Book Review: The Nordic Theory of Everything

I used to have this theory that the citizens of San Diego have more interesting conversations than the rest of us. The idea is that the default conversation topic for most people is to talk about the weather. But since there is no point in commenting on San Diego weather, since it’s always nice, they have to dig deeper for more meaningful dialogue.

In The Nordic Theory of Everything: In Search of a Better Life, by Anu Partenen, the Finnish-American author explains how the two countries she has called home differ. The policies of Nordic countries, she believes, are rooted in what she calls "the Nordic Theory of Love.” Much like my theory of weather-deprived conversations, the idea is that the government should supply services that strip away the interdependence of a citizen’s relationship to their family, and all the stress and anxiety that accompany it, so that all that is left is love.

For instance, in America the tax code incentivizes dependency on spouses—as any newly-divorced couple will discover the next time they file their taxes. Things get worse if they are on the same insurance plan.

Parents paying for their kids' college tuition incentivizes dependency on parents. When the government picks up the tab instead, these relationships become based on pure love, since the leverage and power dynamic is removed.

Like most untraveled Americans, I am fascinated at how Nordic countries can have such a robust welfare state and still have a functioning government and very happy citizens. And furthermore, could the U.S. adapt their model? Partenen answered most of my concerns but I still have two that remain unresolved. I am going to use this post to categorize the most salient quotes by topic and then address those unresolved questions in my conclusion.

Socialism

Socialism is one of those terms that can mean different things depending on who is using it. Both conservatives and DSA members call Scandinavian governments socialist, but they're just not. In fact, Partenen mentions that Finland, "fought three brutal wars against socialism in the 20th century to protect our freedom, independence, and free-market system.”

She continues:

“One of the reasons the Nordic countries have arrived in the future first is that after their 1990s financial crisis they set about reinventing their governments to nurture capitalism for the 21st century, making them less bloated, much more efficient, and more fiscally responsible. They did cut public spending and taxes, but they also invested in their people.”

One of the distinctions she makes is that the conversation shouldn't be about big vs. small government, but smart vs. inefficient government.

Individualism

She also stresses the individualism of Scandinavia. I don't totally buy it, I think they are more communitarian and homogenous than she realizes. But she makes some good arguments. 

“Nordic societies provide their citizens … with maximum autonomy from old-fashioned, traditional ties of dependency …. Nordic countries are, in fact, the most individualized societies on the face of the earth.”

Attending university costs a small membership fee. All students get a monthly stipend for living costs. 

“Imagine then what it’s like to be a Nordic parent. You can simply focus on raising a human being, in an age-appropriate way at every stage, without ever once feeling guilty that you’re not saving enough money, or not making enough money, to secure them the college education they’ll need to avoid ending up in the gutter.”

This example speaks to Partenen's Nordic Theory of Love: by providing tuition-free college, families are free from the burden that American parents feel and thus, their relationships are strengthened.  

School

Partenen quotes Pasi Sahlberg, saying: “In the Finnish language we don’t have the word accountability. It doesn’t exist… In Finland we think that accountability is something that is left when responsibility has been subtracted.”

What a great line. But not as good as the Finnish proverb: A child’s job is to play. 

“A typical daily program in a Finnish daycare center involves not just recess but several hours of outdoor play throughout the day.”

Students in Nordic countries, who overwhelmingly attend public schools, have some of the highest test scores in the world. Their closest competitors are the high-stress environments of Asian schools. This is having their cake and eating it too. Well done.

Parental leave

Nordic parents take a lot of time off. Like, a lot.

“The universal minimum amount of parental leave … is 9 months. Norway families can choose eleven months at full pay or 13 months at 80 percent. …

After the ten months of parental leave that are used up in Finland, one parent can still stay home, without losing his or her job, until the child turns three.”

This puts enormous pressure on co-workers. The work culture must be much slower-paced than in America, with all those moms and dads not there for long stretches.

But Partenen notes that American moms are more likely to drop out of the workforce. Due to generous leave, Nordic parents return to work.

