It seems like the new trendy political thing these days is socialism or what they like to call it ‘democratic socialism’. Well the thing about all these so called socialist countries that people keep pointing to as successful models of their beloved Socialism in action is, they aren’t really socialist!
Places like Denmark, Switzerland, the Netherlands, Iceland, Sweden, Norway, and Finland all practice a ‘mixed economy’ model that has many capitalist components and A few socialist ones. People call them socialist because the party that is in power now (or was just recently holding office) has ‘social’ or ‘socialist’ in their name. But, for example had Bernie sanders won in November it wouldn’t automatically make America a socialist country, or even a ‘democratic socialist’ country. Now some of these countries are practicing a ‘democratic socialist’ style philosophy on governance when referring to some current economic Strategies. But as I have explained, there are no actual “democratic socialist” countries in Europe. And to me, that’s the root of the confusion.
Just for fun let’s look at what some of these so-called socialist countries call themselves…
Sweden= ‘parliamentary representative democratic constitutional monarchy’
Norway= ‘parliamentary constitutional monarchy’
France= ‘semi-presidential constitutional republic’
Denmak= ‘parliamentary, representative democracy”
These so-called socialist Scandinavian countries actually have greater Economic Freedom than the US derived from freer more open markets. They enjoy free trade (no tariffs), limited government, a completely privatized banking system, and streamlined regulatory efficiency (very hands off with the business sector). Also none of the Nordic countries really have a federal/ national (forced) minimum wage. Compensation is widely based on private contracts and private union negotiations with employers. The government stays out of it! Now you will hear many nordics say the term minimum wage. However what they’re referring to with this turn of phrase is the average compensation nationwide determined as a result of those private negotiations. None of these principles are socialist! They’re capitalist through and through, more capitalist that the US!
Where it becomes more Socialist is when we talk about taxation & government spending… For example, because Denmark is commonly mentioned; The top personal income tax rate in Denmark is 56 percent, and the top corporate tax rate is 23.5 percent. Other taxes include a value-added tax, an inheritance tax, a capital gains tax, etc. etc. The overall tax burden equals on average almost 50 percent of total domestic income. Government spending amounts to more than 55 percent of GDP. They also have a vast network of social welfare programs that provide everything form healthcare to daycare and there is no body for oversight or Control of Government spending.
The only way they are able to hold on financially with all those socialist type programs and vast government spending is because of their strong open & free markets. The saving grace of these nations is that they are capitalist money making machines unhindered by the type of regulation you see here in the US.
Now, this is usually the point in the debate where your hip socialist pal will inform you that there aren’t any true libertarian countries either, and they’re right! But there are those nations that are successful and demonstrate many libertarian tendencies. For a good example, Liechtenstein demonstrates a Libertarian style on current economic strategie. Liechtenstein has more registered companies than citizens and it has developed a prosperous free-enterprise economy. It also boasts a financial service sector as well as a living standard that compares favorably with those of It’s much larger European neighbors. Finally it boasts one of the lowest effective tax rates in the world.
And there’s Ireland who between 1995 to 2007 had a period of very high economic growth precipitated by decreasing trade and corporate regulations. They also lowered the corporate tax rate (currently at a 12.5% standard rate), it now has a record of posting the highest growth rates in Europe. All this while still boasting the highest quality of life in the world (2005 study by The Economist)
Also Singapore which has a highly developed market economy, based on extended trade. It has surpassed its European & Aisan peers in terms of GDP per capita. The Singaporean economy is known as one of the freest, most innovative, most competitive, most dynamic and most business-friendly. It also ranks as the second freest economy in the world. (via 2015 Index of Economic Freedom ranks) According to the Corruption Perceptions Index, Singapore is consistently ranked as one of the least corrupt countries in the world, along with New Zealand… Which has some of the most socially libertarian policies regarding drugs, prostitution, LGBT rights & personal privacy.
Of course we could go on but I think those are some good examples of the libertarian principle of economic freedom at work.
So let’s take a look at a list of some current and true socialist countries to see if your hipster socialist pal will be heading to any of those voluntarily…
Any takers? No? I thought not!