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Does immigration bring Nordic welfare states to the verge of collapse?
They all seem to think so, but I've long found this fear puzzling. These states could solve many of their fiscal problems by either cutting taxes/spending a few percentage points, or by moving to complete dual benefit status (read: non-whites receive less money). No matter what you think of those ideas, they would stave off fiscal crisis.
The trick is that Americans and many of the Nordics have such different senses of what counts as a major political problem. For better or worse, we are used to tolerating waste and disorder. They fall apart if even a single piece of the machinery of government is out of order. (Similarly, the Japanese are aghast over tiny tears in the fabric of social order.) So if someone is collecting benefits "who shouldn't be," it threatens their entire basis of social and legal organization. I, as a New Jersey-bred American think "too bad, but big deal, what else is new?"
Would it help them to be more like me? Can they simply overlook these instances of immigrant abuse? Maybe not. If they were more like me, they wouldn't be them in the first place.
And that is why so many Nordics think their welfare state is in such danger from immigrants. Often the countries most able to handle problems are -- for that same reason -- the most worried about those problems. It is their own vigilance which makes them so vulnerable to exceptions and scattered loose ends.
But if they could be more...um...Hegelian...their future would be brighter.
Posted by Tyler Cowen on May 23, 2007 at 07:04 AM in Political Science | Permalink
Comments
In the early 1990s, I used to work with officials from Sweden, other European countries, Japan and USA. We were supposed to manage a large program of assistance to Africa. In my experience the only ones concerned about waste and disorder were the Americans. Perhaps the non-American officials that I knew were trained in New Jersey (I was trained in Argentina so I know what you're talking about). The concern of many Nordics about immigration may be related to the relative size of their countries and the expected flows of immigrants. Even if they wanted to accommodate much larger inflows than in the past 20 years, they would not have the ability to do it.
Posted by: Edgardo at May 23, 2007 7:55:10 AM
‘Stave off fiscal crises by introducing dual benefits’
How about three simple steps first:
1. Benefits to immigrants is causing fiscal crisis - is this a real problem?
2. It might help to site the data for 1) fiscal crisis and 2) the link to immigrants.
3. It might help to explain the mechanism at work in the solution, i.e. dual benefits creating fiscal balance.
Otherwise you force your audience to say 'WTF'
By the way, invariably the ‘crisis’ in Scandinavia turns out to be the fact that they are not as rich as they could be. But virtually everybody would describe valuing social security and equality at some cost to productivity as a choice not a crisis.
Posted by: aaron_m at May 23, 2007 8:02:23 AM
Or they could just stop all immigrants from coming to their countries, much easier. Why import resentful conquistadors who do nothing but sit around and collect benefits. Round them up and deport them, stop any more from coming, problem solved, the welfare state endures. Most Somalis in Sweden and places should be just taken off the streets and shipped home.
Posted by: adrian at May 23, 2007 8:04:11 AM
So perfect, the Nordics. So, do they want to stay perfect, and give away the store? Or do they want to survive? Tic tic tic......
Posted by: ricpic at May 23, 2007 8:43:28 AM
Adrian - just curious, but where exactly are these boats of disease
ridden asylum seekers coming from - the Shetland Islands?
Posted by: glenn at May 23, 2007 9:42:45 AM
Where I live (in the north-east of the Iberian peninsular) the welfare state is dependent upon immigration. Nearly half of the GDP here is produced by immigrants, without whose taxes the welfare state wouldn't work. The birth-rate here is also so low amoung the "native" population that if it weren't for immigrants none of my generation would receive a pension when (if ) we retire. The birth-rate is also low in the Nordic countries and I wonder if the situation there isn't actually more similar to that here than many people may think.
Posted by: Christopher Ireland at May 23, 2007 9:53:31 AM
"For better or worse, we are used to tolerating waste and disorder. They fall apart if even a single piece of the machinery of government is out of order."
Tyler, this can't be right. Surely Nordic (and other) welfare states have high rates of bogus disability and other free-riding problems. Only recently the WSJ had a story about efforts to get people with electricity allergies and other such dubious problems to go back to work after years on the dole. I should think that any time the public sector soaks up so much GDP there would be significant waste (if not disorder). Maybe that's the key: if the waste occurs beneath some veneer of legitimacy, and if it's universally available, and the free riders are just like us, people may tolerate it.
Posted by: Dan at May 23, 2007 10:09:10 AM
Employers of illegal immigrants use the welfare state to their advantage. The more welfare state, the less you need to offer as a salary. An illegal immigrant will accept what ends up being far below a living wage because it is his ticket to America, and he knows in the back of his mind that he can rely on the welfare state.
The employers know this, and therefore support illegal immigration, knowing that the more illegal immigration, the more they can hire workers without actually paying their own workers.
