Another Wingnut Myth Debunked: Entrepreneurship Thrives Under Socialism

I’ve had a love affair with Norway forever, since I first visited there back in the ‘80s, which has prompted more than a few mash notes on this blog.

And now I get to write another one, thanks to Inc.’s story on entrepreneurship in Norway. It appears that, right-wing talking points notwithstanding, entrepreneurship and innovation aren’t stagnant in places like Norway, where taxes are brutally high and socialism is embraced whole-heartedly:

Norway is also full of entrepreneurs like Wiggo Dalmo. Rates of start-up creation here are among the highest in the developed world, and Norway has more entrepreneurs per capita than the United States, according to the latest report by the Global Entrepreneurship Monitor, a Boston-based research consortium. A 2010 study released by the U.S. Small Business Administration reported a similar result: Although America remains near the top of the world in terms of entrepreneurial aspirations — that is, the percentage of people who want to start new things—in terms of actual start-up activity, our country has fallen behind not just Norway but also Canada, Denmark, and Switzerland.

That’s gotta hurt. This flies in the face of every Republican talking point we’ve been given since, well, forever. I’m sure we won’t be hearing about the “Norwegian miracle” in the Wall Street Journal.

In fact, I actually know people who live and work in Norway. One American friend recently told me about how his Norwegian partners laughed in his face when he asked about liability insurance for the hotel they were opening. Not necessary, he was told. What about lawsuits? “Silly Americans, always with the lawsuits!” they laughed. “Why would anyone sue? If you’re hurt you go to the hospital!” Apparently Norway’s strong social safety net and socialized medicine is a better defense against frivolous lawsuits than the “tort reform” conservatives are always pushing.

Imagine that. Indeed, that appears to be what Inc.’s reporter found. It’s a fascinating read, I hope you will hop over there and give the article your time. (And that goes for my wingnut friends–*cough*cough*JIM*cough*cough*–who I’m sure are dying to post Cato Institute and Heritage Foundation links here. Read the damn article first, please. Thanks.)

I found really interesting the article’s discussion of taxes. Tax rates in the U.S. have basically been slashed in half over the past 30 years but what did we get for it? Zip:

But there is precious little evidence to suggest that our low taxes have done much for entrepreneurs—or even for the economy as a whole. “It’s actually quite hard to say how tax policy affects the economy,” says Joel Slemrod, a University of Michigan professor who served on the Council of Economic Advisers under Ronald Reagan. Slemrod says there is no statistical evidence to prove that low taxes result in economic prosperity. Some of the most prosperous countries—for instance, Denmark, Sweden, Belgium, and, yes, Norway—also have some of the highest taxes. Norway, which in 2009 had the world’s highest per-capita income, avoided the brunt of the financial crisis: From 2006 to 2009, its economy grew nearly 3 percent. The American economy grew less than one-tenth of a percent during the same period. Meanwhile, countries with some of the lowest taxes in Europe, like Ireland, Iceland, and Estonia, have suffered profoundly. The first two nearly went bankrupt; Estonia, the darling of antitax groups like the Cato Institute, currently has an unemployment rate of 16 percent. Its economy shrank 14 percent in 2009.

Moreover, the typical arguments peddled by business groups and in the editorial pages of The Wall Street Journal— the idea, for instance, that George W. Bush’s tax cuts in 2001 and 2003 created economic growth—are problematic. The unemployment rate rose following the passage of both tax-cut packages, and economic growth during Bush’s eight years in office badly lagged growth during the Clinton presidency, before the tax cuts were passed.

And so the case of Norway—one of the most entrepreneurial, most heavily taxed countries in the world—should give us pause. What if we have been wrong about taxes? What if tax cuts are nothing like weapons or textbooks? What if they don’t matter as much as we think they do?

Ah yes, what if? What if “we” have been wrong, lo these many years?

It’s almost laughable. Of course “we” haven’t been wrong, but conventional Villager wisdom has been. Folks like Paul Krugman have been writing about this for years. Nobody but a bunch of Dirty Fucking Hippies have bothered to notice what a bunch of voodoo nonsense “trickle down economics” and “the Laffer Curve” are. But, ya know, don’t listen to us!

Conservative economics doesn’t work, never has, we all know it yet people keep repeating the same tired old canards about high taxes crushing entrepreneurship and killing jobs because they’re fucking children, little itty bitty babies who want their cake and candy and not their nutrition. We’re children who prefer to believe fairy tales because they feel oh so good even though they aren’t real.

No wonder the empire crumbled.

