From Neoliberal Ruins To Recovery: Iceland Is Real Poster-Boy
At a Nordic-Baltic Development Forum meeting, held in Riga some years ago, there arose a lively controversy on the relative merits of the Swedish (Nordic) model, on the one hand, and the minimal government and low-tax regimes of the Baltic countries, on the other.
https://www.socialeurope.eu/from-neoliberal-ruins-to-recovery-iceland-is-real-poster-boy
Göran Person, former prime minister of Sweden, reminded the audience that Sweden, almost until the Great Depression (1930s), had been a low-tax minimal government country. The market failure of financial capitalism, which then started a global depression, had changed all that.
The Nordic model was built, by necessity, to save capitalism from the capitalists. The Swedes came to the conclusion that the market system couldn’t thrive without state supervision.
During this debate, Persson prophesised that, in the near future, the Baltic countries would have to raise their level of taxation to pay for hitherto unattended common needs and to build a more inclusive and cohesive society. After all, they had a considerable backlog of poverty, dilapidated infrastructure and environmental degradation to sort out.
The Welfare State – And Its Enemies
What clinched the matter was when a well known Finnish social democrat asked the audience if they knew which countries topped the interantional list for lowest taxes? The answer was the failed states of the world. Haiti came top. It has next to no taxes. It has also next to no education, no healthcare, no infrastructure and – conspicuously – no economic growth. And no hope. This explains why taxes are the price we all have to pay for living in a civilized society.
At the heart of the controversy between the neoliberals (conservatives) and those of us who want to defend the achievements of the welfare state lie opposite conceptions of the role of the state in managing our common affairs, including interfering with the market when it fails. Contrary to the tenets of the “
Washington Consensus”, which has had a dominating impact on socio-economic development for the past few decades, we believe the democratic state is not only the guarantor of democracy, the rule of law and freedom. Without supervision by, and accountability to, the democratic state, markets can easily go astray, with unforeseen consequences.
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