Posted by: Jay at May 23, 2007 10:20:23 AM
"These states could solve many of their fiscal problems by either cutting taxes/spending a few percentage points, or by moving to complete dual benefit status (read: non-whites receive less money). No matter what you think of those ideas, they would stave off fiscal crisis."
"Would it help them to be more like me? Can they simply overlook these instances of immigrant abuse? Maybe not. If they were more like me, they wouldn't be them in the first place."
*************************
Are you OUT OF YOUR MIND? You say "taxes/spending" as if they are interchangeable. They are not...this administration has increased spending at the highest rate in history while cutting taxes. IN OTHER WORDS, CUTTING SPENDING IS NO LONGER AN OPTION EVEN FOR THE REPUBLICAN PARTY. The Republicans will raise spending while putting the entire nation into debt, and the Democrats will raise spending while raising taxes. Nobody is controlling spending now, and trend is that with each passing year, the chances of toning down spending diminish. Spending will continue to rise and rise because of racially based politics...people expressing outrage at the disparities in outcomes between racial groups.
The majority of Americans can not "simply overlook" what is happening. That is why the majority of Americans are opposed to allowing unlimited illegal immigration. But unfortunately President Bush and many Congressmen in both parties want to "simply overlook" the abuse of the welfare state, and while they're at it will call anyone who actually cares about the United States "racist" in order to make it seem like it's a race issue rather than an issue of resources, money, and rule of law.
Posted by: Jay at May 23, 2007 10:36:01 AM
Yes, I realize that the post was about Nordic countries, but I was so appalled by the logic in the original post, and the idea that this same logic presumably applies to how some people think about the situation in the US, that I had to comment.
Posted by: Jay at May 23, 2007 10:41:07 AM
Jay,
I think the / in Prof. Cowen's "taxes/spending" should be read as an "and", not an "or".
I'm pretty sure he would agree with Prof. Tabarrok that the Bush "tax cuts" would be more accurately described as "tax shifts", i.e. from the present to the future.
Posted by: The Other Brock at May 23, 2007 11:01:45 AM
You do say some odd things. First, it's not clear we have grave fiscal problems. Actually our finances are in pretty good shape with surpluses, high growth and generally low unemployment (yes we can argue about the figures for Sweden but that goes for just about everyone).
Secondly, the Swedes are hardly averse to foreigners. They have a similar percentage of foreign-born as the US, they just happen to be refugees.
I am an immigrant to Finland and I must confess that most crime here is committed by non-Finns so there is a cost to Finland that goes beyond them manipulating the welfare system. Finns are extremely self-consciously honest for various reasons and for that reason it's a very nice place to live compared to the UK. You can understand why they want to protect that while life here continues to improve all the time.
Posted by: Jon Martin at May 23, 2007 11:05:18 AM
As a native Norwegian (and regular reader of Marginal Revolution) I find this post interesting.
But I'm puzzled by the claim that the Nordic countries need to "stave off fiscal crisis". The Nordic countries run fiscal surpluses, and the public debt is falling.
As most Americans know, this is not the case in every country of the world.
Over the long term the Nordic countries may face fiscal problems, but for the time being, they seem to me to be some of the least likely candidates for a fiscal crisis.
Posted by: Are Slettan at May 23, 2007 11:07:19 AM
what does the creepy, old german philosopher have to do with this? Hegel offered a criticism against Lockean libertarians in this country. he had a love affair with bureaucracies and saw them as superior to private business. aren't the norwegians already inspired enough by Hegel?
Posted by: thehova at May 23, 2007 11:31:04 AM
Ah the two issues where Cowen is at his worst, combined. Immigration and uninformed arguments about Nordic countries.
Where to start:
1. “Collapse” is a straw man. Not the first time Cowen is using it either. Big government leads to a reduction of economic activity compared to what people are capable of, not “collapse”. Third world immigration leads to higher than necessary taxes, social conflict, much higher crime rate, not “collapse”. Modern countries hardly ever collapse. Does that mean we can downplay large policy issues in our standard of living? In Sweden about 5-6% of GDP goes to net transfers for immigrants. Of course this does not imply “collapse”. But is it good?
2. The Nordic countries differ more among themselves here than with the US. Iceland and Finland have extremely harsh immigration laws. 2% of Iceland’s population are born in a non-western country. Similar figure for Finland.
Denmark had large third-world (let me include the Balkans here), but this lead to a backlash. Now they have tightened the law.
Sweden (and to a less extent Norway) have most of the problem. About 10% of the population are third worlders. 48% of adult third world immigrants work in Sweden (2004), compared to 75+ of natives. More than half all murders, rapes and robberies are committed by first or second generation immigrants.
Cowens claim that Scandinavians politicians are less tolerant to abuse is completely false in the political arena. There is no political reaction, due to the same and worse ideological problems among the elite as in the US. Immigration 2006 was the highest recorded in a decade. The number of police per capita are lower than ten years ago. Welfare abuse has been rampant, with polls indicating a large share of the population ACCEPTS abuse of welfare benefits.
