An interesting article at The New Libertarian:
“The Swedish self image is special. That we are a moral superpower, a higher civilization, richest of them all, have the best welfare and are neutral since we are so good â€“ it lives on”
— Johnny Munkhammar in the liberal magazine Liberal Debatt, number 4, 2003
Sweden is in a sense an ideal natural experiment in economic policies. Sweden was an impoverished nation until capitalism was introduced in the country during the 1870s. Although the socialdemocrats had a strong influence during the first half of the 20th century, they were pragmatic and slow to expand the size of government. Sweden was one of the freest economies in the world during this period and experienced the second fastest growth in the world between 1870 and 1970, second only to Japan. During the 60s the socialdemocrats radicalized and a rapid expansion of taxation, the regulatory burden and government occurred. Sweden became the country with the most extensive welfare state in the world, the highest taxes, the strongest unions and the longest period of one party rule (the socialdemocrats have been in power 60 of the past 69 years). Between the 1960s and the 1980s the governmentâ€™s share of the Swedish economy increased from about 30 percent (approximately the same as the US) to about 55 percent.
From this period and onward, the Swedish model has been on the decline. Entrepreneurship has declined to an international low, none of the 50 largest Swedish corporations have been started after 1970, the working morale has declined drastically and unemployment is staggering high. But the government does its best to hide the figures that show the bad performance of the Swedish economy. In this paper we discuss the drop in entrepreneurship and working ethics in Sweden and examine the countries high hidden unemployment.
The image of the Swedish welfare state abroad is still that of the beginning of the 1970s, when we did not have higher taxes than other European countries, respected private property and had a strong free trade policy. By highlighting the problems that have arisen in Sweden since then, we hope to give a more balanced view of the Swedish model.
As the Swedish welfare state has expanded and economic incentives reduced, entrepreneurship has dropped. In a study of 37 developed countries that was conducted in 2002, Sweden was ranked in the 31:st place when it came to entrepreneurial activity and was one of the countries where entrepreneurship had fallen the most between 2000 and 2002. An important contributing factor is that the marginal tax on entrepreneurs is approximately 70 percent and that they are required to pay additional fees to the state, such as when their employees go on sick leave.
Read the whole thing at The New Libertarian.
Dutch social democrats often refer to the Swedish model as the prime example of a good functioning welfare state: a system we have to copy in the Netherlands.
Perhaps some of our ‘progressive’ leaders should read the article at TNL.