One of the fundamental intuitions of economists is that there are difficult trade-offs to everything you do â in life and in policy. I think this is overblown often â that often there are âvirtuous circles;â full of mostly good things and vicious ones. As Fred Argyâs been at pains to argue, we seem to have two models of successful economic growth â and one has more odious trade-offs than the other.
Thereâs the free market model of the US. Itâs not all that free a market by the standards of a strong libertarian, but itâs much freer than lots of European economies. (Well even here this is something of a simplification. The US is regulated to buggery in lots of silly respects â try catching a taxi across several counties in New York and youâll see what I mean. But at least the US has lower total tax take and a freer labour market than most if not all Western European countries.)
Those two things (and the fact that itâs such a bloody big market) give the US economy a lot of dynamism. But there are plenty of people whoâd argue that the greater state expenditure on things like education in Europe generates a lot of good things that the US misses out on. (It used to be productivity, but the US has had plenty of that of late too â more than the Europeans). But the US also has a nasty underclass. Itâs alive and well â though probably living a more genteel existence in parts of Europe. But in other parts of Europe â in the Nordic countries in particular â the huge sums spent on âhelping and hasslingâ people into work and upgrading their skills and the degree to which they subsidise education generally provides one explanation as to why they might be able to perform creditably with a much more equal distribution of income than the US.
This is an argument for state intervention not just on the grounds of fairness but also on the grounds that properly done it can actually grow the pie â or at least involve pretty minimal sacrifices to the size of the pie. You might end up with some inefficiencies from higher tax rates but theyâre somewhere between offset and outweighed (depending on your prejudices) by the additional skills of your people.
Anyway, it occurred to me that there was a variation on this argument when I visited this post a while back on Crooked Timber. Remarking on the fact that the Netherlands had managed to find itself in the top spot in a UNICEF funded comparative study of child wellbeing in rich countries (pdf) the author agreed that Dutch society was indeed very âchild-centricâ â from government policy right down to community mores. This seems to be something broadly replicated in the Nordics generally. Hereâs the list of countries in order of their child welfare achievement.
Australia is not there because some data was unavailable for the series, but where it could be measured it was somewhere near the middle. Now I guess the first reaction of some will be to challenge UNICEFâs methodology but though the aggregate measure involves â well â aggregating a bunch of rankings which canât really be easily compared, the things they look at seem reasonable and not very biased as such measures often are in alternative ‘wellbeing’ indexes.
Thus the categories that are measured are Material well-being, indicators of Health and safety, Educational well-being, Family and peer relationships Behaviours and risks and Subjective well-being (kids responses to âhow happy are you?” questions). I havenât looked it all over that closely â so perhaps you can pick some holes in it, but the âcore samplesâ Iâve taken seem sensible enough.
Thus child safety â which Iâve just chosen at random – is measured by three indicators.
â number of infants dying before age 1 per 1,000 births
â percentage of infants born with low birth weight (<2500g.)
â percentage of children age 12 to 23 months immunized against
measles, DPT, and polio
â deaths from accidents and injuries per 100,000 aged 0 â 19
Something quite similar emerges from an OECD study on âthe Position of Youth in the Labour Market in OECD Countriesâ (pdf) â with the Nordics tending to have the lower scores on teenage NEET â not in education or employment.
(There are lots of good graphs in this paper, not all of which clearly support my hypothesis â as in the case of Figure 5 on long term youth unemployment, which as you would expect, tends to be best in less regulated labour markets.)
All this makes me think that maybe part of the Nordic economic success is their success with children. As most readers of this blog will know, early childhood development has become a new craze – an area in which both the left and the right ought to be able to come together to recognise itâs importance. As the Chicago economist whose done more than any to bring all this to our attention, Nobel laureate James Heckman puts it in his arresting little sound bite âSkill begets skill; motivation begets motivation. Early failure begets later failure.â Our lives are a classic case of ‘increasing returns’ with success in early childhood reaping rich economic rewards for the individual and for society and failure reaping horrible individual, social and economic suffering and failure.
As Heckman has shown, the benefits of good early childhood education â including a strong safety net of active programs for those most at risk â is a hugely worthwhile economic investment for the future (even when you measure some small sub-set of the benefits like lower imprisonment rates) quite apart from its greater fairness and broader contribution to wellbeing.
Anyway, Iâm no expert on this, but Troppo is frequented by such people, so Iâd be interested in their views. Is the success of the Nordics further evidence of the economic benefits of looking after kids well.
In the meantime, if by chance you find yourself behind a Rawlsian veil of ignorance and you get a peek on the other side of the veil, don’t pick being an adolescent in Japan.