Welfare queens

“... the key to keeping welfare queens … at bay is linking a person’s benefits to his or her previous salary.”

Only 7 percent of Finland is on the equivalent of welfare, compared to the U.S., which is 15 percent. Finland also has larger labor force participation. This is what Patenen means by smarter, rather than larger, government. A larger welfare state does not have to lead to fat and lazy welfare queens.

But the question remains: is the lack of abusing the system a policy design, or is it cultural?

Community

Partenen quotes the book Coming Up Short: Working Class Adulthood in an Age of Uncertainty by Jennifer M. Silva, writing: 

“Increasingly disconnected from institutions of work, family and community, [Americans] grow up by learning that counting on others will only hurt them in the end.”

“Tragically, America appears to be raising a new generation of young people afraid to form bonds at all…"

Partenen contrasts that with Nordic societies, which "have already transitioned toward … supporting the independence of the individual, so that the individual can then afford to make supportive and loving commitments to other people, like pairing up and starting a family.”

Healthcare

The usual sound bite is that Americans pay the most for their healthcare but we have the best doctors. But when you dig deeper, it gets more complicated.

“Another justification for the high incomes of doctors in the United States is the expensive malpractice insurance they’re forced to buy. In Finland, such costs are negligible.”

Ok, but why? Is it harder to sue or culturally a less litigious society? Partenen never really goes deeper.

Scott Alexander led me to believe that the reason American drugs are so expensive is that the R&D cost of getting them to the market (i.e. passing FDA hurdles) is so costly that Big Pharma needs to charge a lot to recoup those costs. 

Partenen counted with a big story that ran in Time. 

“Drug companies warn, of course, that if their profits in the United States were curtailed it would reduce their ability to innovate, but the research and development costs of major American drug companies are but a fraction of their vast profits. Drug companies spend more on advertising than on product development."

I went directly to the Time article and found this:

"In other words, even counting all the R&D across the entire company, including research for drugs that did not pan out, Grifols made healthy profits."

Scott ...

There was also some good parts on the effects of the healthcare system we have chosen and the ways to pay for its inefficiency. 

“Unpaid medical bills fall either on taxpayers, as government money flows in to subsidize hospitals that provide charity care, or they fall on other individuals, when hospitals raise their prices to cover their losses, and when insurance companies raise their premiums to cover those higher prices… The current system in the united states, even though we may not notice it, isn’t just bad in terms of getting health care, it also literally tears apart the social fabric of the nation.” 

My mother-in-law told me that, as an occupational therapy assistant, she had the option of earning wage X as a part time worker or earning wage Y as a full time worker, with X>Y. The reason being that part time workers are not offered benefits, like health care, so they can afford to pay her more.

One of the benefits of eliminating our employer-based health insurance system is that your employer can now pay you more money. We don't realize the hidden cost of our wages being eaten up by our benefits.

“Currently U.S. employers that offer their employees health insurance, like those that offer parental leaves, are at a disadvantage compared with those who don’t. They’re also at a disadvantage when competing with companies in other countries with public health care. Many American employers have already hinted that they’d be more than happy to drop the burden of providing health insurance and instead offer their employees higher wages, or support for purchasing their own health insurance. ObamaCare forced big employers to keep offering health insurance, whereas a public option would free both employers and employees from the absurdity of health care that’s tied to employment.” 

Trust

“Trust in the medical profession as a whole in the United States had plummeted since the 1960s. Of the 29 countries [in a Harvard study], the United States came in twentieth fourth in the proportion of adults who trust doctors.”

“As I interviewed Nordic citizens about their health care, I was struck by how understanding they were of the need to keep costs at bay and to offer care to the neediest… In the United States, the prevailing feeling seems quite the opposite: that insurance companies are the enemies of the common people, and thus should be squeezed out of every penny possible…

It is difficult for Americans to know what they are missing. Europeans can feel enormously proud of and even patriotic about their health-care systems because they pay for them with their taxes…” 

This all sounds nice in theory. I wish we could expand our public services and increase institutional trust. But trust is not downstream from policy. If that were the case, Americans would feel the same way about our tax-funded schools as Finns do about their healthcare system. And we just don't.

