Last week I returned from driving around a country about
which people make many erroneous statements.
First, Iceland is not outrageously cold – its winters are about the same
temperatures as Chicago’s. Second, while
it has permanent glaciers, most of it looks green, actually rivalling Ireland. Third, while its population was once
unusually homogeneous, now only a minority are stereotypically blonde
Scandinavians. Fourth, while once poor
it is now hardly rustic, with a per-capita GDP, 30th in the world at
$46,100, fitting in with others nearby, one spot above Denmark’s and four below
Sweden’s.
Despite a low share of natural economic resources
(world-class scenery doesn’t quite count), Icelanders have done, in many ways,
an outstanding job with their country.
In 2015, it was ranked the world’s 13th most developed by the United
Nations, down from first in the world, soon before their three-year political
and economic crisis, in 2007-2008. It has universal health care, the fourth
highest life expectancy, lower smoking and obesity rates than in most of Europe,
and unusually low pollution. In 2015 it
had almost 1.3 million foreign tourists, four times the resident
population. For those who like that sort
of thing, Iceland also has one of the lowest rates of economic inequality, and
is informal enough that their people still have, in effect, no last names. I can personally attest that it has its share
of gravel roads, but most of them and all of its paved ones seem in excellent
condition. Taxes are not obscene, and include
a flat 22.75% on personal income, only 18% on corporate, a value-added tax
(VAT) of 11% on food, room rentals, and other things consumed by humans, and a
24% VAT on everything else. Unemployment
was last seen at 3.1%. Their government
aggressively dealt with financial transgressions during their crisis, and
required some bankers to make up a part of their microscopic total of 147
prisoners, a real reason why their currency, the Icelandic krona (ISK), is
stable and strong today.
On the other side, there’s one thing that pervades the
experience of locals and visitors alike.
It’s expensive! Not only, as one
would think, are the mass of imported goods higher than in their original
countries, but so is almost everything else.
In Alaska, locally caught salmon is a relative bargain. Not so for the lamb and fish raised and
caught in Iceland. Restaurant meals,
even plates of those things, seemed to start at ISK 3000, or over $26. Although tips and tax are included, that’s a
lot. The largest supermarket chains,
Netto, Kronan, and especially Bonus, mitigate that somewhat, and while fast
food is often available and cheaper it is around double American rates, with
the lowest-priced Subway footlong ISK 1199 or $10.51. Postage on a domestic letter in that small
country is ISK 160 ($1.40), and even a postcard to the United States, or
elsewhere outside Europe, costs ISK 285 ($2.50). Items for tourists were no exception either,
with ordinary souvenir magnets usually ISK 899 and playing cards almost always
more. Even things where I would not
think prices would vary much from one country to the other, such as silver
bracelet charms, were at least double those of similar items elsewhere. That puts a lot of pressure on locals as well
as tourists, and is probably the main reason why many have more than one
job. Although I suspect high pay for
workers is a real reason, and accounts for such things as unmanned fuel
stations, there is no national minimum wage as such. Yet what is in effect a lack of positions
paying comfortable wages in relation to cost of living, and a general sense of
balance, did not stop large numbers of Icelanders from unsuccessfully protesting
a $3 billion aluminum smelting installation, despite its thoroughly modern
environmental safeguards.
To what does all this add up? Iceland is certainly an admirable country,
but, despite its long-time cultural emphasis on self-reliance, people’s choices
are more limited. There are far fewer
opportunities to become truly wealthy there than in the United States. However, its advantages in health and life
expectancy are real, and lofty food prices may help that. Almost everyone there who wants to can work,
which, in 2016, is quite a strength for anywhere fully developed. Accordingly, while I would never want to
force such a system on Americans, little Iceland has plenty to teach us. And as we have, in the past anyway, excelled
at borrowing from other countries, we should keep their ways in mind.