David Brooks Is Incorrect About Northern Europe
Last week, David Brooks had a piece titled "Living Bernie Sanders's Danish Dream." In it he makes a number of claims about pitfalls of the Northern European economic model that are not true. Let's review them here.
American capitalism has always been distinct from continental European capitalism. We’ve had more entrepreneurial creativity but less security.
It’s possible that entrepreneurs, company founders and others would pay these [higher tax] rates without changing their behavior, but I wouldn’t count on it. When you make risk-taking less rewarding, you get fewer risk-takers, which is exactly what you see across the Atlantic.
In reality, the Nordic countries are more entrepreneurial than the US. The most common measure of entrepreneurial activity is the birth rate of employer enteprises, which is defined as the percentage of enterprises in a given year that are brand new. Here is the enterprise birth rate of the US and the Nordics in 2007 (Norway didn't have data):
Perhaps because of its high level of enterpreneurialism, the Nordic countries are among the most innovative in the world. They regularly score near the top of (admittedly flawed) innovation indexes. Stockholm is home to the hottest tech sector in the world after Silicon Valley (which is itself located in tax-loving California). In recent years, the Nordic countries have given the world Spotify, Skype, Mojang (maker of Minecraft), Rovio (maker of Angry Birds), Supercell (maker of Clash of Clans), and Klarna (cutting-edge fintech firm). The Nordic countries, led by Volvo, are also on the forefront of driverless car research and, led by Finland, on the forefront of mobile phone networking technology. The Nordics are also home, in Sweden, to the most successful pop music industry in the world.
There's nothing sluggish about the Nordic startup and innovation scene. Nothing at all.
American values have always been biased toward individualism, achievement and flexibility — nurturing disruptive dynamos like Bell Labs, Walmart, Whole Foods, Google and Apple — and less toward dirigisme, order and economic equality.
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