Sweden Not a Socialist Standard-Bearer At All


another swedish artifact

Writing in Bloomberg, Anders Aslund becomes the latest to point out that Sweden isn't the total social welfare state so many Americans who wish one for the U.S. perceive it to be:

The [currently in opposition] Social Democrats [who were the architects of Sweden's 20th century planned welfare state] haven't only joined the free-market consensus, but seem to attack the current government from the right, pushing for a better business environment. Gone are demands for the restoration of social benefits. Opinion polls have rewarded the Social Democrats for their right turn with sharply improved ratings.

Sweden is still offering good social welfare, but more efficiently and sensibly and increasingly through the private sector. This model of falling taxes and public spending is rapidly proliferating from the north of Europe toward the south, and the northern Europeans have little tolerance for the statist conservatism and fiscal negligence of Southern Europe. Nor do the Swedes understand the fiscal irresponsibility of the U.S., while they still admire American research and innovation.

Before the "headwinds" in Europe (precipitated largely by an overextended debt-laden welfare state) that President Obama blames for a supposedly stalled recovery (even though the private sector is apparently doing fine), liberals (the real kind!) in Sweden were preaching the free-market to a wayward continental Europe:

block quote longer

The European Social Model is being heavily discussed in Europe. Some still laud it, but its problems are obvious, with low economic growth, an aging population coupled with "pay-as-you-go" pension systems, and widespread persisting unemployment…

For a time in the early 1990s Sweden abolished all farm subsidies and had one of the most deregulated agricultural sectors in the world, before unfortunately being forced to re-regulate when entering the European Union's (EU) Common Agricultural Policy.

In 1996 Sweden deregulated its market for electricity, allowing private competition in distribution. Today, half the nuclear power plants are owned by a German corporation.

Telecommunications, postal services, and public transportation have largely been deregulated, opening up new markets. The state monopolies have been abolished, and the telephone company has been partially privatized.

The introduction of a voucher system has opened up a market in which parents have a high degree of choice over where to send their children to school.

Health care has largely been opened to private alternatives, thanks to the doctors' and nurses' labor unions. In fact, one of Stockholm's largest emergency hospitals, St. Göran's, is a private company listed on the stock exchange.

Sweden has a comparatively low corporate tax rate of 28 percent. The process for opening a business is relatively straightforward, ranging from one week to a couple of months. Sweden presents few barriers to foreign investment, maintaining restrictions only in some limited national-security–related sectors. Most commercial banks in Sweden are privately owned and operated. Banks are allowed to offer a full range of services, and foreign banks have access to the sector. Few working days are lost to strikes. It is easy to close down factories and move investments abroad. There is no legal minimum wage. Unlike in other European countries, retailers do not have their hours regulated. In 2005 the government abolished inheritance and gift taxes. The Swedish Competition Authority has forcefully reacted against local politicians who restrict full competition.

Sweden has high immigration per capita and was, along with the Britain and the Republic of Ireland , the only original EU member not to impose restrictions on workers from new member countries.

The pension system has been reformed from the problematic "pay-as-you-go" formula to a program funded according to the performance of the economy. In the fully funded system all Swedes choose investments for their pensions. If the economy does not grow, pensions will be low, and there are mechanisms that prevent the system from going bankrupt.

These changes, which would have been seen as radical if enacted in the "Anglo-Saxon" market model, have paid off for Sweden , permitting a 2006 GDP growth forecast of about 4 percent. Inflation was lowered to an average 1.4 percent last year.

Granted, it is an easy task to become a paragon of liberalization in today's Europe . But it shows that what many Europeans favorably refer to as the Swedish model is not applied anymore in Sweden . The remnants of the old model—high income taxation (60.3 percent on average), the high value-added tax (25 percent), the regulated labor market, and the insufficiently reformed social-redistribution systems—are the problematic areas in the Swedish economy, not its bold vanguard.

