By Nima Sanandaji
Debunking Utopia is a compact argument that there is not a “Nordic Model” that the U.S. could follow to reduce inequality and increase prosperity, and that the apparent success of Nordic countries is mostly attributable to Nordic culture rather than to government institutions.
Written at a very basic level, the book is a helpful datapoint weighing in favor of the “culture” side in the ongoing “culture vs. institutions” debate in economics, in which MIT’s Daron Acemoglu and Chicago’s James Robinson take the other side.
The author, Nima Sanandaji, would appear to be a great example of the success of the Nordic model. He is a Kurdish-Iranian immigrant to Sweden, who grew up in poverty but was given assistance to educate himself and become an economist. Yet he believes that he is an exception rather than an example.
There are a few worthwhile takeways from this book:
- Nordic “success” -- high output per capita, low inequality -- predated the institutions of generous welfare states in Norway, Sweden, Finland, Denmark, and Iceland.
- Nords just culturally value hard work and achievement, and that quality is measurable in a number of ways. For example, they are highly caffeinated.
- Nordic-Americans appear to have living standards about 50 percent higher than those of Nords in Nordic countries.
Just how to interpret that difference is a tricky question. Cross-country living standards are difficult to measure and Sanandaji doesn’t seem to have presented an exhaustive run-down of the different statistics that could be chosen. Furthermore, it’s possible and likely that Nordic immigrants to the U.S. were “positively selected,” meaning that the U.S. effectively poached successful people from their home countries. Nevertheless -- 50 percent is a lot.
One additional note: Sanandaji doesn’t go into the differences in health care outcomes. But in many cases discussions about the size and scope of the welfare states in Nordic countries versus the U.S. boil down to the fact that they have health care benefits paid out of taxes. My understanding is that Nordic-Americans have better health outcomes than Nords in Nordic countries.
4. Sweden is struggling to integrate Muslim immigrants.
This is both a point against the “institutions” explanation of economic growth and against the idea that Nordic government policies are themselves the root of Nordic success. The newest immigrants to Sweden are not easily finding work and embracing a Swedish way of life, and instead are secluding themselves and committing crime at high rates. Sanandaji concludes that generous welfare benefits are part of the problem, although his argument is a little underdeveloped.
5. Nordic countries have been moving toward embracing free-market policies.
As the prime minister of Denmark pointed out while visiting the U.S. in 2015, his country is now not a social democracy. In some respects, it is more free-market than the U.S.
Overall, an interesting survey of some of the relevant comparisons between the U.S. and smaller Nordic countries. On the one hand, it is obvious that the U.S. could not adopt Nordic-style social benefits and have them work the way they seem to work there, and this book makes that point well. On the other hand, such comparison are difficult and I’m sure there are ways the data could be presented differently to make Sanandaji’s case less compelling -- I’d be interested to read that book too.