Which Countries are Doing a Good Job Managing Their Economies?

Question: Please name some countries who seem to be doing a good job of managing their economies and social programs. What are they doing right and what can we learn from them?

Paul Solman: Superb question. But what does “good job” mean? Given all the controversy over using output (GDP) as a measure of national success, the vogue in recent years has been to augment it with something that more nearly measures “happiness.” Tough to do, of course, just as you might imagine. Self-reported happiness? Happiness when, and for how long?

But methodology conundrums aside, a few countries consistently make it to the top of the happiness lists, and also are high up in wealth generated per person (GDP per capita). Mainly, they’re the Scandinavians: Denmark first and foremost. So what is it about Denmark that we might learn from?

Well first off, a few problems: Denmark, at 5.5 million people, is pretty darn small: less than 2 percent the population of the United States. Second, it has nowhere near the percentage of citizens whose families came from elsewhere — outside the country, that is.

Those qualifications out of the way, there’s one especially surprising economic fact with regard to Denmark and its Scandinavian siblings: the high ratio of taxes (and government spending) to GDP. Denmark’s tax burden — 50 percent or more — is just about the highest in the world. It also has just about the world’s lowest “gini coefficient,” a measure of economic inequality and inequality. As we’ve reported with regard to the work of British epidemiologist Michael Marmot, inequality is a pretty reliable predictor of unhappiness.

I leave the inferences for others to draw.