Date: Dec 24, 2011 6:02 AM
Author: Paul A. Tanner III
Subject: Moral economics -> world's highest living standard and greatest<br> happiness

Modern mathematical economics implies that this all-or-nothing economic philosophy of ideologically pure conservatives and communists (see my post 

"Conservatism, Marxism, and modern mathematical economic theory"
http://mathforum.org/kb/thread.jspa?messageID=7615529&tstart=0

for more on this point) is all wrong as an ideal and instead, a very healthy mixture of both government and non-government - of socialism and capitalism - is the ideal.

And modern mathematical economics implies that an economy can be a prosperous as possible and a people as happy as possible only if there is an ongoing redistribution of wealth and income and their benefits.

That is, the highest standards of living and greatest levels of happiness can be had by a country only if the economic policy of the country is morally good.

To see proof of this, consider the fact that Norway, a country that is a prime example of this ideal of a rough 50-50 mix, for the last 3 years is ranked as the happiest country in the world, and for 9 of the last 11 years, is at the top of the world in terms of quality of life and standard of living:

http://www.prosperity.com/rankings.aspx
(See the chart)

http://travel.yahoo.com/ideas/the-world-s-happiest--and-saddest--countries.html

Quote:

"At No. 1 for the third year in a row: Norway.

...

Cynics say Norway's ranking is a fluke, that it's a boring, godless (just 13% go to church), homogeneous place to live, with a massive welfare state bankrolled by high taxes."

[To reply to those cynics: Having a massive welfare state seems to help a lot for this level of happiness - looking at the lists, the general statistical pattern is that the more massive the welfare state combined with economic prosperity, the higher the level of happiness: Read on.]

"Four Scandinavian Countries Named to Top 10 Happiest Countries List"
http://www.allscandinavia.com/happiestcountries.htm

Quote:

"What do these prosperous four Scandinavian countries have in common? All have generous welfare benefits and lots of redistribution of wealth. Their governments take care of their citizens, who all have abundant civil liberties. And there are few restrictions on the flow of capital or of labor."

[See the further below for the significant claims for the necessity of security and redistribution, this necessity claimed by a representative of the top country, Norway.]

http://en.wikipedia.org/wiki/Human_Development_Index

Quote:

"Norway has been ranked the highest nine times [out of the last 11 years]."

"Top quality of life in Norway"
http://www.norway.org/ARCHIVE/News/archive/2001/200103report/

Quote:

"According to the UNDP's most recent Human Development Report, Norway has the highest standard of living in the world.

...

Minister of International Development Anne Kristin Sydnes is pleased that Norway is ranked at the top of the UN Index: "OUR RANKING IS A RESULT OF THE FACT THAT NORWAY HAS PURSUED A DELIBERATE REDISTRIBUTION POLICY FOR A NUMBER OF YEARS [my emphasis].""

This is significant: A representative of Norway says basically that redistribution must be part of national economic policy if said country is to be truly prosperous - a country can be truly prosperous only if said country's economic policy is a morally good one.

NOTE: Redistribution is about the moral good of SOCIAL AND ECONOMIC DEMOCRACY.

But there are many ways to redistribute wealth and income other than through welfare state benefits - social and economic democracy is many-faceted.

That is, to go all the way, all aspects of redistribution must be pursued, which includes not just having a vast welfare state but includes using government via such as union-friendly laws to cause higher paying jobs and using government ownership in some of the financial sector to aggressively loan money to result in more citizens owning businesses. And it includes what is called industrial democracy, where national unions have a say in national industrial policy. (See further below for more on this.)

In Norway this mixture of capitalism and socialism in the form of social and economic democracy is about 50-50 - Norway practices both democratic socialism and democratic capitalism to a roughly equal percentage:

"Economy of Norway"
http://en.wikipedia.org/wiki/Economy_of_Norway

Quote:

"THE GOVERNMENT CONTROLS 31.6% OF PUBLICLY-LISTED COMPANIES [my emphasis]. When non-listed companies are included the state has EVEN HIGHER [my emphasis] share in ownership (mainly from direct oil license ownership)."

(Note that also in China we see that about 1/3 of all publicly traded corporations are government-owned at least via majority ownership of company stock.)

When government ownership of non-publicly-traded corporations is also added to that 1/3, this means that not far from 50% of the means of production in Norway is government-owned at least in part. And when we see that government is involved in many other ways in the economy via its heavy welfare state and its redistribution of wealth and income and the benefits of wealth and income, with government spending being close to 50% of GDP, we see that government is easily involved in more - even much more - than 50% of economic activity in some way.

