Wednesday, June 26, 2019

JPMorgan Chase Analyst Destroys the Idea That Nordic Countries Are Successful "Socialist" Countries

JPMorgan Chase analyst Michael Cembalest is out with a report about the Nordic countries.

It takes a powerful swipe at the claim made by American socialists, such as Bernie Sanders and Alexandria Ocasio-Cortez, that the Nordic states are primary examples of successful socialist states.

As Charles Lane at The Washington Post notes, drawing on data from the World Bank, the Organization of Economic Cooperation and Development and other sources, the Cembalest report shows that five nations — Sweden, Denmark, Finland, Norway and the Netherlands — protect property rights somewhat more aggressively than the United States, on average; exercise less control over private enterprise; permit greater concentration in the banking sector; and distribute a smaller share of their total income to workers.

Here, from the report, is the Cembalest executive summary:

Lane then comes in for some serious smashing of Elizabeth Warren's proposed wealth tax:
The Nordic countries tried direct wealth taxes such as the one that figures prominently in the plans of Sen. Elizabeth Warren (D-Mass.); all but Norway abandoned them because of widespread implementation problems.
And the Sanders universal healthcare plan is far more extreme than anything in the Nordic countries. Here is more Lane smashing:
The Nordic countries’ use of co-pays and deductibles in health care may be especially eye-opening to anyone considering Sanders’s Medicare-for-all plan, which the presidential candidate pitches as an effort to bring the United States into line with European standards.

His plan offers an all-encompassing, government-funded zero-co-pay, zero-deductible suite of benefits, from dental checkups to major surgery — which no Nordic nation provides.
The Netherlands’ health insurance system centers on an Obamacare-like mandate to buy a private plan; individuals face an annual deductible of $465 (as of 2016), according to the Boston-based Commonwealth Fund.
Dutch consumers’ out-of-pocket spending on health care represented 11 percent of total health expenditures in 2016, according to the Peterson-Kaiser Health System Tracker — the same percentage as in the United States. In Sweden, meanwhile, out-of-pocket spending accounted for 15 percent of health expenditures. Who knew?
These countries are generous; but they are not stupid. They understand there is no such thing as “free” health care, and that requiring patients to have at least some skin in the game, in the form of cost-sharing, helps contain costs.
Of course, the correct solution to better healthcare is the free market solution but at least Lane's warning shows just how radical the Sanders proposal is.

Bottom line: The Nordic states are far from the socialist states that Sanders and AOC claim they are. The only true remaining socialist states are the ones Sanders and AOC don't want to claim: Venezuela, Cuba and North Korea.

As Ludwig von Mises put it:
There are many socialists who have never come to grips in any way with the problems of economics, and who have made no attempt at all to form for themselves any clear conception of the conditions which determine the character of human society. 


  1. Most of us mis use the word 'socialism', which technically means government ownership of the land, buildings, and capital that a service is provided. Few Americans understand public schools, state universities and community colleges, and public transport are 'socialist' per technical definition.

  2. Dont the Nordic countries have a lot of state-owned businesses? I'm pretty sure Norway and Denmark have some pretty large state owned (or majority owned) companies. Not completely socialist, but getting there.