December 13th, 2012
01:33 AM ET

Should America try to be like Scandinavia?

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By Global Public Square

Here at GPS we often report how the United States has fallen behind in a number of global rankings. For example, The Economist has just published what it calls the "Where to be born" index: a list of countries which provide the best opportunities and the highest quality of life. In 1988, America was #1; now it is joint 16th. Three of the top five countries today are in Scandinavia: Norway, Sweden, and Denmark.

Or look at the World Economic Forum's Global Competitiveness Index. The U.S. has fallen to #7 in the latest rankings. Finland and Sweden are in the top five.

Or look at corruption. The United States ranks 19th in Transparency International's new index. Denmark and Finland are rated the cleanest countries.

Now you can spot two trends. On the one hand, America has been losing its edge. But I'm also struck by the rise of Scandinavia, a region that includes Denmark, Norway, Sweden, and if you broaden that definition, Finland and Iceland. Each of these countries seem to dominate global ranking lists. Why? What is their secret sauce?

Well, Scandinavia is actually much more free market-oriented than most people realize. Capital is allocated by the market, the government doesn't own companies, regulation is usually light, corruption is non-existent. Companies can hire and fire easily, labor moves around. But these countries do tax a lot and spend a lot – on education, childcare, health and other things.

Now,  a recent MIT paper suggests there are limits to this model. It's called "Can't we all be more like Scandinavians?" In brief, it points out how the Scandinavian welfare system provides a number of benefits: more vacations, better healthcare, more equality. But when it comes to innovation, the U.S. still wins. For example, if you look at patents filed per million residents, the study shows the U.S. has moved far ahead of Scandinavian countries.

Here's why this is important. Unlike say, a healthcare system (which only benefits people of one particular country), innovation has global impacts. New American inventions spread around the world. According to the paper's authors, Scandinavian countries "free-ride" on U.S. research and development. But if the U.S. became Scandinavian, it would spend less on innovation, which might reduce global growth rates (and thus, discredit the Scandinavian model).

The paper has been criticized for using patents as the marker for innovation. But even so, this is an important discussion. And it ties in to many of the questions our leaders are grappling with. Does the state need to make societies more equal? Does that come at a cost?

There is much to admire about Scandinavia: on education, on healthcare, on energy. But that doesn't mean we need to become Scandinavian. We are more individualistic, free-wheeling, ready to take risks. Americans don’t need to stop being American. But why not look at how these countries in Scandinavia make investments in healthcare and early education and how all of these things create greater equality of opportunity. That is after all what helps people succeed, no matter where they come from or how poor they are.

The truth is, Scandinavian countries are fulfilling a huge part of the American dream better than America these days. Thankfully, we're still an innovation powerhouse, and we need to spend more on R&D rather than cutting those budgets. And perhaps we need to target some of that innovative thinking towards restoring the American Dream of equal opportunity. That would be a truly American solution to an American problem.


soundoff (579 Responses)
  1. Rick McDaniel

    America is now ranked 7th, and still dropping. After another 4 years of Obama, we will be totally out of the top 10, and probably out of the top 20.

    December 20, 2012 at 10:15 am | Reply
  2. Dictionar German Roman

    I just couldn't leave your web site before suggesting that I really loved the standard information a person provide to your guests? Is going to be back ceaselessly to investigate cross-check new posts

    December 20, 2012 at 3:34 pm | Reply
  3. Piia

    I live in Northern Finland and have to say that we never have gotten any free-rides from anyone. After World World II Finland literally rose from the ashes. While we had a whole country to build again we had to pay huge compensations to Russia for decades. People gave everything to their country... people even gave their wedding rings to their country to get the gold desperately needed. And while people were starving and trying to build their homes they also worked their ass off for their country! Finland fought it's way to one of the richest countries in the world except by the 80 until the Great Depression hit us. We had to again work hard to survive and fought back to victory from the recession more quickly than no country in the past had been able to survive. These struggles have made ​​us stronger even in the midst of the current recession. And again when we're at the point where we do not accomplish without the hard work of the people, even our president to do its bit by reducing their wages significantly.

    It is, in fact, very wrong that our nation is suffering from the current recession, whose birth we are not responsible in any way. Finland is the only European Union country that has met stringent financial requirements every year. We do not live beyond our means and we obediently paid higher taxes than any other state. Now we have to pay for festivities which we are not even involved. But we do it – as it is for the common good! Finns are not greedy or seek popularity – we just work hard and enjoy life as it is! We do not need wealth, but rather we are enjoying peace, equality, higher education, and a higher quality of life in general.

    And what comes to innovations – here is few facts: Finland (and most of other Scandinavia too) sells most innovations to America and to other bigger countries! Next time you play Angry Birds with your Nokia phone just picture this: both the phone and the game were created here... and with no luck – just with hard work!

    January 3, 2013 at 11:40 am | Reply
    • Serhend

      You make a strong case for your country I respect your pride, but the free-riding i do have to agree with. USA is a innovation powerhouse bar none. Angry Birds and Nokia...that's all you got? We have Apple, IBM, Cisco, EA, Disney, Coca-Cola, McDonalds, Hollywood, Twitter, Facebook, and You Tube...nuff said

      February 16, 2013 at 1:25 am | Reply
  4. Carla Skwarek

    I have lived in Sweden for 13 years now (I am English) the substance of this report has errors. The Swedish Govern ment has a monopoly on alcohol; against EU regulations. Cases brought to the EU Courts against the Swedish government/Swedish employers concerning civil liberties or wrongful dismissal have gone against the Swedish Government or employer. Corruption is also alive and well here. There has been rather a lot in our papers on work malpractice and suicide of employees who are hounded by bullying and corrupt bosses. There has also been a lot of news on 'whistle blowers' who are victimised and bullied for daring to suggest publicly that there is something wrong at their place of work. White collar Unions are weak and in fact are more likely to promote the Employer's wishes than stand up for the workers. Regardless to say I don't know exactly where these statistics come from but I'm guessing that it is provided by the Swedes themselves.

    January 16, 2013 at 11:56 am | Reply
  5. HeyHo

    How do you rate a great education system? On simply moving people through one or the quality of the students?

    June 4, 2013 at 6:36 am | Reply
    • Henry

      Swede here, we rate it solely on quality.
      If you've "crammed and forgot", you'll be stuck in the following grade until you actually learned.

      September 21, 2013 at 8:29 am | Reply
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