The Myth of Scandinavian Socialism.

[innonimatu]

Yeah, it's become so obvious that even the bloody IMF is publishing papers about that relation between smaller income gaps and greater economic prosperity! (don't have the link around but I mentioned it in some other discussion a few months ago)

 

[Leifmk]

Yeah, you're right, Norway really has been lucky with the abundance of resources for hydro power. I was overlooking that And more recently oil and gas, or course.
I believe that you don't even have to burn fossil fuels for electricity?

Not entirely true, we do have a couple of natural gas-burning power plants (and of course a small coal plant on Svalbard, but that's not very significant) but something like 96% of our electricity production is hydro. Mind you we're plugged into the European grid -- we're a net exporter, but during some periods when seasonal demand is high the flow goes the other way. (Heating in winter is mainly electric or wood-burning, with oil furnaces as a pretty distant third option.)

Going back on topic, has scandinavian "socialism" preceded or followed the biggest bout of industrialization there? Did the state invest directly in supporting or developing industries? And did private businesses and wealthy individuals at some point fled from the countries because of high taxes? I'm asking because some people have created myths about any kind of social-democracy which involve all these aspects.

Yes and no. The initial industrialization process of the late 19th and early 20th centuries was very much market-driven (including a lot of investments by foreign capital interests). Socialist and later social-democratic political movements arose after the economy had been industrialized. I guess the most social-democratic thing I can think of is the rebuilding of Norway after WWII and the subsequent rounds of investments in building and upgrading infrastructure. Local power plants all used to be built and owned by the local governments, and provide power at "socialist" prices to consumers; these were privatized in recent decades. National telephone company was a state-operated monopoly for ages; it was also privatized and the market was opened to competition. After the discovery of North Sea oil, the dominant oil company was government-owned (and remains dominant today, with the Norwegian government still owning two-thirds of the stock).

Capital flight has been a mild-to-moderate problem at worst. The stereotypical example is in shipping, where shipowners flag out to some tax haven or other and then eventually and stereotypically die with a lot of suspected money hidden away causing much confusion for both taxmen and heirs and lawyers (novels can and have been written about this stuff).

 

[Terxpahseyton]

Yeah, exactly.
We all know that SE, DK, etc liberalised their labour markets

We do? It is my impression that SE, DK etc. have strong unions and worker protections. Certainly no hire-and-fire-system.
Also, how does one make it easy to destroy businesses? By business creation I suppose a lack of regulation/paper work or some such? Or maybe you just mean low taxes.

 

[Tahuti]

We do? It is my impression that SE, DK etc. have strong unions and worker protections. Certainly no hire-and-fire-system.

Sweden and Norway have indeed strong unions and worker protections. Denmark, on the other hand, does have a hire-and-fire-system. In fact, Denmark's entire economic system is built around few (labor) regulations combined with large amounts of social spending (or the flexecurity system as it is called).

 

[Mise]

DK has the lowest job tenure in Europe, IIRC. DK and SE have the highest labour turnover rates in Europe, again IIRC.

By business destruction, I mean how easy it is to file for bankruptcy protection. Business creation is indeed how quickly you can go from having no business to having a fully registered limited liability company. IIRC you can do that in 3 days in NZ. It's not about lack of regulation, it's about the efficiency of the beaurocracy that handles that regulation. I mean, for you to even have limitation of liability expressly requires rules and regulations... Try to start a business in Greece and you'll see.

 

[Terxpahseyton]

Only found this after a quick search

Yeah Finland and Denmark are really high, while Sweden not so much. Seems to reflect what Kaiserguard said.
Oh and this

by the The Institute for International and European Affairs
http://trueeconomics.blogspot.de/2011/06/20062011-europes-corporate-tax-rates.html

Denmark is a real cooperate heaven it seems.

 

[Mise]

Whenever I look at that graph, I can't help thinking that France is a bunch of god damn hypocrits.

 

[Quackers]

Wow, Anglo-Saxon run-away-Wild-west economy has the highest corporate tax rates in Europe! Who woulda thought it?!

 

[Mise]

Yeah, cos we actually tax companies at the rate we say we're going to tax them at.

 

[Traitorfish]

Which is to say, we put the tax rates at the rates we're going to put them at. Whether or not people are actually paying at those rates, well, that's where it gets a bit shaky.

 

[Cutlass]

Which is to say, we put the tax rates at the rates we're going to put them at. Whether or not people are actually paying at those rates, well, that's where it gets a bit shaky.

The chart is labeled "effective rates" not "nominal rates"....

 

[Traitorfish]

Yes, and the UK nominal rate would be even higher. I'm just saying, let's pretend our tax system is bullet-proof.

 

[WindFish]

Yes, and the UK nominal rate would be even higher. I'm just saying, let's pretend our tax system is bullet-proof.

Only the top rate of corporation tax is higher. Marginal CT is lower than that 23% but the CT equations are bollocks anyway.

 

[Paven]

But the SSB table for Norway is already "household's disposable income per inhabitant", so never mind that the OP also apparently pulled a number ex ano which doesn't even appear anywhere in the table, he didn't understand the table in the first place.

It's probably because the OP just did a quick cut&paste from the von mises institute forums : http://mises.org/Community/forums/t/5616.aspx

 

[Leoreth]

This is what passes as erudite discussion on mises.org?

 

[Cutlass]

This is what passes as erudite discussion on mises.org?

Based on past users here who quoted extensively from mises.org, expectations from that direction should be exceedingly low.

 

[Mise]

Yes, and the UK nominal rate would be even higher. I'm just saying, let's pretend our tax system is bullet-proof.

The nominal corporate tax rates in the UK are 20% for small companies, and 25% for large companies.

 

[Monsterzuma]

Is the difference in "effective tax rate" influenced by how some countries have predominantly large companies within their borders whereas some have mostly small ones? In that instance there would be no real relative tax benefit in the countries listed as having a lower tax rate, considering the "high tax" countries also tax their small businesses at low rates.

 

[Mise]

Well there are vastly more small businesses than large businesses in every country, but large businesses are responsible for vastly more corporate tax revenues than small businesses. 80/20 rule applies again. So the diff btwn effective and nominal rates are a good proxy for how many loopholes large companies enjoy.

In somewhere like Greece then you may have a point, but I think if you're comparing France with Germany and the UK, you can't really claim that France has a dearth of large businesses. It has more multinationals than any other European country IIRC.

 

[Yeekim]

IIRC you can do that in 3 days in NZ.

World record currently held by Estonia with 18 minutes and 3,05 seconds.
/useless fact to make us feel better in this frozen wasteland