In the primary elections, Bernie Sanders has gained traction by presenting himself as a Scandinavian style democratic socialist, and by that most people think universal healthcare and high, redistributive taxes on the rich. As a Scandinavian I think it is important to set the record straight. Bernie Sanders is not promoting the Scandinavian model. I will prove this to you very simply by showing what Bernie Sanders as president would have to do in order to emulate Scandinavian democratic socialism:
By: Onar Am
This article first appeared at Liberty.Me
Cut taxes for the rich, increase taxes for the lower and middle class
The biggest difference between America and Scandinavia is that in America70% of the taxes are paid for by the 10% richest, whereas in Scandinavia they only pay about 40% of the taxes. In America the top 1% earners pay 35% of the taxes, whereas in Scandinavia they pay only about 10%. The bottom 50% of earners in America pay only 2.5% of taxes, whereas in Scandinavia they pay 10%. Bernie Sanders wants to raise the tax for the richest up to more than 50%, but in Norway the richest pay less than 40%.
In short, if Bernie Sanders wants to emulate the Scandinavian tax model, he needs to cut taxes for the rich, increase them for the poor, and dramaticallyincrease them for the working middle class.
Dramatically increase consumer taxes
Scandinavia has among the highest consumer taxes in the world. The VAT is 25%, and the taxes on cars and gasoline are steep. The gasoline tax is around 200% and cars are typically taxed more than 100%. These consumer taxes make up the majority of revenues for the government. In practice this means that the middle class pays the vast majority of taxes in Scandinavia.
Slash corporate taxes
America has the highest corporate taxes in the world. Federal corporate tax is 35% alone, and then in addition state corporate taxes bring the total to above 40%. In Scandinavia the corporate tax rates range from 22% to 25%. Thus, if Bernie Sanders wants to emulate the Scandiavian model he needs to dramatically slash corporate taxes.
Cut public healthcare spending
If Bernie Sanders wants to emulate the Scandinavian countries, he needs to cut public tax financed healthcare spending. Of the Scandinavian countries, only Norway spends a little more tax payer money on health care than America. Due to the world’s heaviest regulations, America also has the world’s most inefficient healthcare system.
Remove social justice from tort law
The Scandinavian system has an efficient civil legal system, very similar to the one America had in the 19th century during the time of laissez-faire capitalism. However, from about the 1880s onward the progressives started changing tort law away from the traditional concept of justice (you cause me losses of 100 dollars, you pay me 100 dollars in damages) over to the concept of social justice.
In practice this means that the civil courts in America are used for purposes of social engineering such as redistribution of wealth rather than, the old fashioned justice. The law specifically targets corporations, making it very hazardous and expensive to do business in America. Among the large corporations in America, the legal department is the biggest one. This is entirely to protect the company against the social justice tort laws.
In case you don’t know what I am talking about, think McDonald’s hot coffee law suit. An old lady spilled hot coffee on herself, and she was initially rewarded $160,000 in compensatory damages and $2.7 million in punitive damages. Such a verdict would be impossible in Scandinavia, because the purpose of the legal system is not social justice.
Nedless to say, the social justice laws in America are a form of indirect taxation which costs businesses a huge amount of money, which mostly goes to keeping progressive lawyers very well fed. The social justice laws in America have the unintended consequences of rendering corporate America into legal monsters which strip consumers of all rights. Whenever you sign an End User License Agreement with companies like Microsoft or Apple, you basically sign a document stating that they own your life and they are untouchable. If you’re lucky you will avoid a fate like these unhappy Apple Users.
So if Bernie Sanders wants to emulate the Scandinavian model, better get rid of those progressive social justice laws.
But wait a minute….
If you find yourself thinking like Homer Simpson “wait a minute, those Scandinavian countries don’t sound very socialistic” then you are absolutely correct. Yes, it’s true that the overall tax burden in Scandinavia is very high (around 50%) and yes, it is true they have big welfare states, including universal healthcare. Nevertheless, on almost all other measures, Scandinavian countries are far more capitalist than the United States.
Notice also that one of the definining features of Scandinavian welfare is that it is largely paid for by the middle class. Scandinavian countries take this “fair share”-business very seriously. You may ask why on earth the large majority of Scandinavians would want to have a welfare state and then actually pay for it themselves. There are historical reasons for that, and one of them is that they are very egalitarian.
The idea of having an elite pay for an underclass goes against the very idea of inclusion and egalitarianism. By including the vast majority of people in financing the welfare state, people become stakeholders, which to a significant extent prevents legalized corruption, like the one we see in America.
The system that Bernie Sanders is proposing is not anything remotely close to the Scandinavian model. He wants to move America more in the direction of countries like South-Africa, Venezuela and Brazil which have elite based welfare states. In those countries most of the taxes are paid for by a small elite, which creates class war and corruption on a staggering scale. America is already well on its way to becoming like that, given that the rich already pay most of the taxes. With Bernie at the helm, it would become even more polarized and elite based.
If you are an American, and especially if you are a Bernie Sanders-supporter, I hope you have learned something. America is far more socialist than you think it is, and the mythical Scandinavian countries are far more capitalist than you think they are. In fact, the primary reason for the success of Scandinavian countries is not their welfare states, but the fact that they are among the freest and most capitalist countries in the world.
This article first appeared at Liberty.Me