Can Welfare States Be Systained in a Global Economy? Lessons from Scandinavia (article critique)

 The following is a critique of the article “Can Welfare States Be Sustained in a Global Economy? Lessons from Scandinavia. The article can be located at the Spring 2010 issue of the Political Science Quarterly (Volume 125, Number 1), the journal of public and international affairs.

This is an article that discusses whether welfare states in the European Union (EU) can be sustained in a global economy. Authors Eric Einhorn and John Logue argued that the EU is capable of sustaining its so called European Social Model, and gave Sweden and Denmark as examples in support of their thesis. They examined how the Scandinavian countries have done this. Their research shows that Sweden and Denmark have accomplished the role of the so called welfare state – a state that provides health care to all of its citizens, decent pension plans to its senior citizens, and other social benefits – while at the same time experiencing healthy economic growth and structural change. The two authors, though discussing the Scandinavian model, didn’t include Norway and Finland due to incompatibility with their testing – whether welfare states in the EU can be sustained in a global economy.

There are two appropriate reasons why they didn’t include them. The former has oil revenues which makes it easier for it to attain the welfare goal while Sweden, Denmark and the EU members – fifteen at that time – didn’t, and the latter has had to focus on dealing with the Soviet economic sphere of influence for the past fifteen years which, the authors implied, focuses more resources on it rather than on what the welfare state focuses on. These two reasons make Norway and Finland irrelevant examples to the other EU members (Norway is not in the EU), and therefore irrelevant for Eric Einhorn’s and John Logue’s effort to prove that the Scandinavian (Nordic) model is possible in the other EU members.

The issue of the welfare state in the EU is important for readers of all walks of life, regardless of where they live. It is important to political scientists, economists, accountants, specialists in finance, and even to non-experts in the field because it concerns everybody. Retirement age, pension plans, health care plans, education and other services of the like provided by the state may have an impact on unemployment and other important factors in life. Depending on whether businesses perceive the environment as threatening to, or protective for, their existence very often leads to their preliminary reaction that it might have positive or negative impact even before the specific policy is imposed.

According to Eric Einhorn and John Logue, the European social model – that is, the implementation of the welfare state in the European Union along with economic growth – could be reformed to that of the Scandinavian model by noting that the transition of the Scandinavian countries – Sweden and Denmark in particular – had not been “pain free,” and implied that the EU members may go through the same path in order to attain the Nordic model by explaining how Denmark and Sweden.

In an effort to support their thesis, Eric Einhorn and John Logue explored the Nordic model throughout the second half of the twentieth century. They used statistics (mainly GDP and GDP per capita) and added impacts of the different policies to the numbers in these statistics.

They started by defining the Scandinavian model citing its seven characteristics: more intervention in affairs by the state, universal transfer payments (welfare), universal provision of basic social necessities such as health care and education, a strong civil society participating in strong organizations, “consensual policymaking processes combined with the integration of major interest groups through democratic corporatism,” and social trust and correctness between the people. The authors discussed these characteristics for the rest of their article in a respective order.

It’s an appropriate way of presenting arguments in a scientific research. The order helps the reader with their expectation of what to read next, and, in case they are interested in reading about the seventh characteristic, they will look for it at the end of the article instead of the entire article.

However, Eric Einhorn and John Logue were not entirely convincing with their analysis. While they consistently pointed out the Nordic people’s solidarity at political, social and economic level by having a comparatively high level of trust and respect toward each other – be it politicians, employers, or employees – as well as solidarity toward the elderly, they did not explain what the term “Eurosclerosis” means, which turned out to stand for “poverty and inequality” (“The “Anglo-Saxon” model has been flagged as the main economic policy alternative to the “Eurosclerosis” problem, despite growing issues of poverty and inequality, especially in the United States and Great Britain.”).

The two authors also referred to Swedish Keynesianism twice but explained it the second time, while it should be explained the very first time they mention it in their article. In addition to that, they did not explain why the first Keynesianism (1930s) led to an economic growth while the second Keynesianism (1970s) led to the exact opposite – an economic decline. It was merely mentioned that the second Keynesianism was an updated version of the first one but didn’t specify what updates there were.

“Can Welfare States Be Sustained in a Global Economy? Lessons from Scandinavia” generally supports existing literature. Current literature states that the living standard in the Scandinavian countries is high, and income is more evenly distributed. Also, existing literature confirms that the Scandinavia economy is market-oriented while there is respect for workers, and citizens are entitled to transfer payments if they lose their job. (Torben Andersen, 2007) The Andersen article also confirms Einhorn’s and Logue’s article that there is a high tax wedge in Denmark and Sweden, and discusses the issue of aging population and changing demographics (both articles agree that there is a tendency of more immigrants coming into Denmark and Sweden) in the same sense (that the two trends would call for more revenue for transfer payments in the long run with fewer number of labor force) but, unlike their article, which supports its arguments by just mentioning some percentage numbers throughout the text, Andersen presented the numbers in a more digestable way – through the use of tables and graphs showing either the age distribution of the population, and the percentage of GDP of employees working at the public sector and the percentage of GDP of employees working at the labor market. Other data was added in the Andersen article which makes it a more valuable research article, whereas the article written by Eric Einhorn and John Logue appears to be drier and less convincing. While reading their article, not only did I expect more data, I also expected in a more digestable approach – that is, through diagrams, scattergrams, tables, graphs, coordinates and the like, and was a little disappointed not to have found one.

However, a strength in the Einhorn’s and Logue’s article is observed in the ordering of the evidence. While both good and bad evidence was used in the article – in order to be more convincing to the reader, good evidence was followed by another good evidence, whereas bad evidence was followed by another bad evidence thus creating more consistent chains of thought. Meanwhile, the end of the article contains a tiny inconsistence with what the authors had discussed. According to them, the Nordic model “seems to have successfully dealt with issues of pension reform, employment flexibility, labor force growth, and medical cost containment in ways that are compatible with economic security, high employment at high wages, good health outcomes, and broadly shared prosperity.” This sentence appears to be slightly incorrect at least when it comes to the Keynesian from the 1970s already discussed in this critique, among other things. The word comparatively between the words have and successfully would make the sentence appear more appropriate with the article’s evidence discussed instead of leaving the reader with the impression that the Nordic system is the perfect system.

“Can Welfare States Be Sustained in a Global Economy? Lessons from Scandinavia” should be read by everyone interested in gaining more knowledge about the welfare state and how it could become reality elsewhere – through the necessary policies and the acquired political and social culture of the Scandinavian people. It would serve the reader as a decent anti-thesis to the American philosophy of individualism and advocacy for a smaller government and its negative reputation of dealing with public issues. Such purpose is often the key to pivotal arguments that would lead to possibly a better society in the long run.

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