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Source: The post is based on the article “Scandinavian social democracy” published in The Hindu on 20th September 2022.
What is the News?
The Nordic model of social democracy offers lessons to the developing world including countries like India despite the myriad complexities of diversities.
What is the Nordic Model?
The Nordic model, also known as the Scandinavian model, is the combination of social welfare and economic systems adopted by Nordic countries (Sweden, Norway, Finland, Denmark, and Iceland).
It combines features of capitalism, such as a market economy with social benefits, such as state pensions and income distribution.
Advantages of the Nordic model: The Nordic model yields equality and social mobility. Everyone has free access to decent public services including some of the best education and healthcare in the world, and people appear happy to pay their taxes to make sure that this continues.
– These collective benefits are merged with entrepreneurship, creating an efficient blend of capitalism and socialism—or “cuddly capitalism,” as some like to call it.
Criticism of Nordic Model: Opponents of the Nordic model criticize the high taxes, high degree of government intervention, and relatively low gross domestic product (GDP) and productivity, noting that these all limit economic growth.
– They point out that the Nordic model redistributes assets, limits the amount of money available for personal spending and consumption, and encourages reliance on government-subsidized programs.
Challenges faced by Nordic Model: The Nordic model faces some notable pressures on its sustainability. Two of the largest concerns:
– Ageing Population: In terms of an ageing population, a large base of young taxpayers and a smaller population of older residents receiving services are the ideal scenarios. As the population balance shifts the other way, benefit reductions are a likely outcome.
– Influx of Immigrants: These countries attract a notable influx of newcomers seeking to enjoy generous public benefits. These new arrivals can present a significant burden to the system and could ultimately, result in its demise.