But don’t worry, America. You will never, ever have to suffer the slings and arrows of affordable healthcare, a clean environment, low unemployment, and a high standard of living like our Norwegian friends. That’s because we in America have been brainwashed for an entire generation into thinking certain things like taxes are a soul-crushing evil. Who needs taxes when we have our beloved Puritan work ethic, and “rags to riches” mythology, ammiright? The idea that America is the land of opportunity is as central to our national identity as the Stars and Stripes and National Anthem. Continually these national talismans prove to be worthless fairy tales, yet we cling to them because the idea that America is not the land of opportunity is just too painful to bear.

Norwegians have a completely different attitude toward taxes which I just can’t imagine flourishing in the United States. They don’t see it as a “punishment” the way some people, especially conservatives, do. Norwegians see taxes as an investment in their families and their country. Because they receive such high level of tangible services — healthcare, pensions, free education (from preschool to college), robust family leave, etc. — there’s an actual value. America never invested in itself in such a fashion; instead, what we get for our tax dollar is war. Buyers’ remorse, anyone?

This may help explain why entrepreneurship in Norway has thrived, even as it stagnates in the U.S. “The three things we as Americans worry about—education, retirement, and medical expenses—are things that Norwegians don’t worry about,” says Zoltan J. Acs, a professor at George Mason University and the chief economist for the Small Business Administration’s Office of Advocacy. Acs thinks the recession in the U.S. has intensified this disparity and is part of the reason America has slipped in the past few years. When the U.S. economy is booming, the absence of guaranteed health care isn’t a big concern for aspiring founders, but with unemployment near double digits, would-be entrepreneurs are more cautious. “When the middle class is shrinking, the pool of entrepreneurs is shrinking,” says Acs.

I guess one could say Norway has never had to worry about being overrun by Russian tanks in the past 60 years — I mean, since the end of World War II America has basically decided to be the world’s police force. I’m not smart enough on foreign affairs to ascertain how credible such a threat has been, anyway. But when comparing our two countries, it does seem like we got a raw deal.

Ultimately, the problem America faces is psychological. We’re just completely unable to have a serious conversation about anything right now, and I don’t see that changing:

Holte was fascinated by this last topic, particularly the angry opposition to President Obama’s health care reform package. “It makes me laugh,” he says. “Americans don’t understand that you can’t have a functioning economy if people aren’t healthy.”

Holte’s American subsidiary pays annual health care premiums that make his head spin—more than $23,000 per employee for a family plan—and that make the cost of employing a software developer in the United States substantially higher than it is in Norway, even after taxes. (For a full breakdown, see “Making Payroll.”) Holte is no pinko—he finds many aspects of Norwegian socialism problematic, particularly regulations about hiring and firing—but when he looks at the costs and benefits of taxes in each country, he sees no contest. Norway is worth the cost.

This makes so much sense — in fact, it is the logic behind such things as liberals’ desire for single-payer healthcare — yet we just can’t seem to have a rational conversation about these things anymore (if we ever did). Because as soon as someone tries to point out the economic impact of our lack of any reasonable social policy, America’s Vuvuzela Chorus strikes up and it’s all “job killing healthcare reform” and “death panels” and “Socialsim-Fascism-Nazi-baby-killer” bullshit. We never get to have a grown-up conversation! Everything immediately disintegrates into lies and bullshit.

It’s killing this country and it’s leaving us in the dust behind more progressive countries like Norway.

14 Comments

Filed under economy, Norway, taxes

14 responses to “Another Wingnut Myth Debunked: Entrepreneurship Thrives Under Socialism

  1. >I don't know much about Norway, but I'm all about refutiating Right-wing myths, and I've posted extensively on the demise of he U.S. economy since Reagan.Taxes.Economy dying.Ditto.St. RonnieDittoWhat's clear to me is that increasing wealth disparity has not only further impoverished the already poor while stifling the middle class, it's also encouraged the misallocation of resources into essentially non-productive financial speculation and rent-seeking. This is what caused the melt down and resulting depression, from which we are unlikely to ever recover.Even David Stockman and Bruce Bartlett are on my side of this issue.The Republican ascendance since 2000 has been an unmitigated disaster. If things don't turn around politically by the 2012 election, I fear our degeneration into a banana republic will be irreversible.WASF,JzB

  2. >But we do love our "lying liar" culture, don't we?Our guys are just the best!!!And thus the new "news" shows celebrating the "new" American Exceptionalism have sprouted again.(Watch for it. Should be assaulting your every nerve soon.)In the shadow of Obama's sellout to the business boys cause he hasn't been "business friendly" enough already (check out his new best buddy's (Immelt's) credentials).Green? Ha!!!!!All the way to the bank.Love ya, Beale!SContinually these national talismans prove to be worthless fairy tales, yet we cling to them because the idea that America is not the land of opportunity is just too painful to bear.

