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The Daily Signal
Sweden
Isn’t Socialist
By John Stossel
January 04, 2019
For years, I’ve heard American leftists say Sweden is proof that
socialism works, that it doesn’t have to turn out as badly as the
Soviet Union or Cuba or Venezuela did.
But that’s not what Swedish historian Johan Norberg says in a new
documentary and Stossel TV video.
“Sweden is not socialist—because the government doesn’t own the means
of production. To see that, you have to go to Venezuela or Cuba or
North Korea,” says Norberg.
“We did have a period in the 1970s and 1980s when we had something that
resembled socialism: a big government that taxed and spent heavily. And
that’s the period in Swedish history when our economy was going south.”
Per capita gross domestic product fell. Sweden’s growth fell behind
other countries. Inflation increased.
Even socialistic Swedes complained about the high taxes.
Astrid Lindgren, author of the popular “Pippi Longstocking” children’s
books, discovered that she was losing money by being popular. She had
to pay a tax of 102 percent on any new book she sold.
“She wrote this angry essay about a witch who was mean and vicious—but
not as vicious as the Swedish tax authorities,” says Norberg.
Yet even those high taxes did not bring in enough money to fund
Sweden’s big welfare state.
“People couldn’t get the pension that they thought they depended on for
the future,” recounts Norberg. “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.
They also reduced pension promises “so that it wasn’t as
unsustainable,” adds Norberg.
As a result, says Norberg, his “impoverished peasant nation developed
into one of the world’s richest countries.”
He acknowledges that Sweden, in some areas, has a big government: “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
morefree market.”
Sweden’s free market is not burdened by the U.S.’s excessive
regulations, special-interest subsidies, and crony bailouts. That
allows it to fund Sweden’s big welfare programs.
“Today our taxes pay for pensions—you (in the U.S.) call it Social
Security—for 18-month paid parental leave, government-paid childcare
for working families,” says Norberg.
But Sweden’s government doesn’t run all those programs. “Having the
government manage all of these things didn’t work well.”
So they privatized.
“We realized in Sweden that with these government monopolies, we don’t
get the innovation that we get when we have competition,” says Norberg.
Sweden switched to a school voucher system. That allows parents to pick
their kids’ school and forced schools to compete for the voucher money.
“One result that we’ve seen is not just that the private schools are
better,” says Norberg, “but even public schools in the vicinity of
private schools often improve, because they have to.”
Sweden also partially privatized its retirement system. In America, the
Cato Institute proposed something similar. President George W. Bush
supported the idea but didn’t explain it well. He dropped the idea when
politicians complained that privatizing Social Security scared voters.
Swedes were frightened by the idea at first, too, says Norberg, “But
when they realized that the alternative was that the whole pension
system would collapse, they thought that this was much better than
doing nothing.”
So Sweden supports its welfare state with private pensions, school
choice, and fewer regulations, and in international economic freedom
comparisons, Sweden often earns a higher ranking than the U.S.
Next time you hear Democratic Socialists talk about how socialist
Sweden is, remind them that the big welfare state is funded by Swedes’
free-market practices, not their socialist ones.
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