A Recipe for a Better Life: Experiences from the Nordic

Countries

Winter Afternoon at Hanasaari Thursday 5 March 2015

Olli Kangas,

Research Director, Kela / Visiting Professor,

Department of Political Science Uppsala University

Content of the presentation

• Good / better life?

– Some examples

• Growing inequalities?

• Public institutions as a remedy

• Inclusive & open institutions

• Social policies unify and divide people

• Social investment approach

• Social trust as an outcome and precondition for

a better life

• Conclusions:

– Can (and should) the Nordic model be exported?

What is a good life? What is a better life??? • It depends…

• Nordic level of living surveys:

• Should we measure objective or subjective ‘goodness’?

• Material standard?

– Money, GDP per capita, distributional questions?

• Resources:

– the Swedish welfare tradition Sten Johansson: Level of Living Surveys 1966->

• economy, education, safety, social relationship, political participation, employment, health, leisure

– Capabilities approach: Amartya Sen & Martha Nussbaum

• Erik Allardt (having, loving, being and doing)

– Also subjective evaluations are important

– Needs satisfaction / satisfaction with life

• Happiness:

– Ruut Veenhoven; Richard Layard, OECD, EU

• Combinatory approach winning terrain

Examples of some Objective

Measures

GDP per capita

SEN's index: GDP/capita * (1-gini)

Human development index HDI 1/3 (Life expectancy) + 1/3 (education) + 1/3 (GDP/capita)

• OECD Human poverty Index HPI-2 =

– [1/4(P1α + P2α + P3 α P4 α ] 1/ α

•

• Where P1: The probability at birth that the baby does not reach

the age of 60 (multiplied by 100) P2: The share of those adults that do not have functional literacy P3: The share of poor (poverty line 50% of median income) P4: the share of long-term unemployed (more than 1 year) α: 3

BKT , USD/Capita

Sen

HDI

HPI-2

USA

NOR

NOR

SWE

NOR DEN

AUS

NOR

IRE IRE

CAN

FIN

SWI

USA

IRE

NL

DEN SWE

SWE

DEN

AUT AUT

SWI

GER

CAN SWI

JAP

SWI

UK FIN

NL

CAN

NL

JAP

FRA

AUT

SWE NL

FIN

FRA

FIN CAN

USA

JAP

BEL BEL

DEN

AUS

AUS

UK

AUT

BEL

JAP GER

UK

UK

FRA AUS

BEL

USA

GER

FRA

NZL

IRE

ITA ITA

ITA

ITA

NZL NZL

GER

Lähde: UNDP http://hdrstat.undp.org/indicators/5.html;

http://hdrstat.undp.org/indicators/5.html

GDP & Life expectancy (Kangas 2010)

Inequality: remedy or a problem?

• In a globalized world:

– an automatic tendency towards growing

inequalities (Piketty 2014)

• “In many countries majority is living in destitution

because they are ruled by narrow elites that have

organized society for their own benefit at the

expense of the vast mass of people. Political

power has been narrowly concentrated, and has

been used to create great wealth for those who

possess it.” (Acemogly & Robinson (2012): Why Nations Fail?)

• OECD (2011) demands that the governments

should act quickly to tackle growing inequality

The Rawlsian principle of justice

• In a good and fair society nobody should

by her or his origin be permanently

doomed in an inferior position

• In good society everyone has fair

possibilities to try to improve his/her lot

• Rawls’ theory of justice

– Veil of ignorance

– Institutions that create inequalities should be

equally open for everybody

Long-term and short-term

poverty

• strong correlation between cross-sectional and long-term poverty

• high cross-sectional poverty neither is replaced by lower long-term poverty nor higher income mobility nor exit from poverty

• Implications for social justice (a la Rawls) – Higher levels of relative poverty acceptable if

exit out of poverty high

– Higher levels of relative poverty acceptable if the absolute income level of the poor is higher

