There was an interesting article in Fréttablaðið a couple of days ago called Endurmat í skugga kreppu [Re-evaluation in the Shadow of the Kreppa] by Sverrir Jakobson, which totally turned over a lot of my latent assumptions. I say latent because I wasn’t really aware that I had those assumptions, but as soon as I read the article, I realized that I did.
In the article Sverrir maintains that the so-called “prosperity” years from 1990 onwards – those years when Davíd Oddsson was Prime Minister and was implementing his economic liberalization policies, including widespread privatization – did not contribute significantly to the advancement of Icelandic society. The years from 1945-1990, on the other hand, accounted for unprecedented advances for the Icelandic nation – despite those “evil” economic restrictions in the 70s, major inflation in the 80s, and suchlike.
During this period [1945-1990], the population of Iceland doubled, while national revenue per capita tripled. This economic growth happened despite the fact that the predecessors of the entrepreneurs that are currently involved in overseas expansion did not enjoy the same tax benefits or other privileges that they do, courtesy of the state. To a large extent it [the economic growth] was funded by the state banks, which it later became fashionable to criticize. During this time Icelanders grew taller than ever before and lived longer. The average life expectancy of newborns increased by nearly nine years and infant mortality decreased by 85%. This was achieved, among other things, through public investment in health care and other preventative measures. The number of doctors per inhabitant doubled, and Icelanders became a nation with one of the longest life expectancies in the world. General secondary education was built up in an amazingly short period of time in a country where compulsory education was still a novelty. […] The link between education and economic growth was then explained to the country’s politicians, who were all in agreement to strengthen the public education system.
All this, Sverrir explains, was more or less financed through income taxes, by workers who denied themselves regular wage increases. Surprisingly, day wages [real wages] of labourers were higher in 1945 than in 1985. And as economic growth continued, Icelanders paid more taxes, but also received an increasing number of services from the public sector. However:
After 1990, authorities began to emphasize that a certain group of people should be able to enjoy these developments more than others, established public firms were privatized and handed over to capital owners to play with. This was meant to increase prosperity, in line with the doctrines of neoliberalism. Growth continued in Iceland for a time, but it was no more than what had been for the duration of the 20th century. The difference, however, was that an increasingly large share went to a small group of tycoons. These individuals were admired by the media and led the overseas expansion, partly through credit supplied by the newly-privatized state banks.
In other words, a case study of the dismantling of an egalitarian society and the increasing gap between rich and poor. And ultimately, of course, the collapse of free-market capitalism. Perhaps we should just be grateful for small mercies: our spectacular economic collapse.
Pretty much the same weather as yesterday – cloudy, with the sun making brave attempts to break through. There’s a cool breeze, with temps of 10°C [50F]. The sun came up at 3.16, will set at 11.38.