Max Tallberg
The Nordic welfare states stand out from other welfare states in relation to their scope. At the same time, they are perennial top performers in international happiness measurements. This gives an obvious reason to next examine them more closely and find out what that well-being is due to. Is it directly tied to the model of the Nordic welfare society, or separate from it? And if it explains happiness, the obvious question arises of how this cause-and-effect relationship works and what the rest of the world could learn from it. In this text I especially highlight my home country Finland in relation to these questions, without forgetting the other Nordic countries.
A central idea behind the birth of the Nordic welfare state has been that the state should guarantee the minimum level at which a person can live a civilized and dignified life. The model thus combines capitalist free markets with a generous welfare system. The model is financed with high taxes, and it also includes a high degree of state intervention in relation to how society and its economy function.
Thanks to these things, the Nordic countries offer all their citizens, but especially the middle class, the greatest possible autonomy, instead of their being dependent on others, as was more strongly the case before for many individuals. This leads at the individual level to large savings and fewer worries in addition to guaranteeing personal freedom for all. In the Nordic countries, the expansion of the welfare state has on a broad scale meant the transfer of responsibility from the family to the public authority. A central strategy has been the building of individual social policy, in other words, that income transfers (also in the form of taxes) and services are directed to individuals and not to families (or clans). Among the results of the strategy is, among other things, that the Nordic countries have advanced the fastest and the furthest in, among other things, the realization of equality between the sexes. However, broad individual social policy can also create incentives that weaken people’s responsibility and possibilities to take care of those close to them.
In relation to this, it has indeed been suggested that the Nordic countries are the most individual-centered in the world. Although individual-centeredness can be a factor that brings challenges in a social sense, the right kind of individual-centeredness nevertheless belongs inseparably to a good life: everyone should themselves get to decide what kind of life to live and on what they base their values and identity. In addition to such freedom, equality has been another central value on the basis of which welfare states have been built, for example in Finland. This has also proved to be an effective means of building a better future for the country.
Public Services Lead to Economic Growth
The Nordic countries also tell us that strong public services can bring about economic growth. At the same time, when preparation for the risk factors of life is combined with this in such a way that everyone participates in supporting the weaker, this leads to the system as a whole being much more efficient compared to a situation in which each individual would have to collect a buffer that would protect, for example, against aging or a possible accident. This applies even more strongly today, which is defined by global economic uncertainty and competition. When the welfare state and economic growth have been studied, however, a clear conclusion has ultimately been reached that the welfare state does not have a significant effect on economic growth. When, however, the positive effect of the welfare state on the well-being of its citizens is taken into account, this research result gives a strong reason to support the welfare state.
In the Nordic countries, many benefits related to the welfare state have also been designed in such a way that they encourage work. This is realized in that many benefits are tied to the size of the individual’s income. This is the case with sickness allowances, unemployment benefits, parental leaves, and pensions. For this reason, individuals who are doing well also support the welfare state in the Nordic countries: they too benefit from it.
Nordic families are also statistically functional, whether it is a question of lovingness, well-being children, or caring communities. This is indeed the norm in the Nordic countries. All children are guaranteed inexpensive and functional daycare here, which is supported by the state and paid for according to the family’s income. In Finland, free and high-quality education is also guaranteed to all children, which is secured in the constitution.
All this has led to the Nordic countries being among the richest and happiest countries in the world. It is also clear that the policies and projects related to the welfare state are an important reason behind this well-being. Since 2013, the Nordic countries—Finland, Denmark, Norway, Sweden, and Iceland—have always belonged to the top ten of the World Happiness Report. In the years 2017–2019, the Nordic countries have also formed the top three. This success is not limited only to happiness, however, but the Nordic countries also stand out positively when looking at the state of democracy, political rights, low corruption, trust between people, sense of security, social cohesion, gender equality, and the equal distribution of income. Thus, Nordic countries are also often seen at the top of the Human Development Index.
The Nordic Success of Democracy
What then more specifically explains the well-being and life satisfaction of individuals in the Nordic countries? How does the welfare state concretely affect this? The most important explanatory factors are related not only to the matters presented above but also to the quality of institutions, both at the state level and at the more general societal level, reliable and broad social benefits, low corruption, and a well-functioning democracy. Individuals living in the Nordic countries also experience a strong sense of autonomy and freedom, as well as high social trust in one another, which also has great significance for satisfaction. These factors also correlate with one another and strengthen one another, which leads to the fact that cause-and-effect relationships may be difficult to perceive exhaustively. Therefore, it is also not enough to raise only one explanatory factor. The well-being of the Nordic countries has also been tried to be explained by referring to historically well-implemented modernization, the ability to support those who do poorly, and high social capital. A possible reason for the success of the Nordic countries could also be that in them there were not at the beginning of the 20th century as great class differences or economic inequality as there were then in many other countries of the world.
