Austrian Thoughts on Welfare State

[AsifShiraz]

I was talking about small government and reducing government responsibilities to someone, and he replied that the Scandinavian countries have achieved tremendous progress and prosperity by large public sector welfare projects.

Is there's really a successful model? If yes, why Austrians oppose such government projects. If no, what's the catch in their development?

 

[Sola_Fide]

 

[hugolp]

Scandinavian countries achieved their success thanks to free market policies. The welfarism came later. During the 80's their welfarism got so bad that they went into crisis and had to cut back. Since then several free market reforms have been introduced.

 

[hazek]

hugolp is right, the guestion to ask is not: Did the Scandinavian countries achieve tremendous progress and prosperity because of large public sector welfare projects?

The correct question to ask is: Did the Scandinavian countries achieve tremendous progress and prosperity despite large public sector welfare projects?

And if you look at how they started off as hugolp pointed out and combine that with a few other factors the answer becomes pretty clear: the second question is the one to ask and the answer to it is "yes".

 

[Tal]

I live in one of these scandinavian countries that american socialists/democrats tend to fawn over and I can guarentee all of you that we are not all that great, there are enormous problems brewing in the scandinavian countries that will destroy our living standards and when that happens I doubt the democrats in the US will be able to use scandinavia as some sort of model for their progressive future.

 

[ClayTrainor]

I live in one of these scandinavian countries that american socialists/democrats tend to fawn over and I can guarentee all of you that we are not all that great

I hear ya

I live in Canada, and American Socialists/democrats always fawn over Canada's health care as if it's all just so free and wonderful, without knowing the first thing about how it actually works.

 

[axiomata]

 

[erowe1]

I was talking about small government and reducing government responsibilities to someone, and he replied that the Scandinavian countries have achieved tremendous progress and prosperity by large public sector welfare projects.

Is there's really a successful model? If yes, why Austrians oppose such government projects. If no, what's the catch in their development?

I don't claim to speak for Austrians. But I oppose such models because they're unethical. Isn't that a good enough reason, whether they work or not?

Also, when you say those Scandanavian countries have achieved great progress with that model, what is that compared to? It can't be compared to what those same countries would have achieved had they not adopted those models, since no actual historical sample exists for that. It must be a statement that's based on a comparison between them and some other country where all other factors are not equal. Rather than use spurious comparisons like that, it's better to appeal to the basic laws of economics that derive from human nature, and accept the consequences of them. Economies can't be better with a central manager dictating how all the resources get allocated than they would be with those resources being allocated by millions of decisions between free people who enter exchanges with one another when both parties choose to make such exchanges because they determine that they would thus be made better off from them.

 

[malkusm]

From Tom Woods' Rollback:

Supporters of the welfare state often reply to arguments like these by pointing to the alleged counter-example of the Scandinavian countries, Sweden in particular, where a cradle-to-grave welfare state exists alongside robust economic growth and vigorous employment figures. We really can have it all.

Can we?

In 2008, Swedish Prime Minister Fredrik Reinfeldt urged his countrymen to face facts: Swedish prosperity had been built up by the free market, and the much-vaunted Swedish welfare state merely drew parasitically upon that wealth until the country was forced to begin returning to the market economy once again. Wealth that "took a hundred years to build was almost dismantled in twenty-five years," he said.

He was telling the truth. Thanks to a largely free-market economy and its avoidance of war, Sweden could boast the world's highest rate of per-capita income growth between 1870 and 1950. That growth rate had fallen to about average by international standards after a quarter century of expansions in the size of government. The economic interventions accelerated under the hard-left Olof Palme, whose increases in taxation and the regulatory apparatus seriously undermined the country's international competitiveness.

There's more, but that gives you a good idea.