The Mirage of Swedish Socialism: The Economic History of a Welfare State (Parts 1 and 2)

[Brian4Liberty]

The Mirage of Swedish Socialism: The Economic History of a Welfare State (Parts 1 and 2)

Much of what the outside world thinks it knows about the Swedish model is wrong. When American politicians like Senator Bernie Sanders and Representative Alexandra Ocasio-Cortez are asked to name an example of a successful socialist economy, they often point to Sweden.

But Sweden only began to experiment with socialist ideas after it was already one of the world’s most successful societies. Its success was based on a free market model developed after an episode of radical liberalization between 1840 and 1870 and the rapid growth it unleashed. As early as 1950 Sweden was the fourth richest economy in the world, and it was also one of the freest, with public spending below 20 percent of GDP. Government was smaller than in other Western European countries and taxes were slightly lower than in the United States.

Only in the 1970s and 1980s did Sweden expand government dramatically with more spending, taxation, and regulation. It is reasonable to say that during this time Sweden was moving towards socialism. But that was an aberration in Sweden’s history, an aberration that was not associated with success. On the contrary, this was the one period in modern economic history when Sweden lagged behind other industrialized countries.

Incentives for work and entrepreneurship were weakened, and welfare dependency increased. The private sector stopped creating jobs, real wages stagnated, and many of Sweden’s most important businesses, like IKEA and Tetra Pak, fled the country. Sweden ran large budget deficits every year and got stuck in a dangerous spiral of inflation, devaluations, and debts. It ended with a deep financial crisis in the early 1990s that included a brief period when the central bank interest rate rose to 500 percent.

At that time, Sweden’s political parties decided, often in consensus, to return elements of the older capitalist model. They deregulated the economy, reduced taxes, shrank government, and introduced a set of fiscal rules that has reduced public debt substantially. The pension system was reformed and many government-owned businesses were privatized. Sweden abolished taxes on wealth, gifts, and inheritances.

At the same time, Sweden became a pioneer in privatizing welfare services, making it possible for private providers to compete with public ones on similar terms and funding, and giving citizens the freedom to choose between different providers of elder care, health care, preschool, and education, including for-profit businesses. Around a fifth of all tax-funded welfare services are now provided by the private sector.
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More: https://www.fraserinstitute.org/stu...omic-history-of-a-welfare-state-parts-1-and-2

 

[Brian4Liberty]

H/t to Rand Paul:

https://twitter.com/RandPaul/status/1686783918085750792

 

[osan]

Still an authoritarian poo-hole, just like the rest of the world.

The only advantage I see in the bigger, better-appointed cage of prettier slavery is the opportunity to set the tyrant to ruin. Sadly, it seems every time we do this, those who committed the good deed turn into equally evil tyrants themselves.

Meet the new boss, same as the old boss.

 

[Brian4Liberty]

Sweden Is Not A Socialist Success

https://twitter.com/JohnStossel/status/1721304384553025720

Democratic socialists in the United States point to Sweden as a socialist success. But Swedish historian Johan Norberg says, "Sweden is not socialist."

Norberg hosts a documentary called "Sweden: Lessons for America?" in which he notes that in Sweden, "government doesn't own the means of production. To see that you have to go to Venezuela or Cuba or North Korea."

John Stossel asks Norberg why so many Americans think Sweden is Socialist. Norberg answers, "we did have a period in the 1970s and 1980s when we had something that resembled socialism: a big government that taxed and spent heavily."

But in his documentary, he explains that big government led to problems: "our economy was in crisis, inflation reached 10%, and for a brief period interest rates soared to 500 percent. At that point the Swedish population just said, 'Enough, we can't do this'" Norberg tells Stossel.

Sweden cut public spending, privatized the national rail network, abolished certain government monopolies, eliminated inheritance taxes, sold state-owned businesses, and switched to a school voucher system. They also "lowered taxes and reformed the pension system," adds Norberg.

So Stossel asks why we keep hearing "that Sweden is this socialist paradise."

Norberg answers: "We do have a bigger welfare state than the U.S. and higher taxes than the U.S. But in other areas, when it comes to free markets, when it comes to competition, when it comes to free trade, Sweden is actually more free market."

He's right, according to the Heritage Foundation's Economic Freedom Rankings. Sweden ranks higher than the U.S.

Norberg also tells Stossel that Sweden's tax system may surprise Americans. "This is the dirty little secret … We don't take from the rich and give to the poor. We squeeze the poor, because rich people might leave."

Even people who earn below average income pay up to 60% in taxes.

Stossel asks: what lessons should Americans take from Sweden?

"You can't turn your backs [on] the creation of wealth," warns Norberg.

"Sweden: Lessons for America?" airs on PBS on October 29th at 7 p.m. Eastern. You can also watch it at freetochoose.tv.

 

[Brian4Liberty]

https://twitter.com/USAB4L/status/1721360827515883547

 

[Madison320]

Norberg also tells Stossel that Sweden's tax system may surprise Americans. "This is the dirty little secret … We don't take from the rich and give to the poor. We squeeze the poor, because rich people might leave."

I think they have higher tax rates on the poor and middle class because they have to actually raise tax revenue. We still have the reserve currency so we can borrow and print what we don't raise in taxes. We're still living in a fantasy world.