GINI

Poverty (60%) Generational

immobility

Differences in PISA

mathematics results

Total Children Elderly University -

Basic

Couples -

Single

Swe .24 NL 11% Nor 10 % NL 7% Den .15 Fin -30 Fin -9

Nor .25 Swe 12% Den 11% Fra 11% Nor .17 Swe -40 Ger -10

Den .25 Nor 13% Fin 11% Nor 16% Fin .18 Nl -43 Fra -18

Nl .26 Den 13% Swe 11% Ger 20% Swe .27 Nor -47 Nor -22

Fin .26 Fra 15% Nl 14% UK 20% Ger .31 Fra -53 Den -26

Fra .29 Fin 15% Ger 18% SA 19% Fra .41 Den -63 Swe -29

Ger .29 Ger 16% Est 19% Swe 21% US .38 US -77 Nl -31

Est .33 Est 20% Fra 19% Den 24% UK .41 Ger -91 US -41

UK .34 UK 17% UK 19% Fin 24%

US .37 US 24% US 29% Est 24%

Mex .44 Mex 26% Mex 30% US 27%

SA .61 SA 32% SA 38% Mex 34%

Public institutions • Rawlsian principles

• Aristotle’s Ethics

– rectificatory justice remedies an inequitable

division,

• Universal and free basic education should

be open to everybody

– the best safeguard against poverty of agency

• Egalitarian principles and practices

– Social policy can unify and divide

– Social and health benefits should cover

everyone

The social investment perspective

on public policy (Kvist 2015)

Social investment

• childcare and school services provide equal

possibilities for all children

• Universal access to healthcare for the population’s

health and wellbeing

• Home service helps the elderly to live longer in

their own homes and,

– institutional care is provided in service homes.

• Public services promote employment and gender

equality.

– Childcare enables both genders to participate equally in

paid labour and fulfil their rights and responsibilities as

parents

Child poverty rate among two parents and single

parent families (left) and child poverty rate and

infant mortality (right) (from LIS)

Female labour force participation rates

(%) according to age 2010. (OECD 2013)

Universalism

• Universal policies for creating social

cohesion among the populace

• When everybody contributes and everybody

benefits when in need, creates strong social

bonds, bridging various social gaps and

cleavages

• Universalism important not only for social

security and basic rights

• it is a trademark of a fair society: equal

possibilities to all persons regardless of their

individual background

Trust is an essential element of well-

functioning society and in life satisfaction • In the Nordics social security

funds have been used as

investment capital to modernize

and rebuild the nation.

• to effectively achieve this goal,

the state has to have the

capacity to carry out reforms

• state capacity is based on the

legitimacy of the regime.

• Lacking legitimacy,

democracies cannot be

effective; and lacking

effectiveness they cannot

develop legitimacy.

• Legitimacy can only be

achieved if the rule of law

concerns everyone – even those at the very top of

political and economic power.

Some measures of subjective well-being (European social survey 2002-2012 merged data)

Subjective health

very good (%)

Life satisfaction

(0-10)

Problems to cope

on present

income (%)

Feeling very safe

when walking alone

in dark (%)

Den 39 Den 8.5 Den 6 Den 50

Nor 33 Fin 8.0 Nor 8 Nor 49

Swe 39 Nor 7.9 Swe 9 Swe 41

UK 31 Swe 7.9 Nl 11 Fin 38

Fin 21 Nl 7.6 Fin 13 Fra 35

Fra 21 UK 7.2 Ger 14 Ger 25

Nl 17 Ger 7.1 Fra 15 Uk 22

Ger 16 Fra 6.4 UK 17 Nl 18

Est 10 Est 6.1 Est 17 Est 17

Nordic experience

• It is possible to unify strong public

institutions and comprehensive welfare

state programs and equality with

competitive and growth oriented

economies

• Economic policy and social policy are

strongly interwoven and support each

other

• Social protection as an investment

Can and should the Nordic

model be exported? • The concept of the ‘Nordic model’ is elusive; a model with 5

exceptions

• Institutions do not travel well

• The Nordic model is difficult to replicate

• HOWEVER the receipts for a better life are applicable elsewhere (and they are not explicitly Nordic!)

• Rule of law – the rule of law concerns everyone -> legitimacy -> state capacity

• Rawlsian / Aristotelian view of social justice

• Comprehensive social protection • Inclusive and open institutions

• Universal and free basic education

• Universal health and social care

• In good society everyone has fair possibilities to try to improve her / his lot.