Sweden Not a Socialist Success
Today, many Americans don’t like capitalism. Socialism would be better, they say. Not repressive Russian or Venezuelan socialism, but democratic socialism like what’s practiced in Scandinavia. I think we should look to countries like Denmark, like Sweden. Say why, do you want to be like Sweden? Kinda. Sounds pretty good. People interviewed in this just released PBS documentary say America should be more like Sweden. It seems like it’s like a place that like no problems or something. It is a socialist economy. Volvos and uh, socialized medicine. Volvo is now a Chinese company. Welcome to Stockholm, Sweden. My name is Johan Norberg and this is where I was born and raised. Johan Norberg made this documentary because he wanted to set the record straight. Sweden is not socialist because the government doesn’t own the means of production. To see that you have to go to Venezuela or to Cuba or North Korea. But we did have a period in the 1970s and 1980s when we had something that resembled socialism. A big government that taxed and spend heavily and that’s the period in Swedish history when our economy was going south. So much so that even socialists complained about the high taxes. Astrid Lindgren, who wrote the very popular children’s books Pippi Longstocking for instance, she was a social democrat but she had made a lot of money from her books. She found that she paid 102% in taxes. She wrote this angry essay about a witch who was quite mean and vicious, but not at all as vicious as the Swedish tax authorities. And yet even though taxes were high, they did not bring in enough money to fund Sweden’s welfare state. There were waiting lines to get health care, people couldn’t get the pension that they thought that they depended on for the future. At that point the Swedish population just said, enough we can’t do this. Sweden then reduced government’s role. They cut public spending, privatized the national rail network, abolished certain government monopolies, eliminated inheritance taxes, and sold state-owned businesses like the maker of Absolut Vodka. Lower taxes reformed the pension system so that it wasn’t unsustainable. The results from the spending cuts and privatization? This impoverished peasant nation developed into one of the world’s richest countries. All I hear is that Sweden is this socialist paradise. We do have a bigger welfare state than the U.S., 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. That free market pays for Sweden’s big welfare programs. Today our taxes pay for pensions. You call it Social Security. For 18 month paid parental leave, government paid childcare, for working families, but having the government manage all of these things didn’t work well so we had to manage it in another way. They privatized. We realized in Sweden that with these government monopolies, we don’t get the innovation that we get when we have competition and this is particularly true for the school system. Sweden switched to a school voucher system that lets parents pick their kids’ school, and forces schools to compete. And one of the results that we’ve seen is not just that the private schools are better than the public ones, but even the public schools in the vicinity of private schools, they often improve because they have to. Sweden’s version of Social Security was going broke, so Sweden privatized that, too. Privatize the pension system? That terrifies people. And obviously that scares people, but when they realize that the alternative was that the whole pension system would collapse, they thought that this is much better than nothing. Now the bulk of pensions is really contribution defined. So if things are going well for Sweden pensions are increasing, but if things are going less well, pensions are automatically lowered, which basically takes away from politicians the ability to buy votes by just promising higher pensions and letting future generations pay. And when it comes to taxes, what Sweden does may surprise you. The low income earners in Sweden pay a lot more than low income earners in America. So despite the fact that Sweden looks like sort of a socialist country which taxes rich exorbitantly high, the truth is the opposite. People who earn below average income pay up to 60% in taxes. This is the dirty little secret about the Swedish tax system. We don’t take from the rich and give to the poor. We squeeze the poor because they are loyal taxpayers. Not taking more from the rich, school choice, privatization, Sweden is anything but socialist. You can’t turn your backs to the well, to the creation of wealth. You can watch the full documentary Sweden: Lessons for America? at free to choose.TV.