Free Market Iceland

"Iceland is known as the Nordic Tiger because of rapid economic growth," writes Cato's Daniel Mitchell, "much of the nation’s prosperity is the result of free-market policies." When I visited Iceland it struck me as more a Scandinavian social democracy than a free market paradise. And indeed the OECD stats back me up. Here's a few countries compared by how big a share of their economy is taken in as tax revenue:

oecdstats.png

Iceland features somewhat lower levels of social spending than do the other Scandinavian countries, but it's still a really high level especially when you consider that pretty much none of that tax revenue is going to the country's non-existent military. I would love to see the US become more like Iceland -- flexible labor market, high taxes, and generous public services sounds good to me. But I'm pretty sure Cato would freak out if I proposed a 50 percent increase in the tax share of the American economy. Meanwhile, in the vein of promoting free market policies for Iceland, let me observe that their agricultural policies are absolutely insane -- trying to create a viable agricultural sector on a sub-arctic island with no soil and high wages is ridiculous.

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Matthew Yglesias is a former writer and editor at The Atlantic.

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