Nordic size arguments part II
Matt Bruenig

The Nordics Are City-States

Matt Bruenig has responded to my piece critiquing his piece claiming that smallness makes welfare states harder to maintain. Yeesh. That’s some back and forth. And if it seems especially hard to follow, it’s because Matt Bruenig isn’t quite following normal etiquette for a debate on Medium: tag people when you talk about them, and thread your replies. Otherwise, your interlocutor doesn’t realize you’ve responded to them until they see traffic referrals to their old response. Good manners, curiously enough, are a key part of the institutional quality Matt Bruenig and I are discussing (to be clear, this is good-natured ribbing).

Now then, what did he say in his most recent salvo? Basically two claims I want to touch on:

  1. The Nordics are not city-states in any meaningful sense
  2. He counts coup on his reading of my statement that smallness has no direct economic impact on welfare state viability

Let’s start with the first one, because it’s easy, and Matt Bruenig both misunderstands the stats he cites, and mischaracterizes the data he presents.

The Nordics Are Highly Urbanized

Here’s a chart of the rural % of population in the Nordics that Matt presented:

Matt’s initial piece, he said small countries can juke their states by having no rural population. This is true. He gave the example of Luxembourg or Singapore. In my response, I said, well, hold on: the Nordics are highly urbanized countries too! This is juking their stats!

Matt’s reply is, no, look, the Nordics have non-zero rural populations! Matt claims that all he was saying is, by having non-zero rural populations, the Nordics aren’t juking their stats.

But that’s misleading. What matters isn’t “pure city state” but “degree of city state-ness.” So 0% rural vs. 3% rural, or 6%, or 12%, or 24%, etc.

Matt gave one comparison: the U.S. That’s neat. But let’s look at some other examples. Here’s my calculations of rural population for a wider sample of countries; Nordics and European averages highlighted (also, a helpful commenter noted that Greenland should be included as a Nordic as well, so I’m including it here):

The only Nordic more rural than the United States is Norway. The others are all substantially less rural. Every Nordic is less rural than the E.U. on the whole or the Euro area on the whole. Iceland and Denmark have comparable rurality with Luxembourg, Matt Bruenig’s given example of a city state!

So I’ll repeat here: The Nordics are city-stats with stats artificially inflated by very small rural populations in most cases.

The exception is Norway. Norway, by the way, is sitting on bajillions of barrels of oil. Funny how that works.

But while this data may seem persuasive, it’s not really very meaningful. For example, I grew up with only 1 other house in sight of my home. Meanwhile, I could see tobacco fields, hay fields, cattle, horses, and active forestry, and personally did ruralized work as well. Neither of my parents worked in a large city. Most of our daily life at home was consumed with questions of hay, pasturage, and forest maintenance. I’d spend my summers swimming in the river just a mile or two down the road. Across the river was Shaker Village, a place so rural it’s literally on postcards displaying scenic rural America.

And yet, Census counts me as urban! Because my county is in a metro area, I’m urban.

I know fairly little about Nordic population classification systems. But I do know that standards for urban definitions are highly inconsistent the world over. So while the above chart is suggestive, it’s worth noting that, really, we don’t know very much about urbanization rates on a comparative basis, because countries do this stuff very differently. By relying on this data for an essential crutch in his argument, Matt is relying on a reed. And even that reed really suggests that these are countries with low urbanization, and their urban population is heavily concentrated in one city, which also happens to be the political hub.

So. Matt’s just wrong here. Urbanization jukes Nordic stats, and also transforms Nordic political culture. Crucially, Minnesota has a fairly similar population and geography situation, and a pretty similar ethno-cultural makeup. If you want to find places with similar stats as the Nordics, you could look at Utah or Minnesota perhaps. Conveniently, both also have traditions of high cultural uniformity, idiosyncratic local political tribes, and very well-functioning governments. This is because good outcomes are only partly about how much healthcare you provide, but mostly about trust and good social and political institutional quality. Kentucky is not poor because we spend too little on education; we are poor because we had decades of epidemic-scale political violence, continue to have huge corruption and nepotism problems, and generally squander and mismanage our resources. Fun fact: Kentucky’s capital is its 14th largest city. Move along, folks, nothing to see here.

Let’s Get Petty

Nothing is better than two people who care too much about a piece of minutiae squabbling over exact wording, right? Right!

I said:

There’s no reason, fundamentally, to think a small welfare state is less stable than a large welfare state because, as I’ve shown, none of the factors that make a welfare state possible have anything to do with the size of the state. At least, not in a direct economic sense. In a political sense, state size may matter, because it may relate to institutional quality.

