Human Development

According to the UN Development Program's Human Development Index, the best place in the world is Iceland. Or, at least, it's the place with the best human development. People who love warm weather wouldn't actually enjoy Iceland very much. I'm not one of those people and I had tons of fun during my stay in Iceland (see my many photosets of the trip up on my Flickr) and they certainly seemed to enjoy a very high level of human development. As a general matter, I would recommend to all countries that they locate themselves near a limitless supply of geothermal energy since this makes it pretty easy to combine prosperity with environmental soundness. In general, though, the combination of a fairly open economy and a fairly flexible labor market with a strong welfare state and a commitment to high-quality public services works very well in Iceland, Norway, Denmark, and the Netherlands and I think we'll see both the US and countries like France and German move closer to that model in years to come. \

Kate Sheppard, meanwhile, points out that the Nordics also dominate the Humanitarian Response Index. Since the world does need military power to provide certain kinds of global public goods and militaries show real economies of scale, I don't think the US should aspire to actually match the smaller European countries' commitment to aid in share of GDP terms (it's also plausible that small countries' aid programs are more effective since they're less geopolitically fraught; nobody worries about Denmark's efforts to rule the world), but we do need to rebalance our priorities somewhat.

Photo by me, available under Creative Commons license

Comments

Matt,

While I feel the US needs to spend more in non-military foreign aid, I think part of the reason the European states can spend so much on aid, is that they don't have to worry about any wars breaking out in their region. The vast power of the US military ensures that none of the European countries needs to fear invasion from their neighbors. This even applied during the cold war, when the US spent a much higher percentage of it's GDP on defense, in comparison to the countries of Western Europe.

Posted by jon | December 3, 2007 11:58 AM

"nobody worries about Denmark's efforts to rule the world),..."

SHHHHHH!

Don't mention it, they will all catch on!

/Limagolf

Posted by Limagolf | December 3, 2007 12:00 PM

I dunno... in World War Z, Iceland gets particularly screwed.

Posted by ryan | December 3, 2007 12:10 PM

Besides geothermal energy and a defense umbrella from a third party, doesn't this way of life also require a homogenous population of northern European descent? Which is why it has been implemented, to a degree, in Minnesota and the Dakotas, but not in the rest of the U.S.

Posted by y81 | December 3, 2007 12:19 PM

The countries with the highest per capita GDP are Iceland and Norway.

They are two DEMOCRACIES that have tons of energy under their countries. They also have fairly free capitalistic economies. They have strong rule of law. They have good educational systems (which don't let religion guide how they teach).

I wonder if the UAE will every get their act together since being a democracy is the least important element to a strong economy.

Saudi Arabia has no chance of serious wealth unless they significantly change their society.

Does this make sense? Have I missed anything important??

Posted by neil wilson | December 3, 2007 12:20 PM

Pedantic stuff:

1) Iceland means Island, not Ice Land

2) Because of the Gulf Stream, where most of the population live, the average mean temperature in January is the same as New York and warmer than Chicago and Boston (it rarely goes below 20, hovers around freezing mainly)

3) But above 70 is rare anytime of the year

4) And straddling the Arctic Circle, it is almost totally dark this time of the year, which would be a problem for most of us

Posted by hopeless pedant | December 3, 2007 12:24 PM

Jon: "While I feel the US needs to spend more in non-military foreign aid, I think part of the reason the European states can spend so much on aid, is that they don't have to worry about any wars breaking out in their region. "

Neither does the USA. The USA maintains massive power *projection* capability.

Posted by Barry | December 3, 2007 12:29 PM

On the other hand, if global warming affects the gulf stream, Iceland is totally screwed.

Posted by mpowell | December 3, 2007 12:46 PM

Matt,

"In general, though, the combination of a fairly open economy and a fairly flexible labor market with a strong welfare state and a commitment to high-quality public services works very well in Iceland, Norway, Denmark, and the Netherlands and I think we'll see both the US and countries like France and German move closer to that model in years to come."

Are you serious? Of course it works well, but that doesn't mean the US will begin to embrace Nordic social democracy any time soon. Have you not been paying attention? Open economy, yes, flexibly labor market, sure, but a strong welfare state and top notch public services? Not even under a Democrat would you get that...

Posted by Daniel | December 3, 2007 12:50 PM

I wonder what the humanitarian response stats would look like if you also factored in private giving? Hmm...

Posted by DJ Ninja | December 3, 2007 1:23 PM

I wonder what the humanitarian response stats would look like if you also factored in private giving? Hmm...

Great. What this thread needed was someone raising the old, 'republicans are good people because they give to charity' crap.

Posted by mpowell | December 3, 2007 1:37 PM

Wow--amazing how quickly partisan labels can be applied, an in lieu of a thoughtful response or contribution. As a conceptual matter the numbers Matt cites are simply incomplete. The Scandanavian countries capture a much larger percentage of their GDP in taxes, so they simply have more to invest/spend/use, per capita. We capture less, but some amount (although not enough) of that does find its way back to humanitarian causes in the form of private donations. The very high participation in charitable giving in this country is an important piece of this bigger puzzle--and it's unreasonable to contend otherwise.

