Category Nordic
Neo-Fisherites and the Scandinavian Flick
Noah Smith wonders if "reality might topple a beloved economic theory". Well, if you look at Sweden, reality just confirmed that beloved economic theory. The Riksbank raised interest rates because it was scared that low interest rates would cause financial instability. Lars Svensson resigned in protest. Then inflation fell, and the Riksbank needed to cut […]
Can IKEA Stay Profitable?
As part of moving my daughter into her new abode last week, I had an experience with IKEA, which got me thinking about whether the giant furniture retailer can continue its high growth and profitability. Everyone is of course familiar with the basic approach used by this very successful company. IKEA provides innovative, stylish low […]
Is a need for fiscal stimulus a symptom of a poorly-designed social safety net?
In the debates on the need for a fiscal stimulus, both sides generally agreed that this particular policy instrument is one of the clumsiest available to policy makers. The dangers are well-known and well-documented: getting the timing wrong, getting the targets wrong, political interference, the risk of seeing a temporary spending program turn into a […]
Ethnic diversity and the Nordic model
There seems to be a consensus of opinion on the Nordic model around two points: It's admirable. It can't be exported to countries that aren't as small and ethnically homogeneous as the Nordic countries. In a recent interview in the New Perspectives Quarterly (h/t to New Economist's very helpful series on the Nordic model), Milton […]
Revisiting Robin Hood’s agenda: Be less concerned about taking from the rich and focus on giving to the poor
Ed Broadbent had an op-ed in Tuesday's Globe on a plan to reduce child poverty, and he offers this proposal: In the next budget, let's impose a six-point increase in income tax on those earning more than $250,000 a year (whose average taxable income is $600,000). While leaving them with very high incomes, this would […]
Cross-country comparisons of inequality in market and disposable income: Policy matters
This graph is taken from a recent Luxembourg Income Study (LIS) working paper (45-page pdf): The countries are arranged in ascending order of inequality in disposable income, and the Nordic countries take four of the top five positions. What strikes me is the extent to which this is due to government policy: the Gini coefficient […]
Nordic vs American exceptionalism
Megan McArdle ponders the Nordic model, and gets pretty much everything wrong. She indulges in the oft-repeated and almost-never-substantiated claim that "things that work in small homogeneous countries don’t work in big, heterogeneous ones". The Nordics are applying standard textbook rules of taxation. There’s nothing exceptional about that. Germany is cited as evidence for the […]
The social spending and GDP per capita graph redux
For reasons unknown to me or to Mark Thoma, The Economist blogger doesn’t seem to be willing to engage me directly in the interpretation of the following graph from this post: My original comment on this graph was: ‘These are countries whose per-capita incomes are greater than the OECD average. The point here is that […]
Doing it by the (text)book: The Nordic approach to financing the welfare state
These are the slides I prepared for the session on ‘Taxation and Social Democracy‘, organised by the Progressive Economics Forum at the Canadian Economics Association meetings; the invitation was based on my blog posts on the nordic model. One of the things that distinguishes blogging from research is that although academia frowns on recycling ideas, […]
Why focus on progressive taxes and not on progressive transfers?
Many posts in the economics blogosphere on the subject of progressive taxation today: Greg Mankiw discusses this paper, Mark Thoma points us to a WSJ article, and Brad DeLong links to Mark’s post twice (here and here). Inequality – both its level and the rate at which it has been increasing in Canada and the […]
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