Just get this through your head once for all: Scandinavians are privately well organized and through, but have very badly functioning political systems. This is why Swedes earn 60% more in the US than in Sweden. Norms of conformism and “niceness” work great in a small community, but are disastrous when applied to politics.
The Swedish political elite cannot react to immigration problems, because that would be “racist”.
Do you honestly think Americans would see the rate of violent crime increase by 2-300% since 1980 and not react politically? What would the American reaction be if 52% of Mexicans lived completely of transfers? Well, Sweden has not reacted, at least not yet.
Lastly Cowen it should be clear to you that a country whose elite is pro immigration enough (actually anti-anti immigration enough) to allowing in 100.000 immigrants per year is never going to enforce apartheid. The suggestion would be met with the same outrage as an American suggesting we give blacks lower benefits than whites.
Ps.
Not hard to run a 2% surplus when you collect 56% of GDP in goverment revenue.
PPs.
"If they were more like me, they wouldn't be them in the first place."
Great point. 56%-42% Swedes do not want more immigration. Yet all 7 political parties propose same or higher rates of immigration. Do you know why Professor Cowen? Because intellectuals are doing in Sweden what you are doing in the US, cheerleading immigration in the name of “tolerance” and “diversity”. The Swedish 'Tyler Cowens' have lower IQ and are less innovative, but equally irresponsible.
Now that you have seen the light about Scandinavian immigration, how about you apply the same logic to the US?
Posted by: Tino at May 23, 2007 3:25:03 PM
"well organized and through"=thorough
Told you immigration was bad.
Posted by: Tino at May 23, 2007 3:27:07 PM
Tyler,
Now is it not the case that the country you are visiting is much more worked up about this issue
than its neighboring Nordics? It is the Danes who have voted in a ruling party on an anti-immigrant
platform, a government that then got them into Iraq. I am not aware of any other Nordic country that
is quite as hysterical about the matter as Denmark, although I was told last time I was there that
Finland has very strict immigration laws, while being less worked up about it than the Danes have been.
Posted by: Barkley Rosser at May 23, 2007 5:25:24 PM
SUNSHINE AND PUPPIES
SUNSHINE AND PUPPIES
SUNSHINE AND PUPPIES
SUNSHINE AND PUPPIES
SUNSHINE AND PUPPIES
SUNSHINE AND PUPPIES
I assume this is what goes on inside the head of an open-borders advocate when someone like Tino posts.
Posted by: dareano at May 23, 2007 5:35:35 PM
"Finland has very strict immigration laws, while being less worked up about it than the Danes have been."
Duh, because they didn't have many immigrants in the first place because of their laws, so they had nothing to worry about. Denmark had nonsensical invite the world policies until they rightly elected people to keep the Muslim conquerers out of their country.
Notice, as Steve Sailer has pointed out - Finland has as big a border with Russia as the US has with Mexico, and yet Russians don't flock to Finland (despite a similar wealth gap), because the Finns don't let them in!
Posted by: adrian at May 23, 2007 5:50:29 PM
Barkley,
you're right. Immigration is a big issue in Denmark and a complete non-issue in the rest of the Nordic countries (it is difficult to immigrate if you are non-EU and we tend to enforce laws here, apparently unlike the US). Nobody really knows why the Danes blowed their gaskets about muslims. Strange. Denmark used to be viewed as the most liberal Nordic country, particularly by Danes, but nobody thinks that anymore.
Posted by: Dan Karreman at May 23, 2007 6:42:19 PM
Read this Dan, and tell me immigrants aren't a problem in other Scandinavian countries.
Posted by: adrian at May 23, 2007 7:03:35 PM
Only about 2% of the residents of Finland are immigrants.
Strangely enough, Finland doesn't have much off an immigration problem.
Now, why would that be?
Posted by: Steve Sailer at May 23, 2007 7:14:34 PM
adrian,
Well, at least somebody in Sweden is hysterical about immigrants,
if not most of the society.
Posted by: Barkley Rosser at May 23, 2007 8:44:09 PM
@Steve Sailer:
Finland's murder rates are higher than Sweden's murder rapes, for one. I mean, aren't you
putting much emphasis on the relation between immigration and crime? Most violent crime in
Europe? White Scotland. France with all it's North-African immigrants doesn't seem to be more
crime ridden than Europe on average.
Posted by: JSK at May 23, 2007 9:08:34 PM
Whites in Britain have significantly higher crime rates today than their ethnic kin in America (homicide excepted, due to our vast number of guns). I would guess that the greater religiousness of working class whites in America is the single most important factor for why their morals are better than those working class whites in Britain.
Posted by: Steve Sailer at May 23, 2007 10:03:52 PM
