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The New Nordic Model

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Countries everywhere face daunting socioeconomic challenges. Inequality is rising. Cohesion is weakening as societies undergo identity crises. And as demonstrations from Santiago to Paris to Beirut show, trust in government is in decline.

In their search for culprits, many voters and politicians blame trade, technology, and migration. But this leads to a seemingly unsolvable puzzle. If people are increasingly angry; if they think that no good can come from trade, technology, or migration; and if they don’t trust their governments or fellow citizens to provide a solution, then what can be done?

The Nordic countries—Denmark, Finland, Iceland, Norway, and Sweden—show that there is a way. The Nordic model that they have pioneered over decades has a few basic components: a welfare state with free, high-quality education and health care; a “flexicurity” model of employment, which combines flexible hiring and firing with strong social security; and open markets with low tariffs and minimal barriers to trade.

But along with these well-known attributes, the Nordic model has another, less appreciated element: a constructive nationalism. This nationalism is defined not by place of origin or color of skin but by one’s contributions to the well-being of the community. Aided by positive economic trends, this particular mix of elements has made for a social and governance model that reconciles growth and dynamism with equality and social peace. Understood correctly, the Nordic model holds important lessons for the rest of the world.

Thanks to their wealth, low inequality, and well-functioning welfare states, the Nordic countries have long been held up as examples for other industrialized nations. Ideologues have often pointed to a single factor in their success—expansive social support, on one end of the spectrum, and free trade, on the other—and tried to extrapolate from it a label for the entire system. But the model is less about ideology than it is about a core commitment that has brought inclusive and sustainable progress.

In recent years, that commitment has entailed three basic elements—a socioeconomic model, a societal attitude, and pragmatism when it comes to managing macroeconomic and technological trends. The socioeconomic model has three pillars: free universal health care, quality education, and affordable housing. These three pillars are neither random nor contested: they are almost universally recognized, both in the Nordics and by scholars around the world, as the key guarantors of equal access and opportunity. Putting them at the center of public policy is thus of paramount importance.

The socioeconomic model also includes an approach to labor markets known as flexicurity. The term’s contraction........

© Foreign Affairs