Viking Economics (3 page)

Danish workers created a Social Democratic Party that by 1924 had grown strong enough to form a government. Thorvald Stauning, a worker in a cigar factory who became party leader, was
the longest-serving prime minister in Danish history. One of his early moves was to appoint a woman to his cabinet, a historic first.

In the 1970s, factory owners in industrial countries were moving production to the global south, in search of weak or nonexistent unions, lower wages, and fewer regulations. U.S. Steel, for example, let their American steel mills decline while opening new ones in South Korea and Brazil.

Over time, the flight of factories proved a challenge to Danes and other Europeans: relocated industries were beginning to compete successfully with factories remaining in Europe.

In the 1990s, Denmark faced the problem head-on. The Danes wanted full employment, but were reluctant to follow their neighbor Germany’s policy of subsidizing inefficient firms to keep workers at their jobs.

Borrowing a 1995 Dutch concept called “flexicurity,” the Danes changed the social contract between the state and the workforce. Instead of guaranteeing workers their existing jobs, the government would guarantee workers
ongoing support and retraining so they could get new jobs
.

While retraining, people laid off from their jobs received up to 90 percent of their former wages through unemployment insurance.

The Dutch had implemented a version of this policy but had given it fewer resources. The Danes brought to flexicurity a century of successful workers’ struggles and its fruits: a stronger safety net,
more active job creation, and better training for the unemployed, and this more-robust version of flexicurity became the “best practices” version, called the “Danish model.”

Denmark’s Viking cousins also adopted flexicurity, which turned out to be a win-win-win solution. Owners were relieved that they could close inefficient factories and put their capital into more-promising ventures. Workers were relieved that they would not be deprived of well-paid work that protected their standard of living. Everyone was relieved that their taxes wouldn’t go ever higher to subsidize jobs that no longer paid for themselves.

Flexicurity affirmed a greatly respected Danish value: to seek the well-being of the whole. Bishop Grundtvig would have been pleased.

Flexicurity gained traction in Europe, and in 2007 the Council of the European Union recommended that its member governments consider flexicurity as they developed their economic policies. The 2008 financial crisis intervened before other countries could adopt the practice.

Four years after the 2008 crash,
Bloomberg
’s Iain Begg surveyed the European economic situation. He wrote on April 15, 2012: “In the Nordic countries, commitments to so-called active labor-market policies designed to keep people connected to the workforce have imparted resilience in employment that others envy.”

When I was in New Zealand in the early 1970s, I read in a Wellington newspaper about some consultants from the International Monetary Fund who were advising the government at the time. This was my first introduction to a group of people who, as it turned out, were against the very notion of “resilience in employment.” These consultants urged the government to give up its full-employment policy, and allow unemployment to rise. That,
the IMF pointed out, would encourage international investors to invest money in New Zealand’s economy.

I realized that this would certainly benefit some New Zealanders, but only at the expense of others. Growing unemployment would increase the number of people willing to work for less money; this, in turn, would reduce the strength of trade unions; and both these results would benefit international investors and their elite associates in New Zealand. This thinking would later come to be called the “race to the bottom.”

This type of pro-unemployment strategy I first took note of in the 1970s is being implemented today in much of the Eurozone and the UK, where IMF-encouraged austerity programs throw people out of work, increase the power of capital in relation to the labor movement, and create downward pressure on wages, as well as shred the benefits that supported a decent life for the working and middle classes.

Yet the Viking countries remain on their own path. Norwegians I interviewed told me over and over that a job is a primary means for participating in society. Everyone who can work should do so. The responsibility of a country’s leadership is to generate a humming and vibrant economy with jobs for all. The path to such an economy is in alignment with both freedom and equality.

It’s a fact of economic life: business goes in cycles. Globalization increases the difficulty that this poses for the small nations that make their living through trading, but only a pessimist would assume that nothing can be done about it.

The Norwegian government, for example, long ago created
Husbanken
(the housing bank) to help people build and buy homes. When a business cycle goes into decline,
Husbanken
increases its activity, offering low-interest mortgages for first-time home buyers.

Many Norwegian renters take the new opportunity to buy homes, which also means spending on construction, furniture, and so on. This rise in consumption not only helps adjust the economy, it also produces one of the highest rates of home ownership in the world.
⁴

In the wake of the Great Recession, President Barack Obama pleaded with German and other Eurozone leaders to undertake major stimulus programs to counter the plunge of the business cycle. After all, the United States has an economic stake in keeping Europe prosperous, so consumers can buy American exports. Unfortunately for the President and most of the rest of us, those leading the Eurozone and the UK had an agenda focused on austerity.

Immigration in Norway is as old as the ancient Viking kings, and immigrants have provided important contributions to the country. Those kings found wives in foreign countries in order to strengthen their international alliances. Centuries later, the German-based Hanseatic League brought large-scale trade to Norway’s west-coast cities of Bergen and Trondheim, and the civil servants working in Oslo were immigrants. Foreigners came to Kongsberg to do mining, and immigrants facilitated the industrial use of waterfalls in the nineteenth century. When we
lived in Oslo in 1960, Berit and I spent a lot of time at an outdoor café on Karl Johans Gate. We would look out onto a sea of white, blue-eyed people carrying navy-blue raincoats and holding the hands of blond children. Now when I visit, I see Norwegians of many colors, wearing everything from soccer pants to head scarves. Two hundred nationalities can be found in the schools. In some classrooms, the majority of children are learning basic Norwegian.

In 1990, immigrants made up about 4 percent of Norway’s population—today that number is about 14 percent: more than 700,000 people.

