What Makes a Social Democracy?

And why are the people who live in them so happy?

In my prior essay, Democracy Prevailed. Now What?, I talked about how, after the dust settled in the US after the elections, the question then became, what’s next?

As I pointed out, for the US to truly move into the model of what a modern day democracy looks like, and to end the scourge of Trumpism (with or without Donald Trump, as Trumpism has the potential to continue long after he is gone from the scene), it then needs to transform from its current state as a liberal democracy to become a social democracy.

There are plenty of role models for what a social democracy is like, as most of the world’s democracies are social democracies.

The difference between a social democracy and liberal democracy is that while a social democracy is concerned with the public good and making sure there is a strong social contract and safety net, a liberal democracy such as the US is solely predicated on freedom and rugged individualism.

The world’s social democracies are also the happiest nations on earth—and when you have many of your basic needs met, it sure does make for a happy life.

The idea of freedom and happiness as basic staples of American life derives from Thomas Jefferson’s immortal words that he etched into the Declaration of Independence.

He wrote that all men (not women, nor slaves for that matter) “are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness.”

The thing with Jefferson’s concept is that it intertwines freedom with happiness—that’s a hallmark of a liberal democracy, the concept that happiness can’t exist without freedom.

You would think, with freedom and happiness so deeply rooted as the prime directives for America, that Americans would be the happiest people on the planet.

But that’s hardly the case. The World Happiness Report, a publication of the U.N., clearly states otherwise.

The Report, which has been issued annually since 2012, looks at a number of factors in ascertaining the well-being and happiness of a nation’s citizens. It looks beyond GDP as a measure of happiness, questioning whether the relative affluence of a country’s population is the proper metric to tell whether people are happy.

Instead, social bonds and social cohesion are the important yardsticks; on the website for the World Happiness Report the researchers ask, “Should we consider some parts of our society to be ‘off bounds’ to the profit motive, so that we can foster the spirit of cooperation, trust, and community?”

Furthermore, the authors of the yearly report state that the most happiness-related trends are:

“The key findings are that people like living in communities and societies with less inequality of well-being, and where trust—of other people, and of public institutions—is high. People in high trust communities are much more resilient in the face of a whole range of challenges to their well-being: Illness, discrimination, fear of danger, unemployment, and low income. Just to feel that they can count on others around them, and on their public institutions, makes their hardships less painful, thereby delivering benefits to all, and especially those most in need.”

The countries that consistently rank the highest in the World Happiness Report are the social democracies, the countries that recognize the importance of government playing a central role in the welfare of its citizenry.

The top 15 countries in the latest World Happiness Report are: Finland, Denmark, Iceland, Switzerland, Netherlands, Luxembourg, Sweden, Norway, Israel, New Zealand, Austria, Australia, Ireland, Germany, Canada.

The U.S. has never been in the top 10 in any of the reports, and in the last few years it’s ranked 18th. It actually moved up two spots in the last year, being ranked 16th in 2022.

There are a number of factors that explain why the social democracies are ranked so high in the report. These include government/social support, less wealth and income inequality, higher levels of freedom to make life choices, strong levels of societal trust and social cohesion, higher positive levels of physical and mental health, and less stress and anxiety.

All these are hallmarks of social democracies.

In the liberal democracy of the US, with its libertarian philosophy of limited government, the end result is much less government/social support than the social democracies.

Along with that, there’s that pervasive attitude of rugged individualism, one that leaves people to fend for themselves.

These attitudes of limited government and rugged individualism leads to a focus on austerity, that the government can only help its people so much because of the concern that too much government assistance drives up the deficit, and the more money spent, the deeper the government goes in the red.

Meanwhile, the U.S. military budget, set at $840 billion for fiscal year 2023, is greater than the military budget of the next 10 countries combined; there’s no trace whatsoever of an austerity approach for the military.

It doesn’t matter that most people in the US are struggling to pay their bills, are deep in debt, have no or very little savings, are dealing with a worried load of stress and anxiety, and can’t afford to better their lot in life: the prevailing belief is that it’s not the government’s role to assist people and give them hope.

