Now It’s Europe Too

In my last Profit Confidential article, I wrote about Canada losing the race against emerging economies. As it turns out, we’re losing it against Europe too. According to a recent global survey of 125 countries and more than 11,000 businessmen conducted by the World Economic Forum, Canada and the U.S. are falling behind on the competitiveness scale. Canada dropped from the 13th position to 16th, while the U.S. is no longer number one, but number six. In contrast, four European countries are now front runners–Switzerland, Finland, Sweden, and Denmark.

According to the survey, Switzerland and the three Scandinavian countries have better institutions, are much more competent in macroeconomic management, are huge promoters of new technology and innovation, and, more importantly, all four countries foster world-class education systems.

I’m certain the survey is right about the first three key strategies employed by the top four, but I can certainly attest to the value of the last one–education. As a sophomore, I entered a writing competition, which I won and which earned me a full semester scholarship to study Henrik Ibsen at the University of Bergen, Norway. Granted, Norway is not among the top five countries on the competitiveness list. In fact, it is number twelve. But, the principle still applies. Let me show you how.

Winning that scholarship was not just an amazing academic opportunity, but it also gave me a great insight to how education is viewed, not just in Norway, but in other Scandinavian countries as well. For starters, post secondary education is more or less free. Not only that, students at the Bergen University actually receive bursaries to go to universities, which have to be paid back only if a student does not graduate. Imagine that, in Norway, the state pays their students’ way through school. This was made possible after Norway established the State Educational Loan Fund in 1947, which really does not “loan” money to students, but rather streamlines it from the state to those who wish to pursue higher education.

I can already hear the uproar, “By the way, where do you think the money is coming from!” And, oh yeah, the dreaded answer is– from taxes; however, not predominantly from property taxes or income taxes, as it is the case in Canada. The concept was quite appealing that I had to read up on it. My “Reader’s Digest” version is that some a portion of the money is coming from taxes on goods and services on specialty items, such as cigarettes and alcohol. Other luxury items, such as cars, are also heavily taxed.

The way I see it, Norway is bound and determined to educate its citizens. If people have to indulge in things that are potentially harmful, such as smoking and drinking, at least the state forces them to “pre-pay” for their mistakes. It is also a better way to have people rethink their life choices when it hits them where it hurts the most–wallets. But, I digress!

Aside from taxes on sales of goods and services, Norway is also collecting money from corporations. As a country rich in natural resources, Norway prudently decided to force corporations profiting from what belongs to every Norwegian to share the wealth through high corporate taxes. Of course, there are other intricacies allowing for such a system to work, but explaining them would seriously extend the scope of this article.

My intention was to offer Norway’s example as an excellent prop for Canada to simplify things, to examine different macro and microeconomic strategies, and to think out of the box, however strange that may feel. For the New World, North Americans are very much set in their old ways, believing that a socially aware state is a state equated with anarchy. Well, in my view, Scandinavian countries are a clear example that it doesn’t have to be so, not by a long shot.