Monday, July 18, 2011

Refocusing (or maybe challenging) our lens

In conversations with so many new friends from abroad, it is important for me to remind myself that my way of thinking and seeing things is affected by my lens, or rather my political, social, religious outlook. When looking at the welfare state in Norway, we need to refocus the lens from an American paradigm, to that of Norwegian politics and society.

The phrase "from cradle to grave" is commonly used to describe the welfare state in Norway. Norwegians enjoy healthcare, education (childhood through university), additional monetary support for students, unemployment and disability pensions, and many other services as a result of what Norwegians have come to expect from their government. Essentially, the entire political spectrum of Norway is shifted to the "left" so that even those on the "right" expect many of these government services while still advocating for more private investment and lower taxes. Of course, the multiparty system (which, incidentally, avoids a gridlocked Parliament!) allows for parties to be positioned above and below the political spectrum as well as from left to right. A common political science model looks like this:

Bear in mind that the severity of these labels becomes more moderate as you move toward the center.

Some of the common political debate over the welfare state and role of government include the use of Norway's tremendous oil fund, tax rates on the wealthy, and economic support for Norwegian industries (i.e. fishing).

It is important to keep in mind that modern Norway is a wealthy nation, but a modest one. Between the 19th and 20th centuries Norway rose from being one of Europe's poorest to one of the world's richest nations. Oil provided an incredible boon to the economy in post WWII Norway. Some would argue that oil has created a greater class divide in Norway, something that some Norwegians fundamentally oppose.

These comments and observations come from my limited time in the country and surface study of the subject. Later in my course, we will actually get more into the particulars of the evolution of the welfare state.

Certainly there is wide variety of opinions of the welfare state amongst Norwegians. The bottom line that I have come to hear and understand is that Norwegians live a very good, secure life and they are all well aware of their good fortune and are grateful for all it provides.

In closing, allow me to stoke the fire a bit: The same Americans who like to say the average tax rate in Scandinavia is well over 60% (which is incorrect) are likely the same as those who think socialism and communism are the same thing. Norwegians have decided that at the price of high taxes, they want their government to provide the assurances of health and education to its citizens. Their progressive tax has not killed the economy and has not killed jobs. It seems to me that they get what they pay for. Food for thought.

So many political, demographic, economic differences make it impossible to talk about the Norwegian and American models on the same level. However, to emphasize the closing point, please consider the following editorial from Augustana President Rob Oliver:

Oliver: 'Sacrificing Now for Kids, Schools, Will Pay Off Later'Friday March 11, 2011 The following editorial, authored by President Rob Oliver, appears in the Friday, March 11, edition of the Argus Leader:

As a proud South Dakotan, a parent and an advocate for education, I am compelled to contribute to the dialogue surrounding the much-talked-about proposal to cut our state’s K-12 education budgets.

As we look to solve South Dakota’s budgetary challenges, I believe we can find the answer to our dilemma by looking to the past.

What might we learn from those who settled this great country, who saw it through hardships far beyond what we now face, and who were the architects and builders of the most productive economy in the world? What might we learn from those who built the finest education systems in the world, the best infrastructure, and the model of democracy that so much of the world craves today? I believe it can be summed up in one powerful word: Sacrifice.

After surviving the economic difficulties of the late 1800s, the challenges of the War to End All Wars, the Great Depression, the Dirty Thirties and World War II, our nation’s Greatest Generation set about paying off our country’s massive debt and building America’s infrastructure, including the educational systems that became the envy of the world, with a determination the likes of which other countries had never seen.

How did they do it? They did it with tax rates far higher than we complain about today. They taxed themselves because they believed that a strong America was good for the world, and for their children who would take over upon their retirement.

The challenges we face today are not nearly as simple as some would try to tell us by suggesting that cutting government is the only answer. The issues before us are complex and multi-faceted.

Make no mistake about it, investing in education is the best means for developing an appreciation for complexity. Education is our best means for developing solutions to complex problems. And, education is the best and most lasting stimulus for building our economy and developing a civil society. Yet, even as we acknowledge this, education funding is being placed on the chopping block in most states and in our nation’s capital, and education in America is losing ground rapidly to other countries.

The power of investing in education is not a new or novel idea. Whatever our voter registration card says, at our core, we all know that teaching children today will ensure a better tomorrow. Yet, each year, education seems to be losing its position as a public good, and salaries for teachers and education funding overall (especially in South Dakota) are a sad reflection of our budget priorities.

I believe that what is needed from all of us, and from our elected officials, is a bold call for collective sacrifice. If we are honest with ourselves, we can readily see that the budgets of our cities, counties, states and country will not be balanced only by cost cutting. Raising taxes is not something anyone wants, yet it is obvious that it is a necessary part of the solution.

The popular argument however, is that we dare not raise taxes in these economic circumstances. It is important to remember that economics is a social science, a study of human behavior both individually and collectively. Just as it is wrong to conclude that any single economic tool will have a guaranteed outcome, it also is a fallacy to conclude that there is a linear relationship between raising taxes and stalling the fragile economic recovery. It is more appropriate to ask what drives consumer confidence and confidence in public-sector decisions such that individual and social behaviors are positively influenced by economic and public policy.

It is my feeling that many – not all – of our elected representatives have underestimated the electorate by perpetuating the thinking that voters are unwilling to face higher taxes in exchange for real solutions. I believe that most Americans, and most South Dakotans, would feel a greater sense of confidence in the future if legislatures around the country set aside bitter partisan politics and focused on real problem solving, including the potential of raising taxes as part of a multi-faceted approach to balancing budgets without abandoning priorities, such as education and appropriate care for elderly.

Bottom line: Let’s quit fighting about how to cut education, and let’s invest in it – together. Let’s tax ourselves to do this and invest in our young people. It begins at pre-kindergarten and continues through K-12, preparing our sons and daughters to then enter the work force or continue their preparation through post-secondary educational opportunities. We will be proud that we invested, and countless young people will gain from it, producing tangible benefits to our communities, state, nation and the world.

But now, as author Ben MacIntyre says, I'm really starting to over-egg the pudding. On a lighter note, tomorrow's post will be about my long weekend in Paris!

As usual, thanks for reading!

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