for the rest of the world. Economists from far and wide go to countries like Denmark, Norway, Sweden, and Iceland to study their model.
The traditional belief has been that economies only do well when there is least government interference. This is popularly known as the “laissez-faire” economic policy. The Nordic countries seem to be an exception to this. These countries have a large amount of regulation and very high tax rates. Yet, the economy of these nations is thriving.
Also, it needs to be understood that the Nordic countries have not always been the way they currently are. These nations were also once dominated by the rich and powerful people. The situation was exactly like what it is now in the western nations. The economic elite were resisting any kind of change. In fact, the people of Norway are still very distrustful of large corporations. This is why it is mandatory for the government to have a certain number of members on the board of every major corporation in Norway.
The same challenges that are faced in America were also being faced there. However, the people of these nations struggled and finally were able to create the Scandinavian model which many consider as an “economic wonder”
The problem is that there are no “apples to apples” comparison of the American model with the Scandinavian model. The Americans are quick to note that the tax rate in Scandinavia is very high. However, they fail to take into account the fact that all these countries have free medical and educational systems. Hence, all the money that an average American spends for the health and education of their families should also be added to the tax rate to come up with the effective tax rate that Americans pay.
It must also be noted that a lot of Americans are spending their lives in debt. This is because of the medical debt. The cost of healthcare in America is one of the highest in the world. The insurance companies are quick the reject people that have any pre-existing conditions. Hence, if an individual does not have medical insurance, it is almost a foregone conclusion that medical debt will bankrupt them. However, this is not the case in Scandinavian countries where free healthcare is available for all citizens. Hence, even though the tax rate in Scandinavia may be very high, the facilities provided by the government justify the high tax rate.
The next big expense that Americans save for is college fee. If their children do not go to college, they are almost certain to end up working menial jobs at minimum wage. However, if the parents do not save enough money, the kids are likely to have student loans for their entire life.
Many young adults in America are living a life of indentured slavery thanks to college debt. However, this is not the case in Scandinavian countries. A college education is provided solely on the basis of merit.
The government pays the entire fee for the course for every citizen. Hence, the literacy rate is higher in these countries as compared to America.
Scandinavians tend to lead better lives. Very few of them work menial jobs that provide a minimum wage.
Also, Scandinavian countries do not have a wealth inequality problem. Since opportunities are not skewed by how much money one’s parents have accumulated, wealth distribution happens fairly.
One of the benefits of low inequality is that the crime rate is abysmally low. Hence, the state does not have to spend huge sums of money on maintaining law and order in the society.
Many American economists are skeptical as to whether the Scandinavian way of life will work in America. Some of their major criticisms are as follows.
The problem of Size: The Scandinavian economies are small in size. Hence they can sustain their welfare state policies. These policies have never been implemented in a country with the scale of the population of America.
Immigration: Secondly welfare policies work when there is less or no immigration. Scandinavian countries do not routinely get residents from other nations who try to live there illegally.
America is prone to illegal immigration. If the welfare state policies are implemented, the illegal immigration will rise by leaps and bounds.
It is impossible for America to have Scandinavia like policies and yet have open borders. America will end up attracting too many freeloaders who will not contribute anything in the form of taxes but will obtain all the benefits.
To sum it up, Viking economics has become a proven economic model in the Scandinavian region. However, its applicability to other larger and immigration prone nations is yet to be seen.
It is likely that America may adopt some of their policies shortly since major American politicians like Bernie Sanders are highly influenced by them.
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What the Current Wave of Protectionism and Populism mean for the Future of Globalization and Free Trade
February 12, 2025
