Iceland has been known for its hardy self confidence ever since the days of its Viking ancestors, which is why they are ultimately tough and resilient and quick to get up and move on when something isn’t working. In its isolation and natural aversion to mainstream economics, Iceland doesn’t always play by Western rules, allowing for it to grow a sense of economic rhythm and national pride as well as peaceful and liberal economic policies for the bettering of its citizens, even in the face of catastrophe. The inhabitants of Iceland, who claim to be the “best í heimi”, or the “best [country] in the world”, aren’t just full of themselves--their equality-oriented policies, self-sufficient economic decisions in the face of disaster, and resilience from years of independence and isolation speak for themselves. America, take notes.
First off, it’s geography--Iceland’s natural isolation on its tiny northern island creates a natural sense of self-sufficiency, which inadvertently contributes to their sustainable economy. Basically, Iceland is happier and more successful economically due to its resilient position. Unlike countries such as Japan and the United States, which rely mostly on imports from countries like India and China, Iceland only imports the external resources it does because it has the money to do so. Iceland could actually become entirely self-sufficient if it wished to, especially in terms of natural power. By utilizing the hydroelectric and geothermal power found copiously in sources all over the country, 85% of Iceland’s energy is provided naturally, meaning they don’t rely as much on foreign oil imports and can focus their money on providing products for other consumer demands at a lower opportunity cost.
But Iceland’s prosperity isn’t due to just some chance geographical factor: in facing economic crises with mixed-market policies and innovative thinking, the country takes the lead along with its Scandinavian neighbors in solving the debt crisis. Back in the 1980s, Scandinavian economic systems were scoffed at by the Western world for being unworkable, but the fact of the matter is, Scandinavian Europe has been extremely notable in rising ahead over the past twelve years and conquering their monetary issues, while the United States still remains over 16 trillion dollars in debt, and that number keeps rising by the year.
So, what’s Iceland’s secret? Back in 2008, their economy crashed along with much of the rest of the world, but unlike the United States, which gave more money to the banks in hopes that they would solve the issue, Iceland allowed their corrupt banking system to crash and fail, forcing banks to pay their way out of trouble instead of forcing the burden on taxpayers. This allowed inflation rates to stay stabilized, avoided market failure, and kept consumers happy when supplies did not waver. And to keep a crash like this from happening again, Iceland employs low tax rates, uses government money for social protection, and can proudly say their economy is faring better than America’s, and most of Europe as well.
Perhaps it isn’t too far-fetched to say that Iceland’s policies are keeping the country above high water while the rest of the world flounders, but there are other traits this little island excels at--Iceland’s equality-oriented policies also assist the economy in running as best as it possibly can. For example, though island runs on a mixed-market approach and there is a lot of governmental control, the people are given through this method many benefits that other countries simply do not have: equal wages no matter who you are, universal health care for all citizens paid by taxes, free prenatal care leading to low infant mortality rates, a 100% literacy rate boasted by free public schooling, and one of the highest life expectancy rates on the planet. And all of this can be traced back to equality-oriented economic policies.
There are some who might argue that America is a much richer country with significant benefits Iceland cannot claim, but in turn, the United States’ so-called “riches” do not truly economically assist its people in the same way Iceland can manage. Sure, America has the highest personal earnings in the world as well as the largest gross domestic product by far at over fifteen trillion, but that doesn’t change the sixteen trillion dollars in debt our country bears, forever weighing it and its economy down. Iceland’s debt is at least a billion dollars less than its GDP, allowing for economic growth and sustainability, and after solving their 2008 crisis, their baking debt is almost nonexistent.
And perhaps prices in America are much lower than they are in Iceland, including consumer prices, rent, and utilities, but this is only because of Iceland’s significantly lower tax rates, and upon further inspection, does not account the Icelandic people for nearly the amount Americans are paying in their taxes.
(Iceland: ISL)
Ultimately, it is well within Iceland’s reach to claim their title as the “best country in the world”, or at least, economically better than America, along with its similar Scandinavian neighbors. This tiny island has figured out a way to solve their bank crashes, provide the people with equality-oriented economic policies, and soar past debt issues that plague the western world. Perhaps it is America that holds itself on too high a horse, and perhaps it is time for a change.
Works Cited:
Carlin, John. "No Wonder Iceland Has the Happiest People on Earth." The Guardian. 18 May 2008. Web. 6 Mar. 2015. <http://www.theguardian.com/world/2008/may/18/iceland>.
"Cost of Living Comparison Between United States and Iceland ." Cost Of Living Comparison Between United States And Iceland. Web. 6 Mar. 2015. <http://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=United States&country2=Iceland>.
"How We Do It Over Here: Iceland vs. America." How We Do It Over Here: Iceland vs. America. Web. 6 Mar. 2015. <http://www.dailykos.com/story/2012/12/04/1167273/-How-We-Do-It-Over-Here-Iceland-vs-America>.