Posted by DJ Ninja | December 3, 2007 1:50 PM

Iceland is not quite the environmental utopia it appears, or at least did not get that way except through a lot of trial and error and then some good luck. Jared Diamond does a great comparison and contrast between Iceland and Greenland, and why the fates of the two colonies were so different in "Collapse."

Posted by Rickster Sherpa | December 3, 2007 2:02 PM

Hopeless Pedant,

Not to be even more pedantic, but Iceland actually does mean "Ice Land". Is = Ice in the Nordic languages. That's the reason Greenland is so horribly misnamed; the guy who discovered it wanted to do a better PR-job when naming it than the one who had named Iceland.

Posted by Norway | December 3, 2007 5:28 PM

The assumption that economic and social policies that may work well in a country with a tiny, homogeneous population (Iceland) or a country with vast per capita natural resource wealth (Norway) could be scaled up or would work effectively in a sprawling, diverse, politically decentralized nation of 300 million people is very naive.

Among the Nordic countries, Sweden would be a more apposite comparison, although it too is vastly different from the U.S. in ways that are important to policy choices. And social democracy hasn't been working out too well in Sweden in recent decades.

Posted by Mixner | December 3, 2007 5:39 PM

I think Mixner is onto something. The Nordic countries are unique in many ways, and our social models are not readily transferable. Furthermore, the most commonly cited uniqueness of these five countries - ethnic and cultural homogeneity, high level of social capital and a good education systems - will be gone within a couple of decades in all five countries, with the possible exception of Finland.

Posted by Norway | December 3, 2007 5:52 PM

Norway,

Ironically, Finland is the least Nordic of the bunch.

Posted by Greg | December 3, 2007 6:23 PM

Re: Jared Diamond does a great comparison and contrast between Iceland and Greenland, and why the fates of the two colonies were so different in "Collapse."

Iceland also went through a very rough time and almost collapsed in the 1700s. At the height of the Little Ice Age there was massice volcanic eruptions on the island and something like 1/3 of the population perished while many more emigrated back to Scandinavia.

Re: That's the reason Greenland is so horribly misnamed; the guy who discovered it wanted to do a better PR-job when naming it than the one who had named Iceland.

True, but the climate was also in a warm spell at the time and Greenland could support European syle agriculture and animal husbandry, at least marginally. When it turned sharply colder in the late Middle Ages the Norse were doomed.

Re: And social democracy hasn't been working out too well in Sweden in recent decades.

That would come as a surprise to the Swedes. Sure, there's disagreements at the margins. But by and large the Swedish economy and Sweden's political situation is to be envied.

Re: Furthermore, the most commonly cited uniqueness of these five countries - ethnic and cultural homogeneity, high level of social capital and a good education systems - will be gone within a couple of decades in all five countries, with the possible exception of Finland.

Huh? Is this yet another "Eurabia" riff? Or is someone going to clone the Vikings from old tomb DNA and turn them loose to take Scandinavia back to 900 AD?

Posted by JonF | December 3, 2007 8:21 PM

JonF,

That would come as a surprise to the Swedes.

The ones with their heads buried in the ice, perhaps.

Here's the Economist's summary of Sweden's recent experience:

Striking changes have come to Sweden in recent decades. The Social Democrats have seen their post-war position eroded and the nation’s political life has become less consensual. A country long known for its lack of crime and violence has come to know both, most alarmingly in the murders of the prime minister Olof Palme in 1986 and a foreign minister, Anna Lindh, in 2004. Immigration has made the once homogenous population increasingly multi-ethnic. Economic prosperity was shaken by the oil crises of the 1970s and then by recession in the early 1990s, when unemployment rocketed and the costs of the welfare system began to fall under question.

Sweden used to be an economic superstar in Europe, but has steadily fallen behind other European nations. The social democrats were thrown out of power in Sweden at the last election and replaced with the center-right Alliance for Sweden, who ran on a platform of market liberalization, reduced unemployment benefits, reduced welfare dependency, increased economic incentive to work, and tax cuts.

Posted by Mixner | December 3, 2007 8:59 PM

I wonder if it's easier to provided "high-quality public services" in Nordic countries because they don't have to lard their civil services with underachievers to make up for past discrimination.

Posted by Fred | December 3, 2007 9:11 PM

Mixner-

If you know anything about Swedish politics or history, you know that this cycle -- the SAP (Social Democrats) being replaced by a non-socialist party/coalition every once in a while -- is totally normal. you'd also know that the SAP itself has been a strong force in the liberalization of the welfare state, which has altered the strong welfare state, but kept the core system intact; and that even Moderaterna aren't interested in dismantling the system. Likewise, for the Economist to cite the murders of top-level politicians as evidence for increased crime is patently stupid. basically, all the stuff cited by the Economist says absolutely nothing about the actual condition of the welfare state, nor it's future prospects. As JonF said above, most Swedes would raise an eyebrow to whatever fantasy you and the Economist are spinning.

