Nima Sanandaji, Welfare dependency and social poverty

Of course, young people who have been given early retirement are a small proportion of the total excluded from the Nordic labour markets. Also for other groups, economic and social marginalisation can follow welfare dependency. As the Nobel laureate Robert Fogel has suggested, poverty exists in modern societies to a large degree because of an uneven distribution of ‘spiritual resources’ such as self- esteem, a sense of discipline and a sense of community (Fogel 1999). These problems are exacerbated when individuals who could otherwise be self-reliant become dependent on public support.

In Denmark, the notion that welfare policies have created overuse of and entrapment in the benefit systems is acknowledged even by the ruling social democrats. Bjarne Corydon, the country’s social democrat Finance Minister, made international headlines in 2013 by discussing the need to reduce the generosity of transfer systems in the country. Corydon explained that it was no mere coincidence that the government was reforming taxes, welfare aid and the system for early retirement: ‘The truth is that we are in full swing with a dramatically positive agenda, which is about strengthening and modernising the welfare state, and the result of the change will be a much better society than the one we have today’ (Politiken 2013). The Danish Finance Minister’s vision makes sense, even from the perspective of a social democrat. If reforms can lead to less dependency on welfare benefits, it will be possible to strengthen both economic development and the funding of welfare services such as health care or education. More importantly, social poverty will be reduced when people move towards self-reliance.

The perverse effects of welfare systems coupled with high taxes and rigid labour markets are clearly seen also in Norway. The most generous Nordic welfare system has created a class of socially poor. In the article ‘The confessions of a “welfare freeloader” ’, published in the daily paper Dagbladet, a young man wrote in 2012 about how he had been supported by welfare for the last three years, although he was vital and in his prime years. In this, he was not alone: ‘I know several people – talented, gifted people – who do not take a job. They do not do much else either, seen from a societal standpoint. No studies, no clearly defined plan for the future and no cunning plans to create wealth of any kind. The interest to “participate” or to “help” is minimal within this group, and poses no motivation to talk about.

The feeling of responsibility when it comes to an abstract entity as “society” is low’ (Dagbladet 2012).

The aim of welfare states is to lift people out of poverty, to provide social security nets and basic welfare services. In many ways Scandinavian societies have succeeded in these fields. But the move from small to large welfare systems has also created social poverty, even among otherwise healthy and young individuals. This is simply not in line with the ideals of a good society. More welfare is not always better welfare.


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