Daily Archives: January 17, 2014

Does the Present Belong to the EU? And the Nordics in Particular?

Even though we don’t know precisely when, we all know that the future belongs to China. And we all know that the past century belonged to the USA. But do the years in between, starting with the present, belong to the EU, and the Nordics in particular? As per this recent article in the Economist on The Secret of Their Success, the Nordic countries are probably the best-governed in the world. As the article notes, the Nordic countries have not only largely escaped the economic problems that are convulsing the Mediterranean world; they have also largely escaped the social ills that plague America. On all of the standard measures of societal health — including productivity, innovation, inequality, and crime — the Nordic countries are gathered near the top.

This shouldn’t be a surprise to regular readers of Sourcing Innovation, which reported on the Global Creativity Index (GCI) in a post last May that noted We Have Supply Management Problems and we should look to Scandinavia for Solutions, as the GCI ranked Sweden first, Finland third, Denmark fourth, Norway eight, and the Netherlands tenth. In order to rank high on the GCI — which requires leadership in Technology, Talent, and Tolerance — you have to have good governance. (Technology, Talent, and Tolerance requires the right atmosphere to flourish.)

So how did they do it? How does this remote, thinly populated region, with its freezing winters and expanses of wilderness, prove so successful? I think the Economist hit the nail on the head when they noted that the Nordics are quite unique in the honesty and transparency of their governments, their pragmatism, and their tough-mindedness. Nordic governments are subject to rigorous scrutiny: for example, in Sweden everyone has access to all official records. Yes, we have Freedom of Information Acts in North America, but a) requests for information for records more than a few pages are usually accompanied by very large access fees (even though the information could be distributed electronically for a fraction of a cent) and b) if anything is deemed sensitive or classified, it’s blacked out. Furthermore, in the Nordic countries, politicians are vilified if they get off their bicycles and into official limousines. In North America, they have to fly private jet before we even frown upon their behaviour (as we are too busy giving a damn whether or not Miley twerked today.)

In addition, the Nordics recognize that they have plenty of problems, that they can’t all be solved overnight, but that they can tackle these problems one-by-one and continually introduce structural reforms to improve the situation. They could constantly blame their predecessors or the other party, but instead they focus on trying to fix the situation and do the best they can. It’s a very realistic, pragmatic, effective approach to their problems — which are not small by any means. As the Economist article notes their governments remain too big and their private sectors too small. Their taxes are still too high and some of their benefits too generous. The Danish system of flexicurity puts too much emphasis on security and not enough on flexibility. Norway’s oil boom is threatening to destroy the work ethic. It is a bad sign that over 6% of the workforce are on sick leave at any one time and around 9% of the working-age population live on disability pensions. But despite these problems, they are moving forward and creating an atmosphere that makes them the place to be.

Furthermore, being a tough-minded people, they are making progress without sacrificing what makes the Nordic model so valuable: the ability to invest in human capital and protect people from the disruptions that are part of the capitalist system.

If the rest of the EU latches on to the Nordic reforms, it could very well be that the EU could collectively control the present when it comes to GDP, innovation, and even the way we want to live our life. (They’re already standing up and telling the US they’re not going to put up with unwarranted spying, and threatening to pull out of Safe Harbour entirely* — which, because of EU privacy laws, would result in a large amount of data-based services being pulled off of American soil and out of American companies — and a lot more money staying in the EU. This could be enough to tip the scales to put the EU firmly in the lead on all of these measures.)

What do you think? Will the EU take the present?

Or will North America smarten up, read the detailed studies — in English — produced by the Nordic think-tanks about how the Nordics reformed their states, and reclaim their glory days? Springsteen said it best, if you’re not careful:

… time slips away
and leaves you with nothing mister but
boring stories of glory days**.

* The European Parliament Committee recommended suspension of Safe Harbour in October (Source: Lexology) and has since threatened to scrap safe harbour as early as this summer (Source: TechWeek Europe unless the NSA changes its ways)

** Just ask the UK. The British Empire once had an economic hold over most of the world. Now they’re 6th and destined for the 10th spot as it is likely that they will soon be overtaken by Brazil, Russia, and India.