FEATURE
P.13
The Nordic Model and
Scottish Independence
The Nordic Model used to be
synonymous with high government
spending and a large progressive
income tax. However, the Scandinavian governments have been
effective in reducing their fiscal
deficit and maintaining their high
standard of health and education.
With the Nordic Model, Sweden’s
national debt has fallen from 67% to
just below 40% of GDP. The benefit
of a lower national debt is that there
will be lower interest payments
when financing the budget deficit
(through loans or government
bonds).
By failing to protect workers and
provide employment: austerity
measures in the UK have failed,
resulting in an increase in the number of people claiming Job Seeker’s
Allowance and thus increasing the
budget deficit.
The planned restoration of the 50p
tax rate (by Labour) for earners
over £150,000 would have substantial benefits for the economy as it
will
reduce the national debt
(£10bn more government revenue)
and can be redistributed to those
who need it. Redistribution of income should improve the economy
as working class people have a
greater Marginal Propensity to Consume (MPC), so are more likely to
spend money when they receive it,
which is great for the economy.
which means ‘neither too much nor
too little, but just about right in the
middle’. In the UK, we are fundamentally greedier, or ‘capitalist’ one
might say. Proposing a steep progressive income tax in the UK, may
have negative impacts in the UK,
such as more tax evasion.
Scottish Nordic Reform?
Government Pension Fund to become the largest sovereign wealth
fund in the world at $664 billion and
continues to grow. This amounts to
$132,800 per person.
These policies should be influential
in how Scotland should control its
£1.5 trillion oil reserves and
improve pensions in Scotland.
With the upcoming referendum in
Scotland, the Nordic Model becomes increasingly important to
guide Scotland to prosperity after it
gains independence. The SNP
promises to invest £690 million over
three years on only health, education and homes. This will follow the
path of the Nordic Model, increasing labour productivity, which
will attract foreign investment
creating jobs.
All of these nations are comparable
to Scotland – they all have small
populations spread across large
territories, long coast lines and a
traditional dependence on maritime Income inequality in Scotland will be
activities e.g. fishing.
reduced by abolishing student fees
Breaking away from a political union and restoring grants for over 20,000
would allow specific policies made students from low income houseby the Scots, and for the Scots. At a holds. This will improve social mobilmicro-economic level specialisa- ity in Scotland.
tion is key to increasing productivity
and reducing bureaucracy is imThe UK should use the Nordic Mod- portant in order to improve efficienel as a basis of reform. However, cy.
we must note the cultural differ- Norway’s sustainable extraction of
ences between the UK and Scandi- oil from the North Sea occurs due to
navia – Scandinavian people do not its large corporation tax for foreign
live beyond their means and have a investment, preventing the Tragedy
sense of collectivism. In Sweden, a of the Commons from occurring.
common term used is ‘lagom’ Effective management allowed its
With people dying at this ٕ