Recently I spent some time in Denmark, Sweden and Norway. Apart from being mightily impressed by the scenery, natural and man-made, I was also impressed by the facts that:
1. The infrastructure of public transport, roads, tunnels and bridges is expensive and serves even small, remote communities.
2. All are generous welfare states; health and education to tertiary level are free and pensions generous.
3. I saw no obese children. Not one.
Returning home I did some homework and learned that several surveys have shown that indices of wellbeing and happiness are far higher in Scandinavian countries than in Australia, and Scandinavian people have much greater trust in politicians and in police than we do. Further, as Transparency International consistently finds over the years, Denmark, Sweden and Norway have the least amount of corruption compared to other countries. Many Australian politicians know they are despised but in their arrogance, and considering their perks, they couldn’t care less (this factoid was reported in our ship’s news summary).
How can we account for this? The most obvious difference between Scandinavian countries and Australia – forget climate for the present discussion – is our respective political systems. While there are differences between the three Scandinavian countries themselves (omitting Finland and Iceland), the similarities are greater and I shall therefore lump them together for comparisons with Australia. (For what it’s worth, the populations of the three Scandinavian countries are: Denmark 5.7 million, Norway 5 million and Sweden 10 million, totalling around 21 million, as compared with Australia’s 23 million).
There are two aspects to this comparison between political systems: structural differences in the way the systems work, and policy differences.
Scandinavian countries are multiparty systems and it is rare when a single party has an absolute majority. Australia is designed around a two party system although there are minor parties and independents. A majority government of Labor or Liberal is considered the right way for the system to work, and where that doesn’t happen parliament is said to be “hung”, as if the life of good governance is slowly being strangled. A hung parliament may seem to give a minority party or an independent a disproportionate amount of power, but in recent practice that has worked well, modifying excesses of poor governance by the ruling party.
Where one major party has an absolute majority, they are in effect granted open slather to do whatever they want to do: the opposition and other MPs are simply dealt out of the game until next election. In fact, only the cabinet or even just the prime minister alone have any real decision-making power because the rank and file almost always back what the inner few decide. This is oligarchy not democracy. Only when the calls, or the modus operandi, of a prime minister become so intolerable does a party revolt against him or her; this is rare but it happened twice in the last Labor Government.
One frequent consequence of a two party system is that in an election campaign the opposition party adopts a small target of the electorate for the enlightenment, instead they dwell on how absolutely terrible the current government is, promising to undo everything they have put in place. This is precisely what Abbott did when he gained power, undoing anything to do with science, climate change, education and health. Election campaigns thus dwell on negativity not on what positive initiatives may be in the interests of good governance.
This virtually unchecked power of the ruling party clearly opens the door to corruption because it provides a focus for lobbying and political donations to influence decision-making. Uncapped or nonaccountable political donations distort the question of whose interests a party is governing for. For example, we know that the fossil fuel and mining industries donate massively to both parties, but especially to the Liberal Party. Thus, current legislation and taxing policies strongly favour the interests of these industries, including strong discouragement of alternative energy sources. The donations and the legislation may be coincidence but the pub test would strongly suggest otherwise. Similarly, the enthusiasm with which the Liberal Party enters into free trade agreements, incorporating investor-state dispute settlement (ISDS) clauses that allow foreign corporations to sue Australia if our legislation is deemed to harm their potential profits, is certainly not in the interests of the Australian people but is in the interests of multinational corporations.
In multiparty governments, if no one party has this kind of power, corruption of the above kind is much less likely, as indeed the above mentioned Transparency International surveys confirm. Similarly the interests of any one party dwindle in the presence of several other parties, so that politicians will tend to concentrate more on the business at hand, which is legislating in the interests of the people. Legislative decisions thus have to be made through discussion and negotiation between parties, a procedure that focuses on producing outcomes that have been discussed from different perspectives. Outcomes of legislation are therefore highly likely to be that much better considered and their consequences analysed.
The design of the parliament reflects these differences between two party and multiparty systems. In Westminster systems the two parties face each other across a divide that surely fosters confrontation, whereas Scandinavian politicians sit in a semi-circle all facing a president and five vice presidents. In Norway, the unicameral parliament has 169 members, and is elected every four years, based on proportional representation. There is no upper house, but where people trust their parliamentarians, an upper house of review in order to keep the bastards honest is deemed unnecessary.
Another bonus at least in Denmark is that electioneering is limited to three weeks, which means that for the greater part of the year politicians can get on with governing rather than scoring points in election-mode the year round, and of course short campaigns save a lot of money.