If someone had predicted in the 1980s that Sweden would follow the social-democratic model set by France or Germany, I as a libertarian would have agreed. Today I can say that Europe should embrace the Swedish model.

inimitably something

You wouldn't guess Sweden started moving away from its total social welfare model as early as the 60s given the tendency of central planners and their apologists n this country to use Sweden as an example of the wonders of central planning and Keynsian economics. Austrian economist Bob Murphy, via Tom Woods:

Bob Murphy notes that Paul Krugman, in his typical style, misleads about what's been happening in Sweden. Bob writes: "Did you have any idea thatSweden ran a budget surplus of 2% of GDP in 2011? Me neither. Reading Krugman certainly did[n't] give me any reason to suspect that. Krugman had produced a chart and implied that the United States was engaged in more austerity than Sweden. Go look at his post. He calls it 'spending side austerity' presumably to cover his bases. But it's not like he says, 'Oh, admittedly, Sweden is running a budget surplus, but I'm saying that's because of their loose monetary policy which has boosted revenues and allowed them to reduce transfer payments…' No, none of that. He just implies that conservatives are insane, puts up an irrelevant chart, and then gives a very misleading analysis of it."

Previous Reason on the myth of Swedish socialist successes

Reason.org: Follow the Swedes to Market –Based Taxi Deregulation

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  1. He just implies that conservatives are insane, puts up an irrelevant chart, and then gives a very misleading analysis of it.

    Krugs? Never.

  2. Krugnuts misleading? Say it ain't so.

    1. At what point do we get to say he is lying about basic facts?

      His whole WW2 stopping the depression thing really is a pack of lies...why can't we say so? or more importantly why can't those who actually get published say so?

      Are they simply being polite? Does calling a liar a liar hurt newspaper sales?

      1. Talking out against The Krugabe is considered to be hate speech by many.

  3. You know how EDG wants to punch the shit out of zoot suit Obama? I get the same feeling when I see Pauli Krugnuts.

    1. I am recommending the same therapy for you that I recommended earlier for EDG, only with Krugnuts.

  4. Whatever Sweden is doing now, I have no doubt that liberals and left-Democrats, like yours truly and Paul Krugman, would be utterly delighted to see it enacted in toto nationwide across the United States, from California to Mississippi to New York to Idaho. And I have no doubt that Libertarians and Republicans would wail and weep and gnash their teeth to powder at such an outcome.

    1. Shut the fuck up, Gabe, you complete and total assclown. You have to be the stupidest troll we've ever had here, and that's saying something. Don't you have some children to rape or something?

      1. "You have to be the stupidest troll we've ever had here, and that's saying something."

        Epi, that truly is a mouthful.
        *thinks back on white idiot days*

        1. White Indian was a front. It was just Mary or whoever posting the ravings of Godesky, because they were easy to copy, paste, and imitate. It was to grief, not to actually discuss a subject. A griefer isn't stupid or not stupid; they're not making an argument, they're trying to disrupt a site.

          Gabe is stupid. He may have been griefing too, but now little Gabey can't do that any more, and he's been reduced to trying to make arguments, and thereby exposing what an utter moron he is. Which is hilarious.

      2. "Don't you have some children to rape or something?"


        You grew up so fast, Epi.

        1. So you do, then. Make sure you remember to renew your NAMBLA membership, Gabriel.

          1. Epi, does it make you feel better to know that it would have been legal in Sweden?

    2. You really think left-liberals would welcome the degree of privatization explained in the article above? You know some very different liberals than the ones that everyone else does. Or the ones who write in newspapers, appear on the news, represent us in congress....

      1. Go easy on him, Jim. He hasn't licked any cop boot for weeks and is delirious with kiwi withdrawal. Just let 'im ramble he'll eventually tire himself out.

    3. And come to think of it, how come the liberals who run the California gov't haven't done this, if they would be "delighted" by it? Or MA? Or any other states dominated by Team Blue?

      1. As a Californian, I would gladly vote for the blue team if they instituted one-half of the agenda written about in this post.

        Of course, Gabe didn't read the post. He's just mimicking the generation-old left praise for the Scandinavian welfare state while completely clueless as to what is actually happening in Scandinavia, as per the Left's usual ignorance of actual international reality.

    4. Seriously? "I don't know what it is, but if it's good then TEAM BLUE will be right on it, and everyone else is a poopyhead?"

