There have, in the past week, been a few noteworthy articles regarding the Scandinavian shadow which looms large over the issue of Scottish independence, as well as the future and makeup of Scotland’s economy, welfare system and society more generally.
Now I write this as somebody who knows a fair deal more about Scandinavia than most, for both personal and professional reasons. A colleague of mine in the Greens remarked that the next Scottish Green manifesto should just be called ‘Scandinavian Nirvana’, such is the appetite in the party for increased welfare, greater social freedoms, gender equality and local democracy. I wholeheartedly agree.
Which brings me to something said by Blair McDougall in a BBC interview on the independence referendum. He accuses his opposite number in the Yes campaign, the significantly more articulate and less hackish Blair Jenkins, of wanting ‘57 per cent tax like in Norway’. There are indeed people in Norway paying that much tax, but these kind of people are not the salt of the earth working men and women which McDougall thinks will be crushed by the weight of Kaiser Salmond’s iron taxation, if he did indeed have such plans.
Then there was a report in The Economist which made the odd logical step of collating the radical reforms by centre-right governments in Sweden and formerly in Denmark with the high living standards and safe economies of the Nordic countries. As the Swedish journalist Katrin Kielos noted, there is an awful schizophrenia about the new craze for the Nordic centre-right, in that it assumes that being Scandinavian is a virtue in itself and argues that the path forward for these secure and durable systems is to follow a more British or American model . It is a trend which wishes to dine on the fruits of the Scandinavian countries’ labour whilst seeking to undermine it at its foundations.
The whole thing is illustrative of the fact that there is a huge amount of ignorance about the way in which Scandinavian society functions, and that this ignorance can be used to significant political advantage. It is also debatable to what extent it is even appropriate to address the Nordic countries as a single unit. There are however certain things which underpin ‘the Scandinavian model’ which Scotland would have to adopt were it to develop in such a direction.
The first is a strict ethos of universalism. Not all services are free in Sweden or its neighbours, but notable by its absence is the incredibly British notion of selective assistance. Britain seems to implicitly accept that there should be huge gaps in income between different levels of society, and that one of the roles of public welfare is to alleviate this. It is a mode of thinking which the New Labour project perfected with its targeted alleviation, support for bright pupils from state schools and university access bursaries, without ever tackling the structural causes of poverty and discrimination.
Secondly, the way in which Scandinavian trade unions work is different to the British model. The nostalgia for the 1970s which pervades much of Britain’s left ignores the fact that old British models of trade-unionism were what allowed public support for the radical reforms of the 1980s. The systems of collective bargaining employed in Sweden and relatively high levels of unionisation amongst what might be termed normal people means that it is both destigmatised and can claim to represent large portions of the population. This system has come under attack from centre-right governments in recent years but has survived relatively intact. The Scandinavian countries do not have a legal minimum wage, but they do have an effective minimum wage proportionally higher than Scotland, leading to a reduction in income inequality before the tax system has even played its redistributive role.
And once tax is collected, where does it go? Not into benefits as they might be normally understood, but rather into the provision of universal services. Childcare, incredibly well funded education systems, transport and infrastructure and healthcare. The biggest challenge to Scotland is whether it is possible to transfer to this type of system given the appalling disparity evident in the country and present. It is in the interests of every Scottish woman to vote for a scenario which will provide the funding and structures for them to work and live on the same terms as men (and from a male feminist perspective, in men’s interest too).
Now to return to Blair McDougall and his mythical 57 per cent tax rate, I would say that it would only become an issue when you earn as much money as a senior press adviser or an MP. Having large tax reserves means that in times of crisis governments are able to effectively deal with them, unlike the British model of medium taxation on an out of control financial system without any thought as to the after effects.
So to be realistic, adopting a Scandinavian social model would involve higher rates of tax, but it would also involve higher wages and better public services. In real terms incomes might well be higher, or at least remain static whilst providing for higher levels of public investment.
The whole thing is also dependent on a grand narrative. People vote for things because they believe in their viability, and the Scandinavian system is underpinned by a notion of functional redistribution different from the dominant discourse in Britain, and even in Scotland. It isn’t about smashing the rich or shooting bankers at dawn, but rather about building a cohesive society which works in the interest of all. As Norwegian Prime Minister Jens Stoltenberg says, “to create we must share, and to share we must create.”