“[Americans] tend to consider taxes as money taken from them, and tax breaks as a … correction. Cash benefits, by contrast, are seen as money received.” 

Finnish families receive cash each month, whereas US families get things like the EITC. She might be right here. Stimmy checks were pretty popular, until they caused massive inflation. But this could be a good case for something like UBI being a popular government program that increases institutional trust.

Elder care

Again, just another example of the Nordic Theory of Love as it relates to elder care:

“Having a public system that will take care of the fundamentals and the most difficult aspects of care, actually frees up family members to provide truly loving care for their aging relatives in ways, and amounts, that are not overly taxing or exhausting.”

Culture

“In the end, could the Finnish model truly be applied to a country as diverse as the United States? Do Finland’s policy choices—the supply approach, universal day are, ambitious teacher education, lack of standardized tests, in-school tutoring, short schooldays, and cooperation—really explain Finland’s success? Or is the reason for it actually much simpler: That Finns are all the same”

Interestingly, she never really comes back to that last question. But she does double down on the policy->happiness bit.

“All these achievements should not be dismissed as products of unique Nordic circumstance and culture. These achievements may have been inspired by the Nordic theory of love, but they are not achievements of culture, they are achievements of policy.” 

“When a company or a country does well and there is more wealth to share, workers can take their cut in either money or free time. Nordic workers often prefer to take time over money, because at a certain point, the secret Nordic people know is that time off buys you a better quality of life than more cash.”

There is a big subject that Partenen mostly avoids, which is the homogenized, monoculture of Scandinavia. She only gestures briefly at it in one instance, writing:

“The Nordic habit of conformity can be particularly hard on immigrants. Sweden is widely admired for its generous immigration policy, but on the whole many immigrants to the Nordic region find its citizens cold, hostile, and closed-minded.”

Conclusion

One of the best arguments of America being a go-go capitalist country that should not take its foot off the gas is that, in essence, we subsidize the socialist policies of much of the industrialized world.

So it's worth asking if higher U.S. taxes on the wealthy will hamper investment and growth to the point that global markets are affected. Let's just take the parental leave example. If we pull, say, twenty percent of the U.S. workforce out for two years and increase taxes to pay them for their time off, that is going to have some impact on economic growth. I mean, I think we will be fine but that slowdown is going to have global effects. Other countries are going to feel it when most of their retirement investments are tied to U.S. stocks.

“By country, the largest stock markets as of January 2022 are in the United States of America (about 59.9%), followed by Japan (about 6.2%) and United Kingdom (about 3.9%)."

Also, most of the new drugs come from U.S. pharmaceutical companies. So when places like Canada impose cost controls, that just means U.S. consumers are left to foot the rest of the bill. Imagine if we decided to not sell drugs to those countries unless their consumers shared the burden that U.S. consumers pay. They would not have access to many powerful medications. 

Whether through trade or investment in global stocks and bonds, Nordic countries (and pretty much all countries) are reliant on U.S. wealth being as strong as it is. 

It feels safe to say that, when compared to America, Nordic countries work less, which means they have less wealth. So if the U.S. adopted Nordic policies, there would probably be less wealth; which would affect EVERYONE. Is the world better off with America working and producing as much as we do?

(I mean, I think the answer is that we should adopt more "socialist" policies but I wish people would at least grapple more with the tradeoffs.)

Finland So White

The other issue that never gets resolved, and I've been hinting at this entire time, is the issue of culture. Nordic countries are very homogenous (read: white), which leads to high levels of trust. You cannot implement these policies without trust. Trust comes first, it's not the other way around. You just cannot take a country with our history of chattel slavery, segregation, and the treatment of indigenous people—not to mention our sky-high affective polarization—and think you can fix things by offering free healthcare, better schools, and paid parental leave.

Even if you could build "smart" government programs, people would abuse them or find ways to denigrate and dismantle them, just as the Republicans have tried to do with Obamacare. 

I'm still convinced that America needs to fix our trust issues before we can have a better government.