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Saturday, December 19, 2009  

The Blessings of Liberty

In a comment somewhat tangential to the discussion of carbon over at TAE, I unloaded excessively in defense of the Danish social model. TAE responds here. Anyway, I'll cop to being generally irritable about people dumping on the Nordic countries, especially in light of moronic displays like this. Anyone who makes a sharp distinction between "American-style free-market capitalism" and "European-style socialism," whether it's an idiot sign-waver or the editor of Newsweek is probably trumpeting their mastery of cliches and not much else. Indeed, check out the Heritage Foundation's ranking of economic freedom and Denmark comes in at 8th, a mere two notches behind the ruggedly market-oriented United States. In fact, if you exclude the two city-states at the top of the rankings as outliers (Hong Kong and Singapore), the following countries are pretty bunched between "freedom scores" of 82.6 (Australia, #3) and 74.3 (Mauritius, #18). The U.S. and Denmark at separated by a mere 1.1 points.

If Americans were better traveled than we are, this would be pretty intuitive. Denmark is a lot more similar to the U.S. than different. People buy things, drive cars, spend lots of money, make lots of money, and spend most of their weekday waking hours at a job. The differences are obvious--stuff generally costs more, cars are smaller, there are many more people on bikes, the streets are clean, the buses date from this century, there's less screw-you money in evidence--but they are swamped by the similarities. TAE rightly points out that Danes (and other Nordic people) pay higher taxes, but the overall picture is not one of hovels-and-gruel "Nordic socialism" over against American capitalism and democracy. These are very wealthy, very dynamic market economies.

The main differences are that we pay somewhat less of our GDP in taxes, spend vastly more (again, in percentage terms) on our military, and we tolerate crappy social services and lots of infant mortality and child poverty. Cultural factors and policy details aside, that's the main difference between American capitalism and northern European socialism: Our electorate has a "revealed preference" for lower taxes, a military that is always growing faster than our economy, and lots of poor, sick kids.

Moreover, the "freedom score" numbers produced by Heritage don't do justice to the reality of American economic freedoms. They don't mean much to our vast incarcerated population, or to the 18% or so of our children who live in poverty and are less likely to escape it than their Nordic counterparts. They are greatly diminished for our shockingly high proportion of semi-literate adults. They're not so hot for people who can't afford a car and have to rely on our crappy public transit systems to take advantage of our super-awesome labor market freedoms. I can't be sure, but if you tried to index the freedom rankings against the share of the population that has effective access to those freedoms, you'd find the U.S. dropping behind several Nordic socialist hellholes.

Now I, obviously, would happily trade somewhat higher taxes and a military that gradually shrinks relative to GDP in exchange for healthier kids, better schools, more environmental responsibility, infrastructure improvements, and all the associated curses of socialism. In fact, I suspect that such a shift in our policy mix will be necessary if we want to avoid becoming the 21st century's Argentina. Plenty of people disagree, of course. But I wish invocations of European countries as possible models for anything from carbon usage to health care didn't cause so many Americans to slam down the socialism trump card and assume that we don't have anything to learn from them.

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