Authors: George Lakey
I traced this trend back to Jens’s mother, Karin Stoltenberg, who in the 1980s was one of those pioneer cabinet ministers in Gro Brundtland’s government. She earned wide respect by working hard to support an expanded role for women in the workforce.
She pushed for lengthy maternity leave at full pay, subsidized after-school programs for children, and the right to paid leave when a child was ill.
Karin Stoltenberg believed that freeing women to combine career with family and encouraging couples to share responsibility at home would be a win-win for freedom and also for productivity. When her son Jens became prime minister and formed his cabinet in 2005, he made it the first in Norwegian history to have a majority of women.
The Stoltenbergs, mother and son both, love families and at the same time want parents to be in jobs and paying taxes. Norway ranks first in Europe not only in participation of women in the workforce but also in birth rates.
Save the Children ranks all countries in the world to find “the best place to be a mother.” Year after year, the Nordic countries trade places among the top few ranking spots. In 2015, the top five were Norway, Finland, Iceland, Denmark, and Sweden. The UK was twenty-fourth, and United States thirty-third.
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Norway offers new parents two options for its national, government-funded parental leave. The first option is to take fifty-six weeks of leave at 80 percent of your pay.
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The second is to take forty-six weeks at 100 percent of your pay. This is true if you’re adopting a child (up to age fifteen), or if you’re giving birth.
The law guarantees that the parents can come back to their old jobs when their leave is completed. If a parent wants to continue as a stay-at-home caretaker, he or she will be paid by the state for that job. Some women aren’t in the workforce and don’t have a job from which they can take a leave if they become mothers. In that case, they can claim a grant, which in 2009 was about $5,000 USD.
The Nordic countries realize that if all the parental leave is
taken by the mother, she will be less likely to keep up over time with advancement opportunities at work, and therefore she will fall behind in lifetime earnings and career achievement. That’s a built-in dynamic of inequality between the genders: once again, the more inequality, the less freedom. Further, a mom taking the parental leave means she’ll probably become the primary caregiver for the youngster, instead of caregiving being shared equally.
That means the dad needs to step up and take responsibility for childcare. When I’m on the streets of Norway during the working day, I’m struck by the large number of young dads who now push baby carriages and play with young children in the parks. The basic design of Viking economics promotes not only justice but also productivity. Economics writer James Surowiecki reports in
The New Yorker
that a recent worldwide study of four thousand research-and-development teams found gender-diverse teams much better at driving “radical innovation.”
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These days, the Nordic middle class of professionals and managers is becoming larger than the working class. In the shifting coalitions of electoral politics, the labor-social democratic parties are not always leading their governments.
Nevertheless, trade unions play a crucial role in Nordic economies. Strong labor movements bring an organizational cohesion and persistent advocacy that prevent an unraveling of the economic design for equality and freedom. John Weeks studied
inequality in Australia, Canada, Germany, Japan, Sweden, the United Kingdom, and the United States for the decades of the 1980s and ’90s, finding that declines in trade union membership were closely associated with widening income differences.
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Then came the 2008 lurch of the financial sector outside of Norway and Sweden. The United States was one of the countries where inequality accelerated; according to the
Fiscal Times
, “for most Americans, wages aren’t just stagnating—they’re falling. Low-income workers have taken the biggest hit, especially restaurant workers … The declines get worse the father you move down the income scale.”
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The Nordic labor movements do not tolerate this kind of trend, on principle and because of the suffering and because it leads to the kind of political alienation we see in the United States, when many white male workers follow demagogues like Donald Trump.
A convenient way to look at social classes is to see them performing different functions for the economy as a whole. In Nordic as in other modern industrial economies, people in middle-class jobs mostly perform the functions of managing, teaching, designing the work of, and supporting the health of the working class. Working-class jobs produce most of the goods and services that keep the economy humming.
Economic functions generate particular values carried by each class within the larger system. Each economic class carries a kind of culture that supports its function. Working-class people generate the value of social solidarity; one reflection of that is giving a higher percentage of their income to charity than do people in other classes.
I’m not suggesting that individuals can’t support values that are mostly promoted by cultures other than their own. The
solidarity championed by workers and their allies has been adopted more broadly in the Nordic countries. We see, for example, Norwegians across a wide class spectrum taking pride in their small country being among the top contributors to the United Nations.
In the early 1900s, a coalition of Nordic workers and small farmers pushed for an economics of solidarity, attracting middle-class allies and leading to the invention of Viking economics. In the 1980s, when the coalition’s confidence in their invention was shaken and they flirted with the neoliberalism promoted by the upper classes, their economies plunged toward disaster. When they returned to the root value expressed in the old slogan “All for one and one for all,” they once again prospered.
One of the arguments used by neoliberals is that a “flexible labor market” contributes to economic strength, i.e., the common good. Nobel Prize–winning economist Joseph E. Stiglitz challenges that idea. “That the American labor market performed so poorly in the Great Recession and that American workers have done so badly for three decades should cast doubt on the mythical virtues of a flexible labor market.”
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He notes that unions fight for strong worker protections, which “correct what would otherwise be an imbalance of economic power.” In other words, powerful trade unions are an essential ingredient of why the Nordic countries outperform the American economy.
I told the dramatic story earlier of how the Nordics made the transition from majority-poor to top-of-the-charts economies, emphasizing the role of union-led nonviolent direct action campaigns. For day-to-day influence in the direction of the overall economy, however, the unions depend on a political party that is accountable to them, the Social Democrats or Labor. In the United States, we
see what happens without that mechanism: the Democratic Party pays almost no attention to labor except at election time, and it fails decade after decade to enact labor’s legislative priorities even when in control of both Congress and the White House.
