Nicholas Kristof, What We Should Learn From Nordic Happiness, NYTimes, July 4, 2026.
You want security, health care and the American dream? Look to Scandinavia.
“We actually live the American dream,” Jens Stoltenberg, a former prime minister of Norway who is now the finance minister, told me. “The American dream, it’s more reality in the Nordic countries than in America.” Image
Skeptics have argued that generous welfare benefits and the resulting high taxes have held back the Nordic economies. Perhaps a bit. “Farewell, Nordic model,” The Economist wrote in 2006. But Norway is now richer than the United States per capita, and Norwegian workers are more productive than American workers, with higher output per hour. Scandinavians live longer than Americans, and people are happier. The five Nordic countries — Denmark, Finland, Iceland, Norway and Sweden — all rank among the six happiest countries in the world in the World Happiness Report, based on Gallup polling.
Yet the Nordic countries are themselves facing significant challenges, including fiscal pressures, immigration, widening inequality and perhaps some breakdown in the social consensus. Some doubt whether the model can survive here, let alone be exported to countries that are larger, less homogeneous and more suspicious of taxation.
On the other hand, it’s not an alien model but, for Americans, a path we once blazed. Lawrence Katz, a Harvard economist, told me that the United States and Scandinavian nations pursued similar policies from the 1940s through the 1960s. That was the period when the United States rapidly expanded educational opportunities, had strong unions and, in the 1940s, experimented with universal child care. The post-World War II period is sometimes thought of as a golden age, for the economic pie both grew and was sliced more equally.
“The U.S. in the mid-20th century was sort of like Scandinavia today,” Katz said. But America changed course in the 1970s and eventually embraced the Reagan revolution.
One reason for the retreat, I’ve argued, was racialized political rhetoric that characterized some safety-net programs and investments in opportunity — used by Americans from all walks of life — as handouts primarily benefiting Black people, with a particular emphasis on caricatures of the “welfare queen.”
Three misunderstandings:
When Americans discuss the Nordic system, they sometimes suffer from three misunderstandings.
The first is that these are socialist countries. While they are often run by social democrats, they have market economies. Sweden did experiment in the 1970s and ’80s with quasi-socialist policies, but the upshot was an economic crisis. As Johan Norberg, a Swedish writer, put it: “We have been socialists and we’ve been successful — but never at the same time.”
The second misunderstanding is that because of their strong welfare systems, citizens of Nordic countries lie around while collecting benefits. Sure, some people do manipulate the system, but the labor force participation rate is higher in Nordic countries than in the United States.
The third is that in the case of Norway, its success is mostly a reflection of its oil wealth. Oil has given Norway a nice cushion, but the country has also managed the cushion unusually well — putting it in what is one of the world’s largest sovereign wealth funds. Moreover, according to Geir Axelsen, the director-general of Statistics Norway, the increase in female labor force participation in Norway since the early 1970s appears to have added roughly as much to the country’s gross domestic product as oil has.
How it came about:
To understand how the Nordic socioeconomic system evolved, I dropped by the office of Kalle Moene, an economist at the University of Oslo. The system began in the 1930s, he said, when workers in thriving sectors of the economy agreed to hold down their wage demands to support sectors that were struggling.
That principle — sacrificing to help those not doing so well — still underpins the region’s business model. Norwegians who are better off are willing to give up some income to ensure that people in blue-collar jobs get by.
Moene argues that this wage compression promotes innovation and dynamism by boosting the profitability of growth industries and by lowering profits in lagging industries.
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