David Leask’s excellent ‘As Others See Us’ column in the Herald, in which a group of Norwegians were asked for their opinion on independence, was revealing. The lack of interest in Scotland’s constitutional future was unsurprising – I frequently find myself explaining to Swedes the ins and outs of the independence movement – as Scotland is not politically visible. The Swedish daily Dagens Nyheter recently published a feature on Europe’s contemporary independence movements which mentioned Scotland in the same breath as the Northern League in Italy and Flemish separatism in Belgium, entirely ignoring the broadly leftist motivations found in the majority of pro-independence groups and parties in Scotland. The challenge will be to explicitly build the construction of a sustainable and humane welfare state into the Scottish cultural narrative at home and abroad.
Neither would we or should we transform Scotland into Scandinavia overnight. When talking with a good friend of mine about how I hoped to live in a Scotland where I felt the state and society treated me and any potential wife/partner equally she smiled wryly and wished me good luck, with some justification. But that isn’t to say that we shouldn’t try. I answered that to combine the best aspects of Scotland and Sweden would create something beautiful, but that it would require the type of radical social change not seen since the 1960s. It would be a national project which larger countries would be entirely incapable of, but which might just work in Scotland. Scandinavia might be a fluid concept with many faces, but the values which it ostensibly represents are what we should really be aiming for. Both financially and morally, we cannot afford not to.
#1 by BM on February 15, 2013 - 1:07 pm
I live in Norway, and have repeatedly asked Blair McDougall where he got that 57% number from, since there simply isn’t provision for it in the tax code. In fact, the current Labour-Scoialist Liberal-Agrarain government has a policy that no-one pays more than 50%. Maybe you could show me his working, Dom?
#2 by Dom on February 15, 2013 - 1:24 pm
I can’t. As you point out, the top income tax rate is remarkably low http://no.wikipedia.org/wiki/Toppskatt
It is possible to pay that much tax in total depending on how you count it, if things such as employer contributions are seen as wages and then there are various property taxes and the like. You could feasibly argue 10 per cent either way depending on your parameters.
#3 by Martin B on February 15, 2013 - 7:19 pm
Anyone wishing to compare income tax rates with (specifically) Sweden needs to remember: Swedish income tax includes local taxation.
So if you want to compare like with like, remember to reduce your take home pay by Council Tax.
Also, when you’re using the Swedish tax calculator
http://www.ekonomifakta.se/sv/Fakta/Skatter/Rakna-pa-dina-skatter/Rakna-ut-din-skatt/
remember to specify that the answer to “Medlem i Svenska kyrkan” is “Nej” otherwise you’re adding another ~1% in church taxes (yes, really).
http://www.thelocal.se/discuss/index.php?showtopic=27847
Once you’ve done all that, you’ll find that your real post-tax disposable income isn’t all that different for the same salary, although higher salaries (say above £80k) are much harder hit than in the UK.
Mind you, that level of salary is much rarer in Sweden than here – as noted above, overall salary disparity isn’t that great.
As a friend there observed to me: you’ll never be stinking rich in Sweden, but you won’t be impoverished either.
#4 by Thomas Widmann on February 15, 2013 - 7:58 pm
It’s interesting you claim the Swedes and Norwegians aren’t very knowledgeable about Scottish independence. Danish newspapers have published long articles about the topic, and when I was in Denmark a few days ago, Cameron’s comments were front-page news.
#5 by Tom Dunlop on February 16, 2013 - 10:06 am
I can concur with above statements about Nordic tax rates and life. I live in Finland and find the rates quite reasonable.
Regarding the 57 % tax rate, It has been shown elsewhere that the BT have a weak grasp of numbers (see WoS website for details), probably mostly in the service of exaggeration and spin. However there have been some howlers as well.
The tax rate includes local taxation, here as well. System very progressive with a lot of deductible items. For instance tax relief on interest if you have loan on a house, tax relief on temporary accommodation & transportation costs if you have to work in a different city. Some years my tax rate was 14 % because of this.