Matt reads this as me saying:

Now I disagree with this because I think small sizes do make it harder for you to do a large welfare state because small sizes (coupled with easy paths to emigration) make labor and capital flight much easier and make competitiveness of exports more important. But putting aside those points, Stone’s position is only that size doesn’t matter economically. I’ll take that any day I can get it in the Nordic debate.
As the quote suggests, all Stone does after arguing that the Nordics’ small size is irrelevant economically is then say that the smallness point is not intended to be the economic argument that it often masquerades as. Rather it’s only intended to be a very indirect way of plugging into the debate of why Nordic countries can politically muster the will to do good governments rather than bad governments. That’s a separate debate from the one I am interested in.

Which… isn’t my point. I can see how he read it that way, because he admits to basically not caring about the rest of the post where I go on for quite a long time about how the Nordics can only maintain social democracy because of a wide variety of institutional factors that the U.S. does not have.

Matt Bruenig seems to think by “institutions” I mean “political preferences.” But I don’t. I’m using it in the way that, well, everybody who studies development uses the word. So, “I believe it is immoral to bribe cops” is not an institution. But “In practice, basically nobody ever tries to bribe a cop” absolutely is an institution. “I believe, regardless of race or religion, everyone in my country should be entitled to the same benefits” is not an institution. But, “In practice, basically nobody discriminates based on race or religion” could be.

Institutions are not directly correlated with beliefs. People with very non-racist beliefs may uphold racist institutions, and vice-versa. We have very limited understanding of how institutions form (which is what much of my post was about). So Matt’s argument that:

All I want to confirm is that it is possible, from an economic perspective, for the US to do social democracy like the Nordics have. Put more bluntly: what I am trying to establish in this debate is that if the US adopted Nordic institutions, they would actually work and the economic system would be sound and sustainable. In his piece, Stone says it should not be any harder economically to do it here because size is irrelevant to the economic viability of the model. So let’s do it, then.

Is just plainly unfounded. If he thinks my reading of the production process of institutional quality is wrong, he should say why, how, and where. He should explain why he thinks that the U.S. has the institutions to support and produce social democracy today. And if not, then it’s like dropping the U.S. constitution on Iraq and expecting it to Just Work. It won’t just work. Programs, laws, constitutions, they are leaves hanging on the tree of institutions. You can staple as many maple leaves to a pine tree as you want, but they will whither and die and pine needles will grow back in their place.

If the U.S. adopted Nordic institutions, they might work. But the “adoption” here would involve genocide of ethnic minorities, mass population relocations, mandatory religious conversions, political purges, the abolition of Federalism and indeed the whole constitution, mandatory unionization, and generally a wave of changes that would make Stalinization look peacable.

“Universal healthcare” is not an institution, it is a policy. “Most people who might individually be better off with private healthcare still support universal healthcare because they see the social benefits as ultimately supporting their values” is more of an institution (we often casually combine norms, mores, and institutions, as it’s hard to distinguish between them in many cases). You can’t legislate that into existence. You can’t argue it into existence. There is enormous debate about how institutions come into being, but “we write them as laws” is not a viable option.

So, no. My argument isn’t that “smallness doesn’t matter.” Smallness put the Nordics in the position to have the institutions they have. Those institutions have produced prosperity. Their policy choices have broadly been responsible, so we can say their policy choices have probably contributed to their prosperity as well, though there have been bad policies and missteps too.

I get that Matt doesn’t want to talk about what creates institutions. The revolutionary left is not fond of institutionalist thinking because, I mean, did we miss the “revolutionary” bit? But the point of institutions is that they are not usually malleable to directed change.

In sum: the Nordics really are just glorified Luxembourgs, and the Nordic model is fundamentally non-transferrable to the United States unless and until we can become demographically, socially, culturally, (some theorists, though not me cuz that crap is racist as all get-out, argue even genetically) Nordic.

Check out my Podcast about the history of American migration.

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I’m a native of Wilmore, Kentucky, a graduate of Transylvania University, and also the George Washington University’s Elliott School. My real job is as an economist at USDA’s Foreign Agricultural Service, where I analyze and forecast cotton market conditions. I’m married to a kickass Kentucky woman named Ruth.

My posts are not endorsed by and do not in any way represent the opinions of the United States government or any branch, department, agency, or division of it. My writing represents exclusively my own opinions. I did not receive any financial support or remuneration from any party for this research.