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MR. MICHAEL CEMBALEST: Good morning and welcome to the Eye On The Market podcast. This one's a travel log. With the first Democratic debates coming up this week, I thought it was a good time to share this analysis.


At the Democratic Party Convention in California earlier this month, the former Governor of Colorado was booed for saying that socialism isn't the answer, and the crowd there has company. Recent surveys of college students in the United States are shown as having a more favorable view of socialism than of capitalism. And when they're asked about some of the failed 20th Century socialistic experiments, the respondents say they're talking about Democratic Socialism instead. 

Okay. Fair enough, but let's take a look at where Democratic socialism is used elsewhere before the United States adopts it and, that's where, of course, it gets murkier because such societies are not that easy to find. Some people point to the Nordic countries as Democratic Socialism in action. 


And just to give you a refresher, the Nordic countries are, for our purposes, Sweden, Finland, Norway, Denmark, and the Netherlands. They have an average population of just about 9 million and a GDP per country that averages about 5-percent of U.S. levels, and are very ethnically homogenous and more closed to immigration than the United States. 


Anyway, while some people point to these Nordic countries as Democratic Socialism in action, the Nordics themselves, many of them disagree with that. The former Prime Minister of Denmark said some people in the United States associate the Nordic model with some kind of socialism. Therefore, I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.


Our models backed him up. While Nordic countries have higher taxes and greater redistribution of wealth than the United States, the Nordics are just as business friendly as the United States, if not more so. And examples include greater business freedoms in the Nordic countries, freer trade, even before the Trump tariffs, more oligopolies where companies have large market share, lower levels of state control over the private sector, and receptivity to foreign direct investment, et cetera, et cetera. 


And so--and as for the tax issue, while the Nordic countries may raise more taxes than the U.S., the gap results from regressive VAT and consumption taxes, and Social Security taxes, and payroll taxes, rather than from having much higher progressive income taxes.


So the bottom line is you can copy the Nordic model, if you like, but understand that it entails a lot of capitalism, a lot of pro-business policies, a lot of taxation on the middle class with respect to their spending and their wages, minimal reliance on corporate taxation, roughly the same as a percentage of overall taxes as the U.S., and plenty of co-pays and deductibles in its healthcare system. For all of the discussion about Nordic healthcare systems, which are excellent, they are quite different from anything related to Medicare for All proposals in the U.S., which do not have co-pays and deductibles.


So with the Nordic countries firmly rooted in capitalism and free markets, if I wanted to find an example of Democratic Socialism in practice, I'd have to look elsewhere. So I broadened my search and I looked for countries that relative to the U.S. are characterized by higher tax rates on corporations and individuals, more government spending, more worker protections restricting the ability of companies to hire and fire both domestic and foreign labor, less flexibility for companies to set wages based on worker productivity, more reliance on regulation, more constraints on real estate development, more antitrust enforcement, more state intervention in product markets, a shift away from a shareholder centric business model, more protections for workers in domestic industries through tariffs, and more constraints on capital inflows and outflows. 


I couldn't find any country that ticked off all of these Democratic Socialist boxes, but I did find one that came close. Argentina, which has defaulted seven times since its independence in 1816, which has seen the largest decline in its standard of living in the world over the last century, and which is on the brink of political and economic chaos again in 2019. 


So that's where my journey ended, halfway around the world from Scandinavia, where it began, and my conclusion is that a real life proof of concept for a successful Democratic socialist society hasn't been really--has not been found yet. 


And again, to reiterate, if you like that Nordic model, understand that it's heavily reliant on middle class taxation, not a lot of corporate taxes, plenty of co-pays and deductibles in healthcare, and a very business friendly private sector.


And so this month's Eye On The Market has some charts and tables that substantiate all of those points. 


FEMALE VOICE: Michael Cembalest’s, Eye On The Market, offers a unique perspective on the economy, current events, markets, and investment portfolios, and is a production of JPMorgan Asset and Wealth Management. Michael Cembalest is the chairman of Market and Investment Strategy for JPMorgan Asset Management, and is one of our most renowned and provocative speakers. 


For more information, please subscribe to the Eye On The Market by contacting your JPMorgan representative. If you'd like to hear more, please explore episodes on iTunes or on our website. This podcast is intended for informational purposes only and is a communication on behalf of JPMorgan Institutional Investments Incorporated. 


Views may not be suitable for all investors and are not intended as personal investment advice or as solicitation or recommendation. Outlooks and past performance are never guarantees of future results. This is not investment research. Please read other important information which can be found at www.jpmorgan.com/disclaimer-eotm.

鑑於2020 年的美國總統大選民主黨首場辯論會即將於本周開始,這篇分析可謂正合事宜。在月初召開的加州民主黨大會上,前任兩屆科羅拉多州州長因為宣稱「社會主義不是我們的答案」而被公眾大喝倒彩。事實上,這次並非單一事件:據近期調查顯示,美國大學生贊同社會主義多於資本主義。當被問到二十世紀嘗試推行社會主義卻遭遇滑鐵盧時,受訪者堅稱他們所指的是「民主」社會主義。這種說法確實不無道理,但是在全球最大的經濟體實行民主社會主義之前,讓我們先了解在民主社會主義在世界其他地方的運作方式吧。可惜的是,民主社會主義的運作並非一目了然:奉行民主社會主義的國家世上難尋。


總結:如果您願意,您也可以效仿北歐模式,但您要明白,這個模式需要推行「大量」資本主義和親商政策, 對中產階級的支出和工資徵收「龐大」稅項,對企業稅收的依賴程度極低,以及醫保體系中病患者需要共同承擔高昂醫療費用和免賠額。



誰在為北歐國家的社會福利項目埋單? 每一個人,尤其是中產階級



  • 個人和企業稅率較高,政府開支較高
  • 限制公司僱用和解僱能力的工人保護措施更多,公司根據工人生產率設定工資及/或僱用外國勞工的靈活性較小
  • 更加依賴監管法規,對開發房地產市場設有更多限制,更多反壟斷執法情況,國家對產品市場施加更多干預;而且偏離了以股東為中心的商業模式
  • 通過徵收關稅和實施非關稅壁壘給予工人和國內產業更多保護,對資本流入和流出設置更多限制