      You're not even a serious troll. Fuck off, idiot.

    5. Whatever Sweden is doing now, I have no doubt that liberals and left-Democrats, like yours truly and Paul Krugman, would be utterly delighted to see it enacted in toto nationwide across the United States, from California to Mississippi to New York to Idaho.

      So eliminating all min wage laws you would be cool with that?

      Or how about a balanced budget through spending cuts?

      1. If there was a grand bargain that included those measures along with the Swedish system of human services, the 'Krugman faction' would leap at it.

        1. So school vouchers too?

    6. It would be interesting if you could actually name a remotely successful welfare state which has three hundred million people in it. Not to mention the myriad cultural differences.

      To the extent that welfare states are ever anywhere near successful it is because local administratorss have nearly complete autonomy over small almost completely homogenous groups.

      The day after you fucks get your wish of single payer healthcare the David Dukes and Al Sharptons will be complaining that some other group is getting more and better healthcare and shorter waiting times than theirs is. Trial lawyers will love it.

      1. If so, it should have already happened with Medicare. It didn't. So it wouldn't.

        1. Medicare is limited enough in scope that it does not need waiting lists...YET. Get back to me when it does.

        2. And if you think that it's not already happening with what elfare state we already have you having been paying attention the "oppressed white" faction's complaints that "blacks get more AFDC/Medicaid/etc than we do."

          It doesn't have to be true to cause rancor and dissension.

  5. Didn't Ford buy Volvo?

    And isn't lutefisk disgusting?

    *insert bork-bork-bork joke here*

    1. Ford bought and sold Volvo. Owned it until I think 2010.

      1. Geely, a Chinese company, owns Vulva Volvo now.

  6. ...their loose monetary policy which has boosted revenues and allowed them to reduce transfer payments...

    Wait. So you're saying the have a budget surplus AND they're printing money? So, only half fiscally unsound then.

  7. Sweden is a much much easier place to do business than the U.S. Swedish business people are stunned at the layers of bullshit we have to navigate here in the U.S.

    1. Exactly. Even with the higher income tax rates, they have a more free market than we do. Apparently this is a difficult thing to comprehend.

      1. It's sad when you would trade higher taxes for less regulation.

        1. I didn't say I wanted to live there - it's expensive, the VAT is a killer, and the personal rate it higher than the U.S.

          But - the corporate rate is lower, and regulation is streamlined. You get permits once - not city, then states, then federal.

        2. Are their taxes that much higher? people always exclude payroll taxes from the comparison. I wouldn't be surprised if our welfare systems cost more than Sweden's. Certainly our healthcare system is double everyone else's and govt pays half of it.

          And undoubtedly if we did switch to a more generous and universal system like theirs, our costs would be waaay higher still, an obvious conclusion morons like Krugman can't get. We are not a homogeneous middle-aged country with rich neighbors and 6-month winters.

          1. Tell that to Minnesota.

          2. Are their taxes that much higher?

            According to Wikipedia the Employer social fee is 31.42%. Sounds a lot higher than the 6.2% FICA rate here, although admittedly it does fund a lot more.

            Your "We are not a homogeneous middle-aged country with rich neighbors and 6-month winters" point is one I have tried to make over and over.

            1. And the 25% VAT would be the killer for me if I was thinking about emigrating to Sweden.

            2. But many of our states are.

              And we are a union of sovereign states, so discussing some sort of national policy seems silly anyway.

            3. I'm sure we will get our own national sales tax sooner or later.

              Total payroll taxes are more like 15% when you count employer half.

              I can certainly believe countries where socialism is so much more positively viewed could have higher taxes, but I really doubt they are much higher. Net taxes for all developed countries seem to hover in the 40-50% of income range from what I recall.

              1. I was comparing the employer portion to the employer portion. The Swedish employees portion is included in the higher income tax rates he pays.

                robc, states realized a long time ago that the consequences of generous welfare packages is out-migrationof both people and businesses. They also know that generous welfare packages are not possible with high taxes and/or deficit spending. Neither is feasible, the first for political reasons and the second for legal ones; hence the alleged need for a national program.