Scandinavian politicians are probably not more honest, less corruptible as people than are Australian politicians, but the respective structures of their respective systems elicit or encourage very different kinds of behaviour.
These structural differences are important but perhaps the greatest difference between Scandinavian countries and Australia lie in policy.
All Scandinavian countries are social democracies; they agree on a welfare state, promoting social mobility, gender equality, egalitarian and extensive benefit levels, the doctrine of all men’s rights, which includes same rights of access to essential infrastructure whether you live in an urban or in a remote area, and ensure the universal provision of basic human rights. Thus, health and education are free, public housing is readily available and pensions are such that the disabled and retirees can live in comfort and dignity. The State pays maternity and paternity leave, which takes over when mum’s leave runs out, are a high fraction of usual salary, as are pensions a high fraction of last salary before retirement.
Scandinavian countries also agree in stabilizing the economy, alongside a commitment to free trade, maximizing labour force participation, and liberal use of expansionary fiscal policy. Social democracies value economic returns, and one way of doing that is by maximizing the number of people on wages so that there is more money circulating and the more people there are paying taxes the better. The neoliberal way is to reduce the workforce people and minimise wages in order to push up profits.
Margaret Thatcher in the UK and Ronald Reagan in the US gave neoliberalism political reality, many Western countries following suit to a greater or lesser extent including of course Australia. The only exception to cutting government spending was (and still is) defence: Reagan racking up a deficit of trillions of dollars on his crazy Star Wars project. The rationale for that however was not neoliberal philosophy but raw politics: frightening the pants off the electorate is a common strategy of the right to get re-elected when on logical grounds they should be soundly thrashed by an angry and deprived electorate. In all countries with neoliberal governments the gap between rich and poor is high and increasing, while in Scandinavian countries the gap is much narrower – and would be much so except for the fact a few Scandinavian industrialists are extremely wealthy. Ignoring those few, the gap between highest and lowest paid is very small by our standards.
Neoliberalism asserts that the only legitimate purpose of the state is to safeguard individual liberty and private property rights and especially commercial liberty by “small government”. In other words the government regulates the economy as little as possible, privatising publicly owned businesses, allowing “the market” to operate freely, crushing trade unions for they interfere with laissez-faire capitalism, and eliminating budget deficits. Profits are protected by minimal tax and individual worker contracts not collective agreements. The market is of course an abstraction: what it really means is that rich people and corporations are free to make themselves richer, which inevitably means depressing wages and access to a pool of unemployed, and low taxes.
Australia has a neoliberal government; indeed both major parties espouse neoliberalism with Labor having a softer version. Labor might have a stated socialist objective – “The Australian Labor Party is a democratic socialist party and has the objective of the democratic socialisation of industry, production, distribution and exchange, to the extent necessary to eliminate exploitation and other anti-social features in these fields.” – but these are words only. In practice Labour operates as a neoliberal government. Indeed it was Hawke and Keating, not the Liberals, who embraced neoliberalism, then called economic rationalism, in the first place. The result was large tax cuts, the wages share of GDP falling from around 61.5 per cent of GDP to less than 55 per cent, which amounted to a transfer of $50 billion from workers to the already very rich. That’s Labor’s version of “democratic socialism” for you.
Naked neoliberalism drove the first Abbott May 2014 budget. Welfare was cut, taxes on superannuation for the rich decreased but increased for those on under $35,000 pa, swinging cuts on public spending in health, education and scientific research. Fortunately the general public and the Senate angrily rejected that Budget.
In sum, Scandinavian countries explicitly legislate for the health and welfare of their citizens, while Australia in true neoliberal fashion legislates almost entirely on an economic agenda for the benefit of the already wealthy. The irony is that all Scandinavian social democracies are doing better economically than Australia is. By way of example let’s take the way Norway and Australia reacted to their creation of huge surpluses: Norway through North Sea oil, Australia through iron ore. Norway created a Futures Fund that is now valued at nearly $900 billion and is intended to keep the country and its population going with special reference to pensions when North Sea oil runs out. The Fund’s investments comprise 1% of all the stocks and bonds in the world; a committee ensures investments are ethical, the Fund having divested itself of tobacco, munitions and most recently fossil fuels. As Norwegian economist Eirik Wekre said: “We cannot spend this money now; it would be stealing from future generations.”
Australia dealt with the huge income from iron ore profits by giving massive tax cuts to income tax and industry that in the way of a progressive tax benefitted the rich more than the poor, and when the downturn came, as it inevitably did, Australia was heading for a deficit. The Norwegian way was rational, ethical and humane, the Australian way greedy and monumentally short-sighted if not downright stupid. The UK reacted to the North Sea oil bonanza in the same profligate way.
