The Scandinavians are coming

The headline Wednesday out of the World Economic Forum is "Singapore overtakes the United States" in its global information technology report--but the more interesting part of the study may be who finished second, third, fourth and sixth.

The states slid from first to fifth place in the scorecard of how well economies use information and communications technology. Asian countries besides Singapore gained ground, with Hong Kong and Japan cracking the top 10. Taiwan ranked 15th, China climbed to 41st from 51st, and India rose to the 39th spot from the 45th.

As lower-wage Asian countries ramp up their tech sectors and siphon away some U.S. tech jobs, a centerpiece of the Bush administration's response has been to cut taxes on the well-to-do in the hope that U.S. entrepreneurs and investors will reinvigorate America's economy.

Certainly the private sector plays a crucial role in a nation's economic health. But Bush's largely laissez-faire approach is called into question by the strong showing of Scandinavian countries in the WEF report. Iceland finished second, Finland third, Denmark fourth and Sweden sixth (Norway wasn't too far behind, at 13th). These countries have a legacy of higher taxes and a stronger social safety net than in the United States--such as more generous unemployment benefits.

Countries with socialist trappings often are rapped for stifling new ideas. But the World Economic Forum gives Nordic nations high marks in this area: "Sweden, Finland and Denmark, in particular, consistently outrank some of the larger European economies in terms of the number of U.S. patents registered per million population, a frequently used indicator of a nation's innovation record," the report says. "They also enjoy an enviable regulatory and institutional environment that has nurtured the growth of the (information and communications technology) sector."