How to turn the US into something like the Scandinavian social democracies: what would actually be necessary?
How to create a liberal America?
My basic starting point is that the social democracies of Scandinavia, the Nordics, are roughly what most people have in mind when they talk about a liberal society. Government takes a large percentage of the total production of the country (up to 50% say) and the uses this to provide public goods, social and welfare services and to redistribute income.
We're generally told from the right of the political aisle that such societies cannot work. Taxes will be so high that all initiative, all economic growth, will be snuffed out. This clearly isn't true as they're rather nice places to live and they have perfectly standard, if not better than many other European countries, economic growth.
But it's also true that they violate some of the canons of the left side of the political aisle. Capital and corporation taxes are low for example. Sweden doesn't even have an inheritance tax. The basic national income tax rate in Denmark is 3.76%, the top one 15%. The tax systems of all four countries (Denmark, Sweden, Norway and Finland) are more regressive than the tax systems of either the US or UK. Yes, top rates of income tax are higher: but they raise a great deal more money in heavily regressive and high rates of VAT.
There is no national minimum wage in any of the EU Nordics. Taxation for social spending tends to be bottom up rather than top down. In Denmark, as an example, the social security taxation is set by the commune, a grouping of as few as 10,000 people. The rate might be 25 - 30% added to that national income tax noted above. This is collected and spent locally. Sure, communes will group together to set up services a single commune would not need: specialist hospitals for example. But money and decisions are local, only moving to a higher level when necessary.
In the American sense this would be like running say, Medicaid from the county level upwards rather than as it does work, from the Federal Government downwards.
There's been some good research into what this means for methods of economic organisation and tax systems. Lane Kenworthy is an academic who comes to mind. Chris Dillow in the UK has made many similar points. There's also interesting OECD research on some of these points. Scott Sumner has done a paper or two which touches on this very point. The essence of the argument being that yes, you can have large government, high levels of social services, significant amounts of income redistribution. But to do so you have to be very careful of exactly how you are raising the money to pay for it all for fear of killing off economic growth.
And that's what I want to do more work on. There are many more sources I know of I've not yet mentioned and I'm sure there are more I don't know about yet. So I need to do the research, both on the ground in the respective countries and also from my desk. I then need to write that all up and present the plan. The plan being, well, if you wanted to create a social democracy, a liberal state, in the US then how would you go about it?
As I say, my starting point is that those places that do make it work seem to violate many of the commonly held nostrums of both left and right in normal political discourse. The research then, the task, is to try and work out what are the actual policies that do make them work? Is it regressive taxation? Light capital such? Local control of tax and budgets?
I'll consider other arguments of course: the standard one about Sweden is that as a homogenous society it's easier to get everyone to pay up for government because everyone is part of the same tribe. Given that Sweden has a higher portion of the population that is foreign born than the US that one might not pass muster as a serious argument though.
As to why I'm asking for money at Kickstarter: well, you may have noticed that the book industry isn't having a great time of it at present. The biggest change has come in advances. Time was an idea like this would be pitched to a number of editors and one (perhaps!) would bite and produce an advance that would fund the research and writing. This is very unlikely these days. Yes, celebrity diet books and the like get bought up but not so much books on political economy.
Currently what I do for a living is freelancing. For the Daily Telegraph in the UK and Forbes online in the US. I'm the economic liberal for them if you like. Freelancing certainly has things going for it as a lifestyle but one of the downsides is that if you want to undertake a deeper piece of work then your income dries up. Which is where that old system of advances came in and why I'm here at Kickstarter. Are there enough people in the community who would be interested in the answers for me to do the research and writing and provide them?
I estimate that the project would take 4 months. I write quickly, as you would expect from someone who makes their living this way. But I would need to do a month of pure desk (Hurrah for the internet!) research and perhaps a week in each country too. Travel's not expensive as I'm already in Europe but none of the four are cheap countries. A bed and three squares a day won't leave much out of $200 a day. Then two months writing, one for the book itself then another month for the rewrite after an editor has corrected me. Then the production cost itself.
Which is what gets me to that $30,000 figure. $3,000 a month to keep the mortgage paid and the animals fed, bills settled. $5,000 to go and talk to people in four countries and check how these things really do work. $5,000 for a good editor, layout, index, reference checking and so on. If everyone asks for electronic copies of the finished book then production costs will be low. But the more the mix tends towards print copies the higher that will get. And of course a margin for whatever of the inevitable possible screw ups I manage to stumble into.
Another way of looking at the same budget is that a reasonable first print run of a book of this type is 3,000 copies. If there aren't 3,000 people who want to read it then perhaps spending 4 months writing it isn't a good idea. 3,000 at the $10 donation level with a reward of an electronic copy: you can see that the numbers roughly match up.
When done and dusted the electronic book will be $14.99, the physical book $29.99. While I generally have a fairly light tone in my writing this isn't going to be a mass market pulp book. The subject matter just doesn't lend itself to that.
The question at the heart of this study is that there have been a number of attempts at building that large government welfare state. Some are currently failing (Greece, possibly Spain), some really never got going properly (post-war central Europe perhaps) and some of them seem to be doing just fine: the Nordics. So what is it that they have been doing which would provide a framework for the US?
We're closing in on 1/15th of the money in the 12 hours since the project was posted: in 1/60th of the time that is.
Many thanks to those who have backed it so far. For I'm very much looking forward to being able to write the book.