Sweden, Rotting From Within

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At the National Interest, Swedish economist Johan Norberg drops an analytical A-bomb on Sweden's stumbling welfare state.

In the early 1990s a deep recession forced Sweden to abandon a lot of the excesses from the 1970s and 1980s. Marginal tax rates were cut, the central bank was made independent, public pensions were cut and partially privatized, school vouchers were introduced, and private providers were welcomed in health care. Several markets were deregulated, like energy, the post office, transportation, television and, most importantly, telecom, which opened the way for the success of companies like Ericsson.

But Sweden retained the world's highest taxes, generous social security systems and a heavily regulated labor market, which split the economy: Sweden is very good at producing goods, but not at producing jobs. According to a recent study of 35 developed countries, only two had jobless growth: Sweden and Finland. Economic growth in Sweden in the last 25 years has had no correlation at all with labor-market participation. (In contrast, 1 percent of growth increases the number of jobs by 0.25 percent in Denmark, 0.5 percent in the United States and 0.6 percent in Spain.) Amazingly, not a single net job has been created in the private sector in Sweden since 1950.

Reporting on Europe, most journalists reserve the gloomiest forecasts for France and Germany, crippled from week to week by strikes, political sclerosis, and their behemoth welfare states. Coverage of Sweden, for some reason, has been limited to social conservatives fretting about the ABBA fans' unwillingness to crack down on gays and produce more babies. Norberg's take on the fate of the grandaddy of European welfare states is eye-opening and overdue.

Nick Gillespie interviewed Norberg back in 2003.

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  1. “Amazingly, not a single net job has been created in the private sector in Sweden since 1950.”

    Wow.

  2. What has their population growth been like, I wonder?

    How does a country that doesn’t produce a single job in 56 years have one of the most generous safety nets in the world? How is it possible to afford it?

  3. What has their population growth been like, I wonder?

    How does a country that doesn’t produce a single job in 56 years have one of the most generous safety nets in the world? How is it possible to afford it?

  4. “In Italy, where the population could shrink by as much as one third by 2050, one town has started offering couples 10,000 euros for each newborn baby.”

    Somebody should let the Italian government in on the little secret about their own workforce that my Italian professor shared with our class: that because of the high employment taxes and the sluggish corruption of Italy’s obese government, a lot of Italians work “under the table.”

    What return are they going to get on their investments (indeed, what return is any EU country going to get on its breeder-bribes) if the kids, as they come of age, aren’t paying into this ridiculous Ponzi-scheme system that’s supposed to rob from their futures to pay for the past?

  5. I think your resistance to conservative media voices (nice slander of the Weekly Standard article there, by the way) has prevented you from seeing that Sweden’s problems are in fact covered fairly regularly by right-wing media.

    Here’s another Weekly Standard article about Sweden’s welfare-state/Islamic radicalism connection, for instance; and some European bloggers, most notably “Fjordman”, have covered the issue.

    By the way, Norberg discusses Sweden’s radical-Islam problems briefly too, but blames it on “segregation”; I find blaming the welfare state itself (and, of course, the criminals involved) a more convincing argument.

  6. …How is it possible to afford it?

    You know all those productivity gains the information age has provided? Imagine funneling all of them through the welfare state.

  7. “(nice slander of the Weekly Standard article there, by the way)”

    Actually, as a number of courts have pointed out in the course of dismissing defamation suits by mob bosses, a claim of slander requires that the victim actually had a good reputation in the first place.

  8. Is the reason Sweden doesn’t rot faster because it’s a refrigerator up there?

  9. The interesting thing is that when my friends see the problems France (etc.) is having, they don’t think “Gee, maybe that’s because their economic policies are idiotic.” After all, why should bosses be allowed to fire employees, ever, for any reason? (…feudalism… sshhhh)

  10. I demand these articles have less Abba and more Ebba. Fewer references to the pre-eminent Swedish pop group, and more to the pre-eminent Swedish punk group.

    I.E., Staten och Kapitalet:

    sida vid sida tillsammans hjalps dom at
    staten och kapitalet, dom sitter i samma bat
    men det ar inte dom som ror, som ror sa att svetten lackar
    och piskan som kittlar, kittlar inte heller deras feta nackar

    Side by side, they help each other out
    The state and the capitalists sit in the same boat
    But they aren’t the one’s rowing
    Rowing so the sweat is dripping
    And the whip that tickles, doesn’t tickle their necks either

  11. – Apologizing in advance for the threadjack –

    Floyd brings up a point I’ve wanted to ask about for quite a while. There does seem to be a knee-jerk hostility on this site toward right-wing publications.
    Attacking The Weekly Standard I can understand, as they are the born and bred standard bearers of the “neo-conservative” movement and the Bush presidency in general, both richly deserving of attack. What I find baffling is the deep animus against National Review. They are, as far as I know, the only right-wing publication of any repute to oppose the War on Drugs and support marijuana legalization. That has to be worth something.
    In addition, while he is getting old, Buckley is still around. I would consider his Conservative party mayoral run in NYC as one the great libertarian interjections into major league politics. A 13% share beats the hell out of the margin of error numbers that modern Libertarian candidates tend to unfortunately collect.
    The only reason I can see for the hostility is that some of their columnists (Jonah Goldberg comes to mind) have been nauseatingly rah-rah about the Iraq war, but, otherwise, what gives? Did you guys get in a flame war with The Corner?

  12. Bob Z, I still read the National Review on occasion, and I think they do make some valid points when they feel like honoring their small-government legacy. HOWEVER, they are far too partisan these days to take too seriously. It’s not just the war, it’s playing “gotcha” with the Democrats and spinning things up or down depending on how they affect the political game. I’m never going to respect that, and you can feel Buckley’s de facto absence from the day-to-day operations. Jonah Goldberg has taken a few-too-many frankly stupid shots at libertarians, ignoring the fact that there are plenty of them within the GOP itself, which doesn’t win NRO any friends here, either.

    Psst. There are also quite a few left-wing types here, too, who would hate National Review if it were pure, classical liberal gospel.

  13. Cliff Richard said It was porn and gonorhea

  14. Long time ago, NR printed an aticle that “proved” that Libertarians were communist.
    It was quite a bald hatchet job.

  15. My only hope regarding Europe’s economy is that its general failure is spectacular and soon[.]

    Breathtakingly stupid as that sentiment is, I am afraid it may very well come to that, at least here in Germany.

  16. I’ve been to Sweden. No idea how their economy is going (don’t care) but the women were so beautiful I wanted to drop to my knees and praise the lord.

  17. “women were so beautiful I wanted to drop to my knees and praise the lord.”

    Mark,
    “praise the lord”?
    Is that what you call cunnilingus?
    What a coincidence!

  18. I’d have responded to the question regarding National Review, but once again Pro Libertate has said everything (and more) that I would have said on the matter.

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