Feb
19

HOW SWEDE IT IS! Sweden: Lessons For North America

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A Britisher, a Frenchman and a Russian were viewing a painting of Adam and Eve in the Garden of Eden. “Look at their reserve, their calm,” mused the Brit. “they must be British.”  “Nonsense,” protested the Frenchman, “They are so natural and beautiful. Clearly, they’re French.” “No clothes, no shelter,” the Russian points out, “they have only an apple to eat and they’re being told this is paradise. Clearly, they are Russian!”

In the United States, there is a growing movement in the Democratic Party  to bring socialism to here-to-fore capitalistic America.  And the mantra being heard is not the failed dictatorial socialism of Venezuela, but the successful democratic socialism of Sweden.  But what is the real truth about Sweden?  I’ll tell you:

Sweden The Rich (1860-1960)  – For one-hundred years, Sweden was one of the wealthiest nations in the world.  Free enterprise (low taxes, small government,  less regulation, private ownership, open markets) made it one of the top economic success stories in Europe.

Sweden The Poor (1960-1990) – But then Sweden headed down the socialist road (high taxes, big government, massive regulations, public ownership, trade tariffs) and the economy crashed.  Pay cheque deductions tripled, inflation ran at an annual rate of 10% and interest rates rose over 500%.  The “cradle to grave” benefits were bankrupting the country.

Sweden The Rich (1990-2019) – Everyone realized that something had to be done.  (It particularly hit home when the founder of IKEA left the country and moved to Switzerland, because his combined tax rate at home had reached 136%).  As one Swedish observer put it, “Our leaders had to sit down and have an ‘adult conversation’.”  And the result of that talk?    Sweden made a complete 180-degree economic turn; retreating from failed socialism and returning to successful capitalism.  Free enterprise was restored and today Sweden is the fourth wealthiest nation, not just in Europe, but in the world.

Now don’t get me wrong.  Sweden still has national health care, national school education and a national pension program.  But the difference is that these three institutions are now primarily in private-for-profit hands.  And from taxes that are paid, government vouchers are issued and each citizen then locally decides where those vouchers will be used (what hospital to go to, what school to attend and what pension plan to invest in).  This in turn causes those hospitals, schools and pensions to compete with each other for the consumer’s business.  And the size of the voucher is kept out of the hands of politicians and promised increases.  It is based on how the economy is doing.  If the economy is doing well, everyone gets a bigger slice of the pie.  But if the economy isn’t doing so well, then everyone gets a smaller slice of the pie.

The bottom line?  Perhaps the ultimate reason why Sweden is not a socialist nation is their tax policy.  Unlike Canada, where the more you make the more you pay, in Sweden it is just the opposite; the more you make, the less you pay (so that businesses will invest more, hire more and pay more).  They learned this from the IKEA family, who have now moved back home.