These positive achievements made possible by the welfare state seem at the same time also to be such that they could be achieved everywhere in the world. For example, no evidence has been found that the size of a country’s people is connected to satisfaction, or that homogeneous peoples would be more satisfied. Thus, these do not explain the successes of the Nordic countries. Research results have also been obtained that ethnic diversity does not necessarily affect social trust at all. The World Happiness Report from 2018 also highlighted that the number of immigrants in a certain country does not affect the happiness of the native population in any way. A positive effect related to this has also even been observed. At the same time, immigrants are also approximately as happy as the native population. The functioning institutions of the Nordic countries and the fact that they are the same also in the case of immigrants is one explanation for this.
Many studies indeed suggest that the well-being of the Nordic countries is linked precisely to the institutions of the welfare state. People are generally more satisfied in a country where it is relatively easy to receive comparatively large social benefits and where labor markets are regulated so that the exploitation of workers may be avoided. It has not, however, also unsurprisingly been found that there is a statistical connection between welfare expenditures and happiness. This may also be explained by the fact that expenditures are closely connected to economic cycles and demographic changes instead of properly measuring how products and services are distributed.
The quality of government is another central explanation for the happiness experienced in the Nordic countries. Related to this as an explanatory factor is also that New Zealand and Switzerland, where these things are also realized, are often also at the top in these measurements. The quality of government has often been divided into democratic factors (especially the rights related to it) and how power is used. Related to this are, for example, low corruption and the functioning of the rule of law. There is also little inequality in the Nordic countries, but it is not certain how well this explains the satisfaction experienced there. It has also been raised as an explanatory factor that in the welfare state individuals experience economic insecurity less often. At the same time, it has also been found out that autonomy and freedom explain well-being more effectively than national wealth. Social cohesion also explains well-being. It is a broader concept than trust. In the Nordic countries it also seems that citizens relatively often experience positive emotions, but that they are not countries where these emotions are experienced most often of all. Satisfaction is nevertheless high.
In other countries that are at the top of satisfaction surveys—such as precisely Switzerland and New Zealand, but also the Netherlands, Canada, and Australia—many of the same factors are also in use as in the Nordic countries. The Nordic countries therefore do not have any secret recipe for their success. Instead, the recipe would seem to be that state institutions should be of high quality, they should avoid corruption, be able to fulfill their promises, and take care of their citizens when various difficulties arise.
The importance of trust is also shown by the fact that societies in which there is only little mutual trust often easily end up in a negative spiral in which corruption leads to a smaller willingness to pay taxes and support reforms that would help the state authority take care of its citizens. It is difficult to leap from this spiral to something better. Changes related to institutions would, however, make this possible if with their help citizens were made to participate and represent themselves in decisions. The quality of democracy, as well as a free press, an educated people, and a strong civil society also help in this. At the cultural level, the most important factors are communality, trust, and cohesion. A divided society is not able easily to provide those public things that would help in living a happy life. In such a society, the distribution of social benefits is also not supported, because it is feared that it would benefit people who are not counted as belonging to one’s own group. When people trust and care about their fellow human beings, it is therefore also much easier to develop the welfare state.
With all this information, in my own view it is difficult to decide not to support the Nordic welfare state. Many Americans also seem to be of the same opinion as Nordic attitudes. Many, for example, support that the taxes of the rich should be raised. In the United States, also 40 percent of men born into the lowest income level remained there, whereas in the Nordic countries that figure is 25 percent. Many studies have shown that in societies where there is less income inequality, social mobility is also higher. Thus, it could be argued that the American dream is realized better in the Nordic countries than in the United States itself.
Sources:
Greve, B. et al. (2021) Nordic welfare states—still standing or changed by the COVID‐19 crisis? Social Policy & Administration. [Online] 55 (2), 295–311.
Partanen, A. (2016) The Nordic Theory of Everything: In Search of a Better Life / Anu Partanen. First edition. New York, NY: Harper, an imprint of HarperCollinsPublishers.
Saari, Juho. (2009) Hyvinvointivaltio: Suomen mallia analysoimassa / Juho Saari (toim.). 3. p. Helsinki: Gaudeamus.
https://worldhappiness.report/ed/2020/the-nordic-exceptionalism-what-explains-why-the-nordic-countries-are-constantly-among-the-happiest-in-the-world/
https://www.investopedia.com/articles/investing/100714/nordic-model-pros-and-cons.asp