    2. Is it mostly easier for small businesses? Large companies are usually sophisticated enough to navigate the regulations, at least to an advantage over smaller businesses.

      1. Precisely. In fact, one of the reasons the American regulatory state is so complex is because major companies lobby for it to be that way in order to entrench their own industry marketshare and stifle competition from the up and comers.

  8. It seems like every year for a while some Swede comes out with an article showing how Sweden has instituted free market reforms and how they have benefited from them. But the Left keeps pointing to them as Socialist paragons. You just can't trust those Swedes.

    1. But the Left keeps pointing to them as Socialist paragons.

      You mean the Left conflates the Regulatory State with the Welfare State in a disingenuous manner so as to put forth intellectually dishonest arguments?

      No way!

  9. Anders Aslund

    Urban translation: Dru Bootytown

  10. Now if only they would privatize the liquor store industry, Systembolaget sucks.

    1. And yet it's still cheaper than the Finnish and Norwegian alcohol monopolies.

  11. I've said before that if it's possible for a welfare state to work its best chance is in a country with only nine million people almost all of whom are Swedish Lutherans. 🙂

    OK, I know that Swedes are not actually observant Lutherans but they still have a strong Protestant work ethic. Slacking to collect benefits is generally frowned on there.

    1. And interestingly enough, their transition away from the welfare-state model has correlated nearly perfectly with increasing immigration into the country from the Middle East and other European countries.

  12. OT: Eurocup spoiler Alert

    The Russians are beating the Czechs like a reenactment of the Prague Spring.

    1. Matt Welch is disappoint. He will be crying into his pilsner urquell this evening.

    2. Damn you, I hadn't had a chance to look yet.

      They looked good against Italy, but I didn't expect Russia to make a serious run. Maybe it's time to buy a Russia jersey to add to my "teams I didn't think would be awesome but now they are for a few months so I'll jump on their bandwagon" collection.

      1. They've been salivating since the groups were drawn. Poland, Greece, and Czech were all lambs compared to the Russian Bear.

    3. The Cezchs came out so well too. At around the 15th minute the game suddenly just swung.

      1. Nice fightback by the Czechs. Wide open game.

    4. The Russians are beating the Czechs like a reenactment of the Prague Spring.

      Too soon!

  13. He just implies that conservatives are insane, puts up an irrelevant chart, and then gives a very misleading analysis of it.

    To be completely fair to Krugman, there are also times when he says that the best thing that could happen would be if earth was invaded by aliens from outer space. And then there are other times when he whines that he isn't taken seriously enough by the elected officials tasked with running the governments of Europe.

    1. Do I have to keep saying this? There's no such thing as etra-terrestrial aliens. If there were, we'd surely be sending them foreign aid too.

      1. OTOH, their existence isn't necessary for the Krugman Plan to work, like all make-work jobs.

        I'm looking at you, Law Enforcement. *shakes fist*

    2. And sometimes his chart is not irrelevant, just misleading like the Estonian GDP one.

  14. For info on Lib Swedes, join the workgroups at http://www.LibertarianInternational.org

  15. "But you're wearing...lederhosen."

  16. Years ago I read an article from P. J. O'Rourke about how the Social Democrats got elected in Sweden and then stayed in power for 40 years by not implementing any of their policies.

    When they finally got around to doing it, they killed the Swedish economy and lost power.

    1. Actually, it's not quite as simple as that. As long as there were nothing but Swedish Lutherans with the Protestant work ethic in the country the welfare state was seen as a shared enterprise.

      By the 1960s or so though a new generation with a different attitude had grown up and the stigma against slacking to collect benefits declined. So essentially over the same time period that the SDs gradually ramped up the welfare state a bunch of people to whom gaming the system was acceptable grew up.

      Add to that immigrants who were showered with benefits without having the cultural understanding of the obligations attached and isolated in separate communities so that assimilation was deterred and you start to have have a recipe for failure.

  17. Before the "headwinds" in Europe (precipitated largely by an overextended debt-laden welfare state)

    Uh no, precipitated by a global economic collapse causing massive stress on a bad monetary system.

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