  3. >I’m not smart enough on foreign affairs to ascertain how credible such a threat has been, anyway. But when comparing our two countries, it does seem like we got a raw deal.IMHO, American foreign policy has been on a great, continuous imperialist arc since Eisenhower and Churchill conspired to overthrow the democratically elected government of Iran in 1953. Since then, it hasn't mattered – Dem and Rethug have followed the same ultimately destructive play book.A good intro is The Limits of Power by Andrew Bacevich, who explodes the American exceptionalist myth.Cheers!JzB

  4. >We have friends in Germany we met while on vacation, and from time to time we compare our politicl system to their democratic socialist system… higher taxes in Germany, but MANDATORY vacation days for all, health care for all, a social safety net that makes ours look like wet tissue paper, and a much brighter economic future ahead than anything we can hope for here. Their standard of living is higher, despite serious space limitations and crowded conditions. We had (!) a thriving manufacturing base to augment our agricultural roots in this country. Now we only manufacture the tools of war. Our family farms have been co-opted by agribiz firms that are poisoning our food, land, and water for better bottom line profit margins. There is no future middle class America, only the uber-rich and the rest of us.The worst of it is, the blue collar middle class helps advance this dreary future by voting, repeatedly, against their own best self-interests.

  5. >Good post. It briefly touched on expensive company health plans in the US. Why is it that US corporations don't get behind a public option? Would they not want to get out from under the expensive burden? They are always bitchin about employee costs. They work overtime to privatize benefits and socialize costs, so why wouldn't they jump at the chance to do so w/ health care? You would think they would be screaming for govt relief. I have seen very little on this, even amongst progressive blogs.

  6. >BlueHawaii:I don't know that employers were against the public option per se, at least I haven't read anything where they were even asked that. I did read surveys and whatnot saying most employers were afraif the Affordable Care Act would increase their healthcare costs and of course they didn't like the mandate.But that reminds me that America started on this path to private health insurance long ago and we sealed our fate when we could have done otherwise. I am thinking of The Treaty Of Detroit.It just defies logic that employers would want to continue paying insanely high amounts of money for private health coverage — costs have been going up up up well before healthcare reform was talked about (my husband is always complaining to me about the health insurance costs at his work and how they go up EVERY year and have been for 10 years.) You'd think employers would want these costs off their balance sheets … well, they do. They just don't want anyone to have health insurance, period. They don't want to be forced into offering coverage to their employees and they scream and moan "socialism" when the government tries to. So what do they want? Do they want a workforce that's just sick and dying? Think that's going to help your business?

  7. >"Why is it that US corporations don't get behind a public option?"Think Walmart, McDonalds and the like. It's all well and good to make sure that your expensive to train and retain managers have some healthcare "privileges" but the flippers and greeters? fuck'em, they're as easy to find as fast food and megasized jeans.

  8. >i notice your usual republican readers are silent on this post. funny, that.but the real problem isn't just republican fairy tales and their supporters. it's democrats who have given up trying to fight for socialism. most of our dem officials are totally brainwashed or bought by corporations and have no interest in doing anything remotely socialist. americans have few elected officials who truly represent them, and not the interests who are destroying this country.

  9. >i notice your usual republican readers are silent on this post. funny, that.you know what's REALLY hilarious is the number of Google searches Sitemeter has dug up for "Heritage Foundation, entrepreneurship, socialism." It seems some folks are furiously Googling to find the wingnut rebuttal. "BACK UP! WE NEED BACKUP OVAH HEAH!"Expect a position paper by the end of the week….