A few years ago, I made friends with a young man named Michael, who had come to Norway from Burundi a few years earlier. I later learned that his story was typical for immigrants who wanted to settle down in Norway.

He met with the immigration authorities and was made an offer something like this: “We pay you a living wage for a year while you spend full-time hours learning the Norwegian language and culture and taking job training to prepare you for a job for which there is a need here in Norway. We will locate you in a town or village, probably far from Oslo. You may be one of a very few Africans around, or even the only one. We will find a family that will put you up until you find your own place in the town.

“If you miss your language lessons or other responsibilities, we will dock your pay for the missing time. If your teacher believes that you need more time to master the language, you’ll be eligible for an extension, while still being paid your wage. When your time is up, we will help you find a job that will use your new skills. After a certain time has elapsed you will be free to relocate anywhere in Norway.

“Norway has a great interest in your becoming a productive, tax-paying citizen. This is the contract we offer: take it or leave it (which is to say: leave the country).”

Michael was sent to a rural village among the western fjords. The only African anywhere near, he experienced the loneliest time of his life. He found the cultural differences enormous, but as his Norwegian improved he came to appreciate the life around him and began to make friends. When free to do so, he moved to Oslo, a significantly more diverse place. He feels he can now handle himself anywhere in the country and is pleased with that achievement, and he counts himself lucky to live in a country with so much freedom.

The emphasis on work as a means of participation underlies the Norwegian immigration policy. Norway followed some other European countries in restricting its open immigration policy in the 1970s, but it has continued to accept people who need asylum and many who want to join their families who previously emigrated to Norway.
⁵

In 2004, Norway opened its doors again—it was required to do so to participate in the European Economic Area treaty, which gives it access to European Union (EU) markets. That year, the EU admitted several new, job-hungry member countries from Eastern and Central Europe. Gradually, workers from those countries found their way to Norway, often to take jobs in construction, retail, restaurants, and hotels. By 2012, nearly all of the 38,000 new jobs created in Norway were filled by immigrants. Three-quarters
of them were taken by foreigners already settled in Norway and the rest by guest workers.

Guest workers are people who work and live in Norway for six months or less. After Norway recovered from its financial disaster in the early 1990s, its economy generated more jobs than Norwegians could fill. The government’s employment office recruited tens of thousands of guest workers from other countries, especially neighbors like Poland and the Baltic States.

When the 2008 global financial breakdown resulted in increased unemployment elsewhere, it was even easier to attract workers from other countries. Over 100,000 guest workers worked in Norway in 2010, from Poland, Estonia, Latvia, Lithuania, Germany, and the UK, among others. The skill levels of guest workers range from engineers and consultants to unskilled agricultural and forestry workers.

The guest-worker system requires that workers pay the standard payroll taxes even though they will not be around to collect pensions at the end of their working lives. On the other hand, the payroll taxes entitle them to unemployment compensation when their jobs in Norway run out, and depending on opportunities in their home countries, many stick around and collect unemployment while seeking fresh Norwegian jobs. But that’s not always easy, as Martins Selickis, a twenty-seven-year-old carpenter from Latvia, told then-newspaper
Aftenposten
: “[Employers] demand that we speak Norwegian and they only take on those who have worked for them before.”

Still, Norway is ranked number one among the twenty-seven richest countries for its policies on migration: acceptance of asylum-seekers and refugees, open borders to immigrants and students from developing countries, and friendly integration practices.
⁶

Denmark, Sweden, and Norway ranked first, second, and third in the Commitment to Development index in 2015. A lot of their aid goes into multilateral programs. They do not require recipient countries to buy goods and services from the donor. They set the standard for the amount of their economy that is given to poor countries at about 1 percent.
⁷

Norway’s aid budget has doubled in nine years, to the level of 30 billion kroner, and a lot of that goes into multilateral programs. Along with Sweden, Norway is also one of the largest contributors to the United Nations.

Norwegians like to target their unilateral aid to reflect their values: assisting the poor, empowering women, and reducing climate change. Three of the countries that get consistent attention are Sri Lanka, Chile, and Cambodia. Norway tries to improve those countries’ access to trade so they can in turn earn more capital for development. Recognizing that some governments hinder development due to their own corruption and incompetency, Norwegians target some aid to try to solve those problems, such as unsound taxation systems and illicit money flows.

In many cases, Norwegian aid is directed to women, as with access to contraception. This is based on the notion that promoting the agency of women gives a head start to any country trying to climb out of poverty.

Norwegian aid is also heavily invested in environmental issues, such as green energy initiatives. The country also prioritizes programs to combat deforestation, especially in Brazil, Indonesia, Guyana, and Tanzania.

But to some internationalists, the Norwegian aid program is best known for its emphasis on conflict resolution. Through training and hands-on mediation, Norwegians have for many years worked in areas of bloody conflict to increase the chance for peace with justice.

When a new European vision came along in the 1950s, proposing a degree of economic integration, Norway looked at it with interest. Norway prided itself on its internationalist tradition and the contribution of Norwegian Trygve Lie, the labor leader who in 1946 became the UN’s first-ever Secretary-General.

Norway applied for membership in the European Economic Community (EEC) in 1962, along with the United Kingdom and others, but the UK was rebuffed and instead set up a parallel group, the European Free Trade Area. Norway joined its “big brother” in EFTA.

Norway did not expect EFTA to be a permanent arrangement; its main trading partners, after all, were members of the EEC. For the next ten years, Norway negotiated with the EEC and prepared itself for membership. All of the major political parties agreed with this. Only the tiny Communist Party dissented.