(Government obtaining large amounts of revenue from corporate ownership means that government has to collect less revenue in taxes, which is good for all taxpayers.)

Why does government ownership of so much of the means of production work in Norway? One reason is because it uses this ownership especially of so much of the financial sector to promote capitalism to a greater degree than even private ownership of banking ever could:

"Innovation Norway"
http://en.wikipedia.org/wiki/Innovation_Norway

Quote:

"Innovation Norway is a state-owned company started in 2004 that
replaced four governmental organizations...
The goal of Innovation Norway is to promote nationwide industrial
development with focus on both business economy and Norway's national
economy. It also has the goal of releasing the potential of the
different districts and regions in Norway by contributing to
innovation, internationalisation and promotion."

"In Norway, Start-ups Say Ja to Socialism"
http://www.inc.com/magazine/20110201/in-norway-start-ups-say-ja-to-socialism.html

Quote:

"Although America remains near the top of the world in terms of entrepreneurial aspirations -- that is, the percentage of people who want to start new things-in terms of actual start-up activity, our country has fallen behind not just Norway but also Canada, Denmark, and Switzerland."

"Norway's Capitalist-Socialists"
http://www.inc.com/max-chafkin/meet-norways-capitalist-socialists.html

Quote:

"It's taken as an article of faith that socialism-high taxes, government regulation, robust social safety nets-are bad for entrepreneurs and bad for economic growth. But one of the world's most entrepreneurial economies-with more entrepreneurs per capita than even the U.S.-is also heavily taxed, highly regulated, and fully welfared-up."

"What Norwegian Socialism Looks Like"
http://www.inc.com/max-chafkin/what-norwegian-socialism-looks-like.html

Quote:

"Yes, the brand of socialism in Norway is very different from that in France and Spain, but come on, let's not get carried away here. Norway has universal, socialized health care, a universal socialized pension system, and universal socialized education. There are, as commenters have pointed out, virtually no private schools or private hospitals in the entire country."

"Norway's success in socialism has me turning red with envy"
http://www.dailyfinance.com/2009/05/14/norways-success-in-socialism-has-me-turning-red-with-envy/

This faster-growth-than-the-US that Norway has experienced has been going on for years:

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita

See especially:

Per-capita GDP of Norway: $84,000-$88,000

Per-capita GDP of US: $47,000

Even PPP per-capita GDP shows Norway pulling away from the US, having grown faster than the US since 1960 even by this measure:

http://www.futureofuschinatrade.com/sites/default/files/world_ppp_gdp_8-8.jpg

This above chart is eye-opening.

And finally, regarding industrial democracy in the per-capita richest major country in the world, Norway:

"The Industrial Democracy - A Case on Norwegian Management Model Practiced in a Private Small Business Company"
http://www.ir.hiof.no/~hwu/Forskning/Paper/47-2010-THEICIE-NO10.pdf

Quote:

"The industrial democracy is an important approach of management practice especially focused on motivation and cooperation aspects. In Norway and other Scandinavian countries, this approach has been practiced in many business companies, partly due to shortage of labor resources and partly due to the strong trade union cultures. The early theoretic grounding work has been developed by the Norwegian researcher Thorsrud (1970) and his theory on industrial democracy has been included as a part of management theories. The Norwegian government pays also much attention for this practice and inspired this philosophy in the labor law."

One of the many advantages of co-determination and industrial democracy is that it drastically reduces the frequency of economically disruptive strikes.

That the system of co-determination and industrial democracy works better than any other system in history at producing the most powerful combination in history of the greatest per-capita economic prosperity in the world for countries in general and the greatest per-capita economic prosperity in the world for workers in particular should not be surprising.

In general this model of Norway that creates such prosperity for all can be called:

http://en.wikipedia.org/wiki/Nordic_model

Quote:

"The Nordic model refers to the economic and social models of the Nordic countries (Denmark, Iceland, Norway, Sweden and Finland). This particular adaptation of the mixed market economy is characterised by "universalist" welfare states (relative to other developed countries), which are aimed specifically at enhancing individual autonomy, ensuring the universal provision of basic human rights and stabilising the economy. It is distinguished from other welfare states with similar goals by its emphasis on maximising labour force participation, promoting gender equality, egalitarian and extensive benefit levels, large magnitude of redistribution, and liberal use of expansionary fiscal policy.[1]"