On Soldiers, Smokestacks and Socialism

I must say: My previous article, Oh Happy Danes, brought me some of the most interesting e-mail I’ve received.

A few respondents pointed out an error in my article. Denmark does indeed have 460 troops in Iraq, whereas I said there were no Danes there. Mea culpa. (That’s Latin for "my bad," sort of.) Still, they are outnumbered by about 150 to 1 by US and UK forces, and the Danish Prime Minister has said that they will be home by August. And I stand by my contention that military action is much less frequent, of less intensity and not the source of national chest-thumping for the Danes that it seems to be for Bush and his cronies, and that war does not constitute such a portion of the Danish economy as it does for its American or British counterpart.

One of my e-mails came from someone who spends a lot of time in Denmark. He said that whenever he’s there, he does find that people seem happy and relaxed. "At least the native Danes" seemed so, he said; he was less certain about Turks and other immigrants there. He wondered how long Danes would remain as content as they seem to be now.

His ruminations intrigued me. Of course, all nations change in some way or another. Countries like Denmark and Sweden, as I pointed out in my previous article, at least have the advantage of not trying to keep up an empire or the appearance of one. This should at least shield people from the military/colonial hangover I described. But the high-quality education and healthcare to which nearly everyone in those nations has access – two of the keys to contentment, according to the University of Leicester researchers who deemed Denmark the happiest country – are funded by tax rates that make Massachusetts seem like the Cayman Islands. What will happen when the money is no longer streaming into government coffers?

While Denmark and Sweden share the fortunate trait of non-militarism with other "happy" countries like Switzerland, Austria and Brunei, they also share another characteristic with fellow welfare states like the UK, France and Germany where the people are said not to be as happy.

Nations that have developed overarching government coverage against all of life’s vicissitudes have had, from the time these systems were established until recently, economies based mainly the so-called smokestack industries and populations that were more or less homogenous, at least in racial and cultural terms. Perhaps the only notable exception is Canada, where the primarily agricultural province of Saskatchewan started its own program of universal health coverage before the rest of the nation – which earned most of its income from its natural resources – followed suit. Also, by the time Canada developed its system, there were large numbers of immigrants and their descendants, at least in the cities.

Since I am neither an historian nor an economist, I probably cannot adequately analyze the reasons why welfare states develop in uniracial nations with manufacturing economies rather than multicultural countries with economies based on agriculture, services or high technology. But, if I may, I will venture a guess.

A government’s ability to tax is inversely related to the mobility of the people or organizations that are taxed. It’s a lot harder to move masonry and machinery than it is to transport ideas, information and capital. Likewise, blue-collar workers are not as easily relocatable as are their more educated counterparts. They also may not have the means or skills to move to the jurisdiction to which their employer is moving, or to any other place where new jobs are being created.

Blue-collar workers and the factories in which they work, as well as the companies for which they work, are practically sitting ducks for the tax collectors. The more of these workers a country has, and the more they’re concentrated in specific towns, cities or regions (Think of Birmingham, St. Etienne or the Ruhr valley.), the easier it is for a government to collect lots of revenue and impose its will. Also, blue-collar workers either don’t have, or aren’t aware of, the options they have or the alternatives they can create to government-controlled schools, medical facilities and other institutions. Or they don’t have the means to access those alternatives.

On the other hand, members of what Richard Florida calls the "creative class" and Charles Murray labeled "the cognitive elite" can readily find alternatives to health care systems that force them to pay for people who don’t or can’t take care of themselves as well or who are prone (sometimes because of their work) to debilitating conditions. Members of the creative class, cognitive elite or whatever one chooses to call them are also more likely to, or have access to professionals who, know how to keep their tax bills as low as possible. Or, if they feel that their home countries are not allowing them to utilize their education and talents for their own benefit, they will simply move to what they perceive as a more hospitable environment. The high-tech corridors of Silicon Valley, Silicon Alley and Route 128 are full of the best and brightest from all corners of the globe, and London is now referred to (perhaps hyperbolically) as the sixth-largest French city because so many Gallic professionals, primarily in financial services, have moved there.

I think that diversity is one of the reasons why the United States, even after Franklin D. Roosevelt, never developed quite as encompassing a welfare system as many European countries. How is that?, you ask. Well, for starters, most of the immigrants who came to this country were trying to shake off the yokes of poverty and government oppression. They certainly didn’t want the taxation levels they had in their home countries. As they became increasingly prosperous, they were even more likely to feel this way and vote for politicians who at least promised they wouldn’t raise taxes, or at least not raise them too much.

Perhaps more to the point is that most people are simply more inclined to help someone whom they see as one of their own than to assist a stranger. On the eve of the 1992 vote on the Maastricht agreement, UK Prime Minister John Major famously echoed that impulse: "Am I going to raise taxes to pay for the Italian pension system?" It’s also expressed in much of the rhetoric against welfare policies and programs in the other European countries and the US: Politicians pander to their constituents’ belief that they’re paying exorbitant tax rates to subsidize people of other races in other places who don’t pay taxes.

In keeping with the patterns I’ve described, the professional classes find ways to help those people whom they consider to be their brethren, whether in blood or spirit. This may mean moving, or simply finding legal ways to pay no or lower taxes. Thus, if a government wants to keep up its spending, whether on social welfare or military intervention, it must increase at ever-increasing rates those citizens and businesses that don’t escape from the net. Escalating tax rates depress development and motivate the more mobile classes and companies to move. We have seen this phenomenon throughout the industrialized world, along with its result: More displaced people who avail themselves to social services that are already strained, which leads to even more increased tax rates.

So it remains to be seen how long countries like Denmark and Sweden can keep up their generous systems of subsidies as their economies shift their emphases from manufacturing to technology and services. One hopes, for their sake, that they won’t make the mistake that France and other countries have made of nationalizing various industries in attempts (all of which have failed) to keep them from moving. Whatever happens, at least the Danes, Swedes and Canadians – like the Swiss and Austrians – can move forward without the burdens of militarism and colonialism. The US, France, the UK and Germany should be so fortunate.

May 7, 2007

Justine Nicholas [send her mail] teaches English at the City University of New York.

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