  10. Jim

    >SB – I can heartly support at least one agenda item from Norway. Norway is the third largest oil exporter and has extensive offshore oil drilling operations. In 2003, Norwegian oil and gas exports accounted for 56% of total merchandise exports. http://www.historycentral.com/nationbynation/Norway/Economy.htmlNow Norway has decided to exert state control over their natural resources and instead of spending the money generated by the oil sales, they have invested it in stocks and other investments around the world. The country has a $300 billion sovereign wealth fund.The flat tax of 28% is also a good idea. Everyone should be paying their fair share. Add in the SS and pension tax and everyone making under ~$73,000 dollars is paying about 38.8% in taxes. Nice that it is even across the board. Income over the $73,000 incurs an additional 9% surtax. Additionally, earnings over ~ $120,000 are subject to an additional 12% surtax, so it is a progressive tax rate.Added to all of this is a 25% VAT which is in effect a 25% sales tax.Gas, even though they are the 3rd largest exporter, runs about $8 a gallon.Now simply get 51% of America to agree to these rates with the promise of free healthcare, housing, education through college, and the other Norwegian benifits and all is well. I think I would actually come out ahead as my three kids will probably cost me close to $300,000 by time they get through college. And hey, even the drug users get a good hookup there:"Just around the corner from Norway’s central bank, for instance, Paul Bruum takes a needle full of amphetamines and jabs it into his muscular arm. His scabs and sores betray many years as a heroin addict. He says that the $1,500 he gets from the government each month is enough to keep him well-fed and supplied with drugs.Mr. Bruum, 32, says he has never had a job, and he admits he is no position to find one. “I don’t blame anyone,” he said. “The Norwegian government has provided for me the best they can.”"http://www.nytimes.com/2009/05/14/business/global/14frugal.htmlOn the other hand, it looks like some of the Norwegians are growing restless with some of the user taxes: http://www.aftenposten.no/english/local/article1891543.ece

  11. >Yes I've written about Norawy's oil industry a lot. Especially here. Norway has long used all of the rigorous offshore safety measures that prevent disasters like the BP oil spill. As soon as America's Democratic president suggests these measure he's a commie pinko anti-business socialist.The reason Norway and the Norwegian people see a real tangible benefit from their oil resources is becauses their oil industry in nationalized. So instead of it profiting a few rich assholes at ExxonMobil or Chevron, it profits the entire nation. And that makes sense, since the oil belongs to the nation, including future generations, not just the current generation. That's how they look at it.Norway's oil fund is handled very carefully. In America, private corporations benefit while the people see little. In Alaska, Caribou Barbie raided the oil fund by sending every Alaskan a check, nearly depleting it. Norway does it differently:"The Petroleum Fund is an instrument designed to prevent Norway's substantial oil profits from being taken too rapidly into the economy. State bank officials and government leaders believe that dispersing oil revenues directly would overheat the Norwegian economy and suppress private sector growth. Their view is that the resource rent collected from the sale of their natural wealth of oil should be conserved."Norway is conserving its money for the day when oil runs out. Already Norway's oil resources offshore are of the hard-to-reach/expensive-to-drill kind. Like ours. So their oil profits will be declining along with everyone else's. But they've got a substantial cushion established. Unlike America, which operates in panic mode.

  12. >Mr. Bruum, 32, says he has never had a job, and he admits he is no position to find one. “I don’t blame anyone,” he said. “The Norwegian government has provided for me the best they can.”"Yes always focus on the exceptions. Of course, it's not like we don't have drug addicts in America who aren't working either! Except ours take advantage of lax gun laws and decide to unleash crime sprees on innocent Americans to feed their habit. Our drug addcits end up in prison and living on the streets. Give me the socialist Norwegian model any day.Give me Norway where the drug addicts don't bother anyone else. And Norway does have rehab programs paid for by the government. Good luck if you're uninsured getting into a rehab program here — aside from the penal system, of course. Cold turkey in a prison hospital is about how America does it.This is the difference between conservatives and liberals in a nutshell. Conservatives feel like if they just make life really really shitty for people, they will straighten up and fly right! Tough love doesn't work, people. Liberals know that SOME PEOPLE — not everyone but SOME PEOPLE — will never, ever do what they are supposed to do. There are SOME people who are fucked up for whatever reason and you can try to get them the help they need but more importantly, let's make sure they don't detonate all over American society.I've been to Norway many, many times. You know what you don't see in Norway? Homeless people pushing shopping carts. Drug addicts crumpled in doorways.No society is perfect but just look at WHO statistic and you can see America is doing it wrong. And it's this conservative "tough love" philosophy that is to blame. It makes people feel better and superior but it doesn't solve our problems. Never has. Never will.

  13. >Okay, but looking out my window this morning and imagining weather like this 9 months out of the year? Those Norwegians deserve whatever their Govt has to offer.

  14. >Okay, but looking out my window this morning and imagining weather like this 9 months out of the year?Hah. It's not 9 months out of the year, it's about the same as it is here now! Snow starts in November, ends in April at the worst. And crap, that sounds like Nashville's weather, except I don't have the socialized medicine or appreciation for pro hockey that I'd have in Canada or Scandinavia.Fuck it. Let the brain drain begin.