Also it worth of note that even union-o-phobes can contribute to unemployment insurance (at least in Finland. I cannot say for the other Scandinavs). There are non-unionised versions of such support that do the same job. In addition, if I do become unemployed I am not plunged straight into poverty. I will receive 60 % of my last salary as unemployment benefit for 500 days. Also the banks are oblige to offer you two years of interest only payments on housing loans. Blair D does not seem to mention that either.
#6 by Craig Kelly on February 17, 2013 - 1:18 pm
Brilliant post.
I was interested to hear that many Swedes you talk to know little about the independence movement in Scotland. When in Uppsala, I found that as soon as Swedes knew I was Scottish, they would hound me with questions about the upcoming referendum. Perhaps that’s because it’s a university town, but I also took part in a debate on Scottish independence in Stockholm. I can’t imagine comparable debates in Scotland if the tables were turned.
And for me, that is a large part of the reason I support independence. I want us to expand our focus beyond our own borders. We’re so often told that Scotland is parochial, I would contend that it is actually being part of the UK that makes us ignorant of even our closest neighbours.
Neighbours who, you rightly point out, have a lot they could teach us about social cohesion and equality. About how a country can—and I would argue should—be run.
#7 by Magnus Jernkrok on February 17, 2013 - 2:31 pm
I’m a Swede. I sent this on a Scottish friend’s Facebook wall.
Haha, I could write hundreds of pages on why Scandinavia both should and couldn’t be what other countries should strive for. Some points from that text:
“Then there was a report in The Economist which made the odd logical step of collating the radical reforms by centre-right governments in Sweden and formerly in Denmark with the high living standards and safe economies of the Nordic countries.”
Because it is so. This is a consensus on both sides of the political spectrum in Sweden. It was the Social Democrats that started reforming the Swedish economy slowly in the 1980s, then the centre-right government took the hit with a massive crisis in the 90s, and since then both sides have agreed that the system needs reforms. What is new with the current centre-right government isn’t it being centre-right, it is the speed of reform and the tax-cutting for ordinary people. It isn’t even that radical. Sweden isn’t the country in the world with the highest tax rate anymore, we’re now, after seven years of “radical reforms” the country with the second highest tax rate in the world. Except for a few radicals on the left, everyone has realized that the foundation for the Swedish success story wasn’t the welfare state itself, but the egalitarian welfare state supported by a strong and thriving private sector. Without the private sector, the system is doomed. What makes me think that Scotland would fail in creating a Scotinavia is that 99% of all Scots discussing the issue are asking the question “How can we create a Swedish Welfare state?” but no one is asking “How can we create a Swedish economy?”
“The Scandinavian countries do not have a legal minimum wage, but they do have an effective minimum wage proportionally higher than Scotland, leading to a reduction in income inequality before the tax system has even played its redistributive role.”
Yes, and this is not without its problems. It is very hard for young people and immigrants to get jobs in Sweden. No one wants to pay the same amount for a Somali refugee without proper schooling or knowledge of the Swedish language, as they do to a teacher that has worked for forty years.
“And once tax is collected, where does it go? Not into benefits as they might be normally understood, but rather into the provision of universal services.”
This, and so much this! The Swedish welfare state isn’t redistributive. 80% of the taxes you pay (which is between 60-80% of total income) is returned to you through health care (which we pay disproportionately little for, around 8% of GDP) and, for example, theatre subsidies. The Swedish tax system doesn’t stop you from consuming – it steers your consumption. This is what people don’t realize when they look at the Swedish tax rates. They only see the %, without understanding that the money is returned to you. It isn’t a system guided by the principle “From each according to his ability, to each according to his need”, but “From each according to his ability, to each and everyone”.
“So to be realistic, adopting a Scandinavian social model would involve higher rates of tax, but it would also involve higher wages and better public services.”
Case in point: You need high tax rates, high wages, effective public services _and a private sector strong enough to bear that burden_.
#8 by Don Francisco on February 17, 2013 - 7:34 pm
Magnus, you made a critical point about the private sector. It’s something we simply don’t have an answer to in Scotland. We are very good at seeing where extra money should be spent, but largely bereft of ideas as to how we will get the private sector out of the doldrums.