"Iceland's Stabilized Economy Is A Surprising Success Story." Forbes. Forbes Magazine. Web. 6 Mar. 2015. <http://www.forbes.com/sites/traceygreenstein/2013/02/20/icelands-stabilized-economy-is-a-surprising-success-story/>.
Lavine, Robert. "Iceland: Superlative Happiness on a Cold Little Rock." The Atlantic. Atlantic Media Company, 11 Aug. 2012. Web. 6 Mar. 2015. <http://www.theatlantic.com/health/archive/2012/08/iceland-superlative-happiness-on-a-cold-little-rock/261005/>.
"Top 10 Policies That The United States Could Learn From Iceland." Top 10 Policies That The United States Could Learn From Iceland. Web. 6 Mar. 2015. <http://www.endalldisease.com/top-10-policies-that-the-united-states-could-learn-from-iceland-2/>.
"Top Economists: Iceland Did It Right … And Everyone Else Is Doing It Wrong."Washingtons Blog. Web. 6 Mar. 2015. <http://www.washingtonsblog.com/2012/08/top-economists-iceland-did-it-right-everyone-else-is-doing-it-wrong.html>.
This was a really interesting topic and I love learning more about Iceland because I feel that myself and other people really do not know much about Iceland, and especially in terms of the economics of Iceland. I thought that your argument had valid points, and good statistical information to back your thesis up. But at the same time I am not sure that I agree with all of your points, while it is good that Iceland doesn’t have to import much of their goods including oil, I feel that the US is at an advantage but using imports and exports to drive their relationships with other countries and by doing so creates investors and long term marginal benefit that outweighs the marginal cost. I also feel that the debt that the US has accumulated is not only our problem, but others problems as well. The people that we owe tons of money to are a much at fault as we are. But at the same time these countries are now more invested in our success and ensure that we maintain stability. In a way the economics of the US has created more globalization, while it seems that Iceland is more introverted. Although the graphs and data don’t lie, Iceland on paper is one of the best countries in the world in terms of economics; I would suggest looking at other factors like crime rate, literacy rates. infant mortality, life satisfaction rates etc. to actually get an accurate result. I felt that you blog post was very well written and was very interesting though, so nice job!
ReplyDeleteReally interesting topic choice, not something I expect to find when I go to the Economics blog. Your research shines through the whole piece and gives an edge to your statements and analysis. Really good job.
ReplyDeleteBy far, one of if not the best posts on the blog I've read, especially in regards to writing and support and information. Iceland is a very good subject to explore economically, considering how there are very few places similar to it. It's self-sustainable, which is directly correlated with the geothermal and hydroelectric energy the island provides. While it would behoove America to heed the advice of its international peers, it cannot operate exactly how Iceland does, given the immense involvement our country has in the world economy, as well as many international interests that Iceland does not have. As you stated, the Scandinavian countries are definitely pulling ahead in the world, and it would be wise for some other countries (cough America cough) to learn from them. America too has the potential for self-sufficiency in terms of energy, but there are some unfortunate factors precluding the achievement of self-sustainability. Aside from that, I do agree with Kaitlin in that we don't hear much about Iceland or the other Scandinavian countries and would argue that we should hear more, what with their rapid advancements and efficiency. But I must say, very nice post!
ReplyDeleteMakes me want to move to Iceland... While socialism eliminates poverty it destroys innovative thinking and hard work. Why would someone want work harder or invent something if they will not be rewarded more? I really like how the government puts their money back towards the people. The 100% literacy rate is impressive though. Sounds like a nice place to live.
ReplyDeleteWhile the United States is far from perfect and it is true that Iceland clearly has better economic policies, I would say it would be difficult for the United States to survive the same way Iceland has. This is mostly because of the rich economic resources that Iceland possesses. If the US were to take on the policies of Iceland, we would still have to import products that we so desperately need, especially considering Americans has one the best qualities of life in the world. This means we want products that cannot be produced in the US, at least not at the prices we want. Which might just be a problem with US culture, but still isn't a problem that can be fixed with Icelandic economic policies. I feel like the reason Iceland is so successful because they don't have to import much because of how resource rich the island is. So I feel like we can take a few notes from Iceland, but we could never shift entirely onto how Iceland runs its economy.
ReplyDeleteIt's rather perplexing that Iceland was able to avoid such a potentially large economic crisis, where as the United States which is nearly twice the size in population as well as physical size is still facing ramifications from trying to stop their economic issues. Yet, I don't really feel that the United States can strive towards becoming similar to Iceland. By no means am I stating one country is better than the other, but the circumstances and resources each country have is what limits their abilities to change or alter as a country. While of course this would be possible it would take a rather long period of time, especially if this transition is desired to be peaceful.
ReplyDeleteThere may also be the factor how when the USD depreciated, other countries became more able to purchase US goods, therefore allowing them to have relatively more goods, thereby offsetting the effects of any recession they would have faced. Another factor is how in the upper European countries decide to run taxes, as instead of having to mess around with tarrifs, they can much more easily tax goods via other methods. If the US were to implement more VAT taxes and other types of taxes, these problems very well may have not existed as much
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