2.8.3 But you do pay terrible taxes, don't you?
Description
This article is from the Nordic countries FAQ, by Antti Lahelma and Johan Olofsson, with numerous contributions by others.
2.8.3 But you do pay terrible taxes, don't you?
Also people who are Conservative, by Nordic standards, support the
basic concept of sharing a public responsibility for education and
health care. We can discuss the efficiency of the government in
running these programs, but you're not going to convince many
Nordeners that the solution to inefficiencies is to move the
responsibility to the individual.
Since the education of the youths is paid for through taxes instead of
parent's earnings, the most intelligent kids get educated regardless
of wealth. This is an advantage for the country as a whole. You can
also say: The educated pay back for their education through taxes.
The same applies to the health care, which additionally seems to be
remarkably cost efficient in the Nordic countries (compared to the US
at least).
We all will need support around our birth, during the time when we
grow up, when we get ill and when we get old. We all need education.
Those needs are as common as our general need for streets and law and
order and protection by an army. All will probably become seniors. In
any case, all have reason to prepare for that. If the preparation is
made by individual savings or by mandatory contribution to a general
system is the difference. The cost for living and health care during
your last years won't change if you live in a libertarian state or in
the nanny-states of Europe. The only difference is the method of
paying. Here you pay in advance via the tax system.
The same goes for primary and secondary education. All who earn money
have once upon a time used the pre-schools and schools, and in our
society you pay for it through the tax some years later. In other
systems you "borrow" it from your parents when you use the service,
and then "pay back" to your kids when they grow up.
Neoclassical economists use to argue that the high taxations in the
Nordic countries must lead to high unemployment, low productivity, low
rates of investments and too little incentives to work and innovate.
Now and then these arguments are presented in s.c.n., and regularly
the following will be presented:
The Nordic experience shows that 50% taxation is not too high to keep
most people from working. In the 80s there was full employment despite
high taxes and an extensive social security system. People still
prefer work to unemployment. Sweden could maintain full employment
until 1990s, but now the open unemployment is higher than in the US,
although the criteria of the statistics differ.
The Nordic model worked well till the 90'ies economic depression, but
it may have gotten into trouble in some of the countries now. On the
other hand, one could argue that thanks to this model the recession in
the beginning of the 90'ies became moderated in a very favorable way,
compared for instance to the development in the United Kingdom.
It's often noted that the level of investments in Finland only some
5-10 years ago was very high, maybe too high, and that Sweden has a
trade surplus (i.e. producing to a higher value than they consume)
whereas USA has a trade deficit.
Productivity is relatively high in Norden. Social security does not
lower productivity. In fact U.S. style low pay employment does not
have as great incentives to high productivity as the Nordic union
negotiated pay model.
Among the positive sides of this high-taxation system, one can note:
* almost no poverty or starvation, as is the case in American
ghettos
* virtually no homelessness problem
* very little crime
* equal opportunity to education & health care, regardless of the
wallets
Another example is that if a US worker is forced to have an expensive
car and drive for two hours each way to get to work, spending money
burning gasoline, that shows up as a bigger contribution to GDP than
that of the Finnish worker who lives in a comfortable cogeneratively
heated house out in Käpylä, doesn't need a car, and rides an
inexpensive tram in to work.
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