On the Edge: The Nordic Bumblebee

Minister of the Environment and International Development Erik Solheim. Photo: Wikimedia Commons

“On the Edge” is the new opinion column in the Norwegian American Weekly, which offers opinions written by invited contributors to make some comments on the current issues that define modern Norway.

In the 1990s, many right-wing economists pronounced the Nordic economic model dead. But rumors of its demise were premature: Today, the “Nordic paradox” is attracting great interest all over the world.

The Nordic paradox is rather like the bumblebee: The bumblebee’s wings are too small for its body, so it shouldn’t be able to fly. But it can, and now we understand why. The Nordic countries have high taxes, strong unions, generous welfare systems and large public sectors; it shouldn’t work, according to economics textbooks. But despite the financial crisis and the economic downturn, the Nordic bumblebee keeps flying.

Could a system that seems designed to fail be a blueprint for success?

World leaders are looking for success stories in the wake of the financial crisis. One success is China. Another is Brazil. In Europe, the Nordic model has clearly come out on top.

Why? No country can copy our model in its entirety. But the rest of the world has noted some key features and wants to understand the Nordic paradox better.

The Nordic countries have demonstrated greater ability to change than the rest of Europe. We adopt new technology faster, are more flexible, have low unemployment, and have been spared protracted labor disputes.

In the Nordic countries, there is extensive consultation at all levels of society. We have enjoyed a good balance of power since an important class compromise was reached in the 1930s: The labor movement renounced revolution, and the business sector realized that it needs workers. As a result, cooperation has developed between government, trade unions and the business sector.

Nordic societies emphasize equality. There is not as large a disparity in pay between unskilled workers and highly qualified professionals as elsewhere. Women participate in the labor market at a much higher rate in Nordic societies, in large part because the government has taken on considerable responsibility for care of children and the elderly. The economy is more dynamic when both halves of the population participate.

Meanwhile, the Nordic bumblebee has to navigate through various difficulties. We need to adapt quickly to a green economy. China has survived the financial crisis better than any other country; will it tackle the climate crisis better, too? Will the Nordic countries be nimble enough to grasp the opportunities a green economy offers?

Will our highly regulated markets stifle innovation, entrepreneurship, and research collaboration in ways that less-restricted, American-style markets do not?

The Nordic countries are relatively small. Norway is the size of Montana, with a population the size of Alabama’s and an economy the size of Connecticut’s. Will its lessons apply to larger countries?

Will the Nordic countries include immigrants in our societies and make full use of their potential?

Will the Nordic countries maintain productivity in a public sector that is increasingly asked to provide healthcare and other social services?

Western democracy faces competition from successful political and economic systems in China and elsewhere. We must address new environmental challenges, widespread poverty and high levels of unemployment. Our economies need to demonstrate that they can grow, change and adapt. Only then can we succeed.

People are looking to the Nordic countries in hopes of finding good examples of Western democracy. Our key to success is our willingness and ability to adapt. This depends on a robust safety net provided by the welfare state. It is this paradox that is attracting such interest: How is it possible to combine social and economic security with a dynamic and innovative business sector?

Erik Solheim is the Minister of the Environment and International Development, and is a member of the Socialist Left (Sosialistisk Venstreparti). He has worked in politics since 1977, and former positions include Socialist Left party leader (1987-1997) and Storting member (1989-2001). He served in the Ministry of Foreign Affairs for five years before joining Prime Minister Jens Stoltenberg’s cabinet in 2005.

Please bear in mind that opinions expressed in “On The Edge” are not necessarily those of the Norwegian American Weekly, and our publication of these views are not an endorsement of them.

This article was originally published in the Oct. 22, 2010 issue of the Norwegian American Weekly. For more information about the Norwegian American Weekly or to subscribe, call us toll free (800) 305-0217 or email subscribe@norway.com.