Posted by km | December 4, 2007 12:13 AM

JonF,

You mean it is alarmism to point out the high levels of immigration in the Nordic countries, Sweden in particular? It's a fact that the Nordic countries (Finland excepted) will become less and less "white" , with a substantial minority - between 20-40 percent in Norway by mid-century, according to *official* statistics - and hence won't be homogeneous anymore.

Whether this is a good or bad development is a different question entirely, but deep changes in demographics is a fact.

(On the viking thing you're making even less sense - our DNA is more or less the same as it was back then.)

The other factors I mentioned are undermined by other things - our education system here in Norway for instance has been the victim of every passing fad for the last 30 years, and the results can be read in the recent PISA from the OECD.

Posted by Norway | December 4, 2007 5:34 AM

Getting back to the Humanitarian index, it is totally misleading, and that's not Republican propaganda. The USA leads the world in private charities. These things are practically unknown in European countries (I happen to live in Europe) because the government handles it all.

Moreover, perhaps because of the greater food surplus in America, it gives out far more food aid than money aid, which is probably not reflected in the index (or if it is, I can't find it). The USA gives out far more than any other country on Earth: with only 5% of the world's population, the USA gave out 45% of the world's food aid this year. All the EU countries combined only reach about half that number, even though they have twice the population of the USA! If you want to check, the official figures are here.

Posted by John Rohan | December 4, 2007 9:09 AM

km,

Sweden's huge, bloated welfare state has seriously damaged its economic performance. That's why it's finally being cut back. As you can see from this article (pdf), Sweden has been falling further and further behind other nations. In 1950, Sweden's GDP per capita was 120% of the OECD average. By the early 1990s, it had fallen to below the OECD average. As the piece says:

In truth, the Swedish economy's best years are long gone. Between 1870 and 1950, average growth in Swedish GDP and productivity was, by some measures, the fastest in the world. In 1970 Sweden was the fourth-richest member of the OECD club of industrial countries. But for most of the past 50 years the story has been one of relative decline, including a deep recession in the early 1990s (see chart 1). By 1998 Sweden had fallen to 16th in the OECD rankings. It has since climbed back a bit, but the relatively strong growth of the past decade should be seen mainly as a rebound from the 1990s trough.

Posted by Mixner | December 4, 2007 1:27 PM

By 1998 Sweden had fallen to 16th in the OECD rankings. It has since climbed back a bit, but the relatively strong growth of the past decade should be seen mainly as a rebound from the 1990s trough.

Translation: Sweden is still a very rich country, a very human and liberal country, and, after a number of years of economic problems, it has managed to right its course to resume growth and human development on a sustainable path.

I don't think Matt is saying that the US is likely to have policies or conditions that are identical to those of the Nordics any time soon. I think he's simply saying that the combination of public policies favored by these states -- free markets, open trade, liberal labor policies, low business taxes, higher taxes on personal income and consumption, a large but efficient public sector -- are both desirable and emulatable, even if the political economy of United States never closely resembles that of, say, Iceland.

Posted by Jasper | December 4, 2007 3:07 PM

Jasper,

Translation: Sweden is still a very rich country, a very human and liberal country, and, after a number of years of economic problems, it has managed to right its course to resume growth and human development on a sustainable path.

Your "translation" is a complete misrepresentation. In particular, nothing in the quoted text supports your assertion that Sweden "has managed to right its course to resume growth and human development on a sustainable path." The text says "the relatively strong growth of the past decade should be seen mainly as a rebound from the 1990s trough." It says nothing suggesting that the growth is sustainable under current policies. The fact that the social democrats lost the most recent election in Sweden to a center-right alliance running on a platform of further cuts in social welfare and greater economic liberalization suggests that Sweden will retreat even further from its social democratic history.

Posted by Mixner | December 4, 2007 4:53 PM

Re: The USA leads the world in private charities. These things are practically unknown in European countries

Are you seriously claiming that the Roman Catholic, the Eastern Orthodox and the various Protestant churches does not engage in charity in Europe? Of course, you might also consider that
"private charity" is far less necessary in Europe than in the USA because thesocial safety net keeps people from utter destitution-- a good problem to have I would think.

Re: It says nothing suggesting that the growth is sustainable under current policies.

Um, no growth is indefinitely sustainable. There will always be downs along with the ups, recessions as well as booms.

Posted by JonF | December 4, 2007 8:15 PM

Um, no growth is indefinitely sustainable.

Um, no one said it is.

Posted by Mixner | December 4, 2007 8:34 PM

In truth, the Swedish economy's best years are long gone. Between 1870 and 1950, average growth in Swedish GDP and productivity was, by some measures, the fastest in the world.

I'm sure some of that has to do with the fact that Sweden is one of the few European countries that managed to remain neutral during WWI & II, while the rest of the continent was devastated by war. In fact, they made a huge profit selling iron ore to the Germans...

Posted by John Rohan | December 5, 2007 3:56 AM