Strange it is to be reading the Milton Friedman obituaries – still rolling out and not so much glowing as radioactive – in Scandinavia, the region he had so much trouble explaining.
For 70 years, from before Keynes and long after stagflation, the Swedes and others have been cheerfully b-ggering about with the money supply as needs demanded, engaging in large-scale economic planning and offering their citizens an all-encompassing welfare system.
The result has been, by any economic indicator, and most social ones, an unqualified success – the Nordic countries regularly top the listings for competitiveness, productivity, innovation, transparency, eradication of poverty etc. When you fly into Helsinki from the smoking shantytown of the UK, it’s the closest you get to time-travel.
The continued successes of the Nordic economies annoyed the hell out of uncle Milt, and was the occasion for one of his most famous remarks, when a Swedish economist told him there was no long-term unemployment in Scandinavia. “Yes,” he said, “we have many Scandinavian-Americans in the US and there is no unemployment among them either”.
Funny, but no longer true. Areas like Minnesota and Wisconsin where there are high numbers of Scandinavian-Americans are suffering the same problems that anyone does in a country which won’t use taxation and public reinvestment to make the transition from industrial to post-industrial economies.
Monetarism was never fully unleashed in the US or the UK, but Milt had just enough influence to ensure that the social-industrial base was sufficiently wrecked to slow transition down by decades (in the UK) and leave it permanently stalled (in the US). Both economies keep themselves turning over by virtue of their inherited centrality to the global economy and supplies of cheap labour.
In a recent interview, Milt reformulated his views:
Though it is not as true now as it used to be with the influx of immigration, the Scandinavian countries have a very small, homogeneous population. That enables them to get away with a good deal they couldn’t otherwise get away with.
Lovely fudge, that one. Any economy that works when the Chicago school says it shouldn’t is “getting away” with something.
Coincidentally, Milt’s death comes at a time when Jeffrey Sachs has belled the cat on his mate Hayek, pointing out that his argument that high taxes lead to torpor and tyranny has been comprehensively disproved by the Nordic example.
It is millions of Americans who have gone down the road to serfdom, working two full time jobs to support a family – a lifetime of toil and unremitting poverty. Scandinavia’s problem is the Road To Surfeit – dealing with the cultural dilemmas that arise when the basic economic question has been solved.
So not doing too well, team blue, with or without the captain around. Indeed, as Richard Adams notes, it may be that social democracy was Friedman’s only unqualified success – he helped devise the modern PAYE tax system in WWII.