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I’ve been struck in researching this book by the consistency with which the many international rating systems for the human development and well-being of a country correlate with percentage of workers in unions. The high-union-density Nordics nearly always appear in the top group, and the United Kingdom, with its lower union density, shows up farther down the list. We find the very-low-union-density United States yet another jump down the list. It appears that the habit in the United States of labeling unions as “special-interest groups” has little relation to reality; according to the evidence the unions should be called “common-interest groups.”
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However, Norwegian writer Asbjørn Wahl shows that the solidarity base for Viking economics cannot be taken for granted. When neoliberal-influenced governments in Denmark and Sweden acted openly to weaken unions, both union power and membership dropped.
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In 1992, Sweden’s national employer confederation declared openly that it had broken with the social partnership model that had worked for decades to create unprecedented prosperity and productivity, and then refused central negotiations with the labor federation.
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This coincided in time with the worst Swedish economic performance in half a century.
Even though the Nordic economic elite cannot rule the roost as it did before the 1930s, the class struggle continues in Nordic countries.
Neil Brooks and Thaddeus Hwong at the Canadian Centre for Policy Alternatives did a comparative study of the six Anglo-American countries in the OECD with a group of Nordics: Norway, Sweden, Denmark, and Finland. They used data from 1990 to 2002. The group average for labor density in the Anglo-American countries was 24 percent; for the Nordics, 71 percent. Among the many interesting social indicators they compared were institutional legitimacy and labor productivity.
The Anglo-American countries had little confidence in their legislatures, 32.1 percent, compared with the Nordics’ 52.7 percent. The average in the first group for confidence in the justice system was 45.8 percent compared with 68.9 percent. The Anglo-Americans also believe that there is more governmental corruption in their countries than do the Nordics: on a scale of perception of governmental corruption, where “0” equals “most corruption” and “10” equals “least corruption,” the Anglo-American countries average 8.4 and the Nordics 9.3.
Perhaps most surprising to Americans will be the study’s comparison of labor productivity. The group of countries where the majority of workers are in unions were also those that experienced higher productivity. “On average, Nordic country workers produce goods and services valued at $44.10 an hour, while Anglo-American workers only produce goods and services valued at $38.20 an hour.”
Comparing two countries at the extremes of the OECD spectrum on union density, Brooks and Huang note that “American workers tend to be very productive, on average producing goods
and services worth $46.3 per hour. However, it might be noted that they are not nearly as productive as workers in Norway, who produce goods and services worth $56.6 per hour.”
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The United States operates a different economic model, which values
insecurity
. The model keeps unemployment high and sustains poverty and hunger. A family depends on a job that might disappear tomorrow; it lands in a feeble safety net; it has few prospects for finding another job as good or better. Small wonder that U.S. unions sometimes defend inefficient labor practices and outmoded organization of work, even though undermining productivity—whatever it takes to keep workers in jobs. In other words, compared with the high-productivity Nordic model, the U.S. insecurity approach creates
an incentive to resist efficiency
.
U.S. economist James Galbraith helps us see how productivity-reducing the U.S. model is in comparison with the experience of Nordic corporate managers. Over there, labor costs are high and there are few barriers to trade. “If you are a business in Sweden or Norway, you are free to import, export, and outsource as you like,” Galbraith writes. “There is, however, one thing you are not free to do: you are not free to cut your wages. You are not free to compete by going after cut-rate workers, either native or immigrant. You are not free to undercut the union rate.”
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Galbraith explains that these strong rules incentivize productivity. They guard against lazy or incompetent managers who try to maintain profit by underpaying employees rather than doing their job of increasing efficiency. Strong unions fight for the Nordic model, which incentivizes productivity.
Finn Gjaerum, the CEO for whom Berit babysat when she was young, cited the reliability and competence of his workers as one reason for his satisfaction as an entrepreneur. Max Chaflin, the senior writer that
Inc. Magazine
sent to Norway to dig into such matters, interviewed entrepreneurs about finding and keeping good workers.
Chaflin interviewed Wiggo Dalmo, owner of a $44 million company that mostly employs mechanics and machinists. In his industry, the employee turnover rate is 7 percent, but Dalmo keeps his turnover below 2 percent. He does that by treating them like Google engineers. He employs a chef who prepares lunch for the staff each day. He throws a blowout annual party—last year the cost was more than $100,000. He also adds private health insurance on top of the insurance that all Norwegians get free, enabling treatment in private hospitals for conditions that might not be treated as quickly in the public ones.
Chaflin notes that “it takes more than perks to keep a worker motivated in Norway. In a country with low unemployment and generous unemployment benefits, a worker’s threat to quit is more credible than it is in the United States, giving workers more leverage over employers. And though Norway makes it easy to lay off workers in cases of [the firm’s] economic hardship, firing an employee for cause typically takes months, and employers generally end up paying at least three months’ severance.”
Bjørn Holte is the founder and CEO of bMenu, a start-up that makes mobile versions of websites. Chaflin reports that Holte pays
himself $125,000 a year while his lowest-paid employee makes more than $60,000. He quotes Holte: “You can’t just treat them like machines. If you do, they’ll be gone.”
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Readers who are mystified by the respectful attitudes often shown by Nordic entrepreneurs will be helped by a study of their U.S. counterparts done by economics writers Brian Miller and Mike Lapham. The book contains interviews with fifteen U.S. entrepreneurs, including Warren Buffett, who have in common an ability to see through “the self-made myth” that haunts U.S. business culture. Because the fifteen understand, as Nordic entrepreneurs do, the social and governmental context that made their success possible, they pay attention to the larger picture of co-creation of economic value.
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