As a norwegian reader, I find the understanding of social democracy in US somewhat lacking now and then. While the norwegian private industry of course feels the recession, the state remains a active investor and so has been able to soften the impact. The main issue here was that the finance department went from a 40/60 stock/saving to a 60/40 model on how to invest our oilfund one year before the crash without much public debate.

The idea of active state ownership of parts of businesses seems anathema to the US. Its not such a bad idea when it comes to accountability.

Easily the best part of this post is the URL:

blog.foreignpolicy.com/posts/2009/05/21/what_the_new_york_times_knows_about_sweden

This D.C. based Norwegian reader, while largely reiterating the point about the somewhat lacking understanding of social democracy in the U.S. and the impact of the recession made by fellow citizen fnord, would like to make a few, mildly differing (importantly, in a social democracy nothing is more than mildly differing) comments.

The Norwegian government "administer state-ownership interests in 80, fully or partially owned, companies, which together employ over 280 000 people"(http://www.regjeringen.no/en/dep/nhd/selected-topics/ownership.html?id=1336), somewhat in excess of 10% of the total number of employees (presumably excluding its huge, mostly benign sovereign wealth fund). While the success of this direct or indirect ownership (keeping the SWF out) in my view can, should be (and is being) discussed, it is, importantly for American readers, principles aside, not necessarily a biggie: Norway is, according to one recent study, the world´s 11th most competitive country (http://www.imd.ch/research/publications/wcy/World-Competitiveness-Yearbook-Results.cfm), with several social democracies in the top places (even though tax levels as a proportion of GDP in some of the countries, especially Sweden and Denmark, are the highet in the OECD countries (Turkey and Mexico being the lowest)). While there could be and probably are several reasons for this, such as a relatively homogeneous work force (although the strength of this argument is declining while the relative competetiveness of the workforce, in particular the Netherlands and Germany, isn´t), the results of the U.S. (#1) are not that easy to argue against. The comparative strength of the U.S. economy, however, seems a lot weaker with respect to a "stress test", measuring which countries
are better equipped to fare through the current financial crisis and improve their competitiveness in the near future, also conducted by professor Stéphane Garelli of the IMD Business School of Lausanne, Switzerland (http://www.imd.ch/research/publications/wcy/World-Competitiveness-Yearbook-Results.cfm). The top country was the social democratic Denmark, with Norway, Sweden, Finland following just thereafter. The key indicator of the top countries seems to be not the degree of state ownership of the business sector but size (Australia and Malaysia being the only relatively large countries to finish in the top). The U.S., however, was put on no. 28, way behind e.g. India and China.

"Socialism", then, is a matter of degree. To the extent that its relative strength in their respective countries weakens their economic output, Nordic countries (except ultra-capitalist Iceland) still perform very well on most economic indicators.

Still, I would argue that whereas a little state ownership does not destroy much, it most certainly does not, on its own, create a strong economy either. Rather, the strengths and weaknesses of all these economies lies elsewhere but a little to much of either one is probably no catastrophe.