Norway’s infrastructure does not however depend on the Futures Fund. Tromso had a traffic problem, particular in winter when the roads are iced, so they built an underground network of roads, like a metro, with several exits and underground interchanges. I was reminded of Hobart’s traffic problems and Max Darcy’s proposal for a traffic tunnel (which he modestly called the Darcy Tunnel) that would leave the city and the waterfront connected. Pie in the sky, way too expensive, the critics scoffed. Well, Tromso is one quarter the size of Hobart yet they financed a much more ambitious scheme very simply: every litre of petrol sold scores a surcharge of half a kroner, or roughly 10c, to the enormous benefit of the whole community. Or take Bergen, two thirds the size of Hobart. They have light rail, ferries , roads and bridges crossing over and under fjords, far more difficult terrain than the level shores of our simple Derwent.
Now for that matter of obesity. Under neoliberalism, deregulation allows markets to operate freely so that business can maximise profits. Thus, fast food chains and suburban liquor outlets are allowed to open in places even where they will do most social and personal dam, likewise for attempts to restrict gambling, labelling requirements for food are not enforced, advertising for fast foods is allowed in peak hours, because maximising profits is what neoliberalism is about. The Scandinavian countries on the other hand regulate in the interests of the people, including their health, so that such things as the sale of alcohol and fast food, and advertising in prime time, are regulated. It is also true that fish occupies a large part of the diet and a culture of fitness prevails (we saw several Iron Man competitions in our travels) while walking trails and bicycle paths are common everywhere. Put all that together and the absence of obesity especially in children is easier to understand.
Many economists and more politicians have adopted Thatcher’s mantra of TINA: “There Is No Alternative!” Well, the Scandinavians have shown very clearly that there is an alternative: it is called an enlightened social democracy.
Then there’s the question of taxation
The downside to the Scandinavian model – if it is one – is that taxes are higher. We in Australia have a culture of regarding taxes as an unwarranted impost and to be minimised or better avoided wherever possible. In the eyes of all but the most idealistic Australian politicians that settles the matter: to legislate in favour of higher taxes is to commit political suicide – or so it is assumed. However, according to Per Capita’s 2014 Tax Survey, attitudes of Australians to taxation but government expenditure are changing. Most Australians believe they pay the right level of tax and would support more spending on health and education. They also think high income earners are not paying their fair share and would support higher taxes on the top 5% of income earners to fund improved services.
High taxes are especially anathema to neoliberals, which means that to avoid a deficit, governmental expenditure on health, education and other services is cut to a minimum – except of course in defence and those billions spent on incarcerating asylum seekers.
In Sweden, which has the highest taxation rate, income tax is progressive rising to 59.7% of income in the highest bracket (I can remember 60% in Australia in the 70s), the VAT rate varies according to item at 25%, 12% or 6%, with no tax breaks for the well off such as superannuation, capital gains tax and negative gearing. Compared to our tax rates, which are amount the lowest in OECD countries, the Scandinavian tax rates sound insupportable.
But Scandinavians prefer higher taxes because once they have paid their tax they don’t have to pay anything for health care, education (no $100,000 degrees there), liveable pensions, decent public transport and so on. It’s rather like those cruises that charge higher fares, but once on board there are no further expenses: all drinks, meals, even tips, everything, are free. Of course you have already paid for it but it feels good. And that’s the Scandinavian experience: once the taxes have been paid they have so much less to worry about in case of accidents or emergencies. It feels good and the surveys confirm that.
Now for the question
Scandinavian politics are so much better than Australian politics, as far as most citizens are concerned, on two counts.
Structurally their multiparty system minimises playing party politics instead of getting on with good government whereas a two party system maximizes these party games. The party’s interests and winning the next election become the focus of politicians, not ethical dealing or the interests of the country. The very design of parliament in the one case facilitates discussion and negotiation, while the other encourages “the boys’ shouting match”, as one female Liberal politician recently put it.
In terms of policy, Australian and Scandinavian parliaments address different issues. Neoliberal governments anywhere are all about deregulation, laissez-faire economics and budget surpluses coupled with the bizarre demand for lower taxes. Ordinary people are the losers in that political sandwich. Multiparty social democracies on the other hand govern for equity, human rights and a thriving economy.
On every count that I can think of: personal happiness and well-being, political stability, absence of corruption, even economic well-being, the European social democracies are doing far better than Australia.
So now for the crunch question: How has Scandinavia got it so right and we haven’t? According to the above analysis, the answer is to make our government a genuine social democracy – not the ALP’s symbolic nod in that direction – that would deliver the sort of society that we so badly need and I am sure that most people would really want.