Meanwhile, social democracies, by virtue of their belief that it is the government’s role to assist people and give them hope, is the way to create a sane, compassionate, humane, just, happy, healthy, prosperous, free, and enlightened citizenry.

The US was actually the world’s first social democracy in the 1930s, thanks to the governmental policies of President Franklin Delano Roosevelt.

Roosevelt’s New Deal strategy offered a framework for using government to shape economic and societal outcomes and shift power to the people.

His policies continued even after he passed away, and continued to a lesser extent until 1980, when they were undone once Ronald Reagan became president.

After World War II, European countries were rebuilt, with the help of the guiding hand of the US, as social democracies.

Over the next number of decades, the social democracies of Europe developed their identities. Each country fashioned itself differently, but each had similar objectives: the well-being of its citizenry.

Some have been more successful than others, with the most successful iteration taking place in the Nordic countries—they are the exemplars.

How, specifically, is a social democracy created, you may wonder?

It’s all about social investment: a nation’s prosperity and its citizens’ happiness and well-being is directly correlated to the level of investment it makes in its people.

The social democracies invest around 50 percent of their GDP in social investment, which means the government is investing directly in its people.

The US, on the other hand, is the world’s richest nation in terms of GDP, yet it acts like a poor nation in terms of social investment.

The US invests only 20 to 25 percent of its GDP in social investment.

The social democracies are also prosperous nations in terms of GDP, but they are much more egalitarian in the way they share the wealth through the social investments they make in its citizenry.

While Americans stress about everything—the high cost of education, housing, day care, health care, getting married, having kids, and more, along with being overworked, having little sick and vacation time, not being able to afford to retire, and being deep in debt—Europeans have free education, low-cost housing, day care and health care, ample time off from work for vacations or maternity or paternity leave, and generous government support to help them during times of economic hardship.

Even McDonald’s workers in social democracies fare well.

Starting pay for burger flippers at McDonald’s in Denmark is $22 an hour, and along with that the worker gets six weeks paid vacation a year, life insurance, a year’s maternity leave, and a pension plan.

In addition, they get universal medical insurance and paid sick leave. To pay for all that, burgers at McDonalds cost about 27 cents more than their American counterparts. Meanwhile, in America, workers at McDonald’s start out at around $11 an hour and get very little in the way of benefits.

Danes pay an extra 19 cents of every dollar in taxes compared with Americans, but for that they get free health care, free education from kindergarten through college, subsidized high-quality preschool, a very strong social safety net, and they experience very low levels of poverty, homelessness, crime, and inequality.

Plus on average, Danes live two years longer than Americans.

It’s similar in all the social democracies. People don’t go bankrupt if they have a medical emergency; they won’t go deep in debt to go to college; they won’t be suffering from anxiety from worrying about making ends meet; and they won’t be living in the streets if they can’t meet their rent.

In the US, it’s seen as a negative if government helps out too much; it’s an affront to the do-it-yourself, go-it-alone mindset.

Americans are told over and over that the social democracies are “socialist” and “nanny states.” But these countries aren’t socialist or communist by Soviet Union standards. They are democracies that believe caring for its people is an imperative.

Their economic system isn’t brutal, unfettered capitalism; it’s one rooted in social cohesion for the masses. Capitalism does fine in social democracies, as there are many successful entrepreneurs and corporations; it’s just that it’s a more humane, compassionate approach, one based on looking out for the common good.

And in terms of the nanny state moniker, people have a lot more freedom in social democracies than in the US.

When your health care isn’t tied to your job, you have a lot more freedom to work where you want—you don’t have to keep working at a job you hate because of the health insurance.

When you have a lot more time off, you’re free to do whatever you want and explore interests that you wouldn’t be able to when you work endless hours with very little time off, as is the case in the US.

And when college is free, you’re able to decide what you really are called to study, as opposed to determining what field will allow you to make enough money to pay off your student loan.

With 80 percent of Americans living on the edge, living paycheck to paycheck, I think most Americans would willingly embrace the “nanny state” of social democracy and happily turn their back on the brutal capitalist model they live in.

They would also happily pay more in taxes in order to enjoy the return on investment they would get. It might take some education to get past the social democracy equals Soviet-style communism brainwashing that Americans undergo, but once they realize the joys of social democracy, they will never look back.