Prospects for Nordic Tourism Promotion

Moneybox
A blog about business and economics.
May 30 2012 12:06 PM

Prospects for Nordic Tourism Promotion

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Stockholm's National Museum: Cool building, mediocre art

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Seth Kugel is looking for a "frugal" travel itenerary to Scandinavia, a region that he rightly says "makes Italy look like the 99-cent store of Europe."

Given that Italy is generally considered a more scenic and delicious tourist destination, why is it so much more expensive to go to the Nordic countries?

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One reason is just that they're substantially richer than the southern European ones, so wages are higher and the labor portion of the cost of everything is bigger. But what particularly tends to give American visitors to the region sticker shock is that the Nordic social model means that the relative cost of different kinds of things is very different in a way that's incredibly unfavorable to tourists. In Sweden, for example, you're going to pay a 25 percent VAT on your day-to-day purchases and a 12 percent VAT on restaurant meals and hotel stays, but you're not going to avail yourself of the cheap college tuition or nearly free health care that the taxes finance. And so it goes throughout the region, where taxes are both higher and less progressive than in the United States, directly and indirectly pushing up the price of things visitors will buy in order to finance public services that visitors almost certainly won't use.

Of course by the same token, this social structure means that tourism and travel exports are potentially very valuable to Nordic countries. Right now Sweden can borrow money extremely cheaply while Italy is being crushed by a combination of tight money and a huge legacy debt burden from the 1980s and 1990s. If Sweden were to borrow money to purchase priceless Italian artworks to build some world-class tourist attractions that would probably be win-win.

But I've still got no real ideas for a frugal trip to the region. Even a free work-related trip I took to Denmark turned out to be incredibly expensive.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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