September 30, 2011

I'm looking forward to seeing conservatives driving Volvos, with Palin stickers...

It's surprising—and very pleasing—how often one hears these days of wisdom coming from odd corners of the planet. It gives me a sort of "world turned upside down" feeling. My belief is that the US will catch up, once the zombie corpse collectivism currently stomping about here has toppled into the dust. Say, maybe, around January 20, 2013. If there's hope for the Swedes, there's hope for us!

(In honesty, I don't really think there's long-term hope for Sweden, because Sweden has no purpose. No higher cause, no dream, no ennobling philosophy. No vocation. You can't go very far on a dream of just muddling through without too many problems.)

The American Spectator : Free Market Sweden, Social Democratic America:

...Facing severe economic stagnation, Sweden began implementing several rather un-social democratic measures in the early 1990s. This included curtaining its public sector deficit and reducing marginal tax-rates and levels of state ownership. Another change involved allowing private retirement schemes, a development that was accompanied by the state contributing less to pensions.

These reforms, however, proved insufficient. In the early 2000s, according to James Bartholomew, author of the best-selling The Welfare State We're In (2006), more than one in five Swedes of working-age was receiving some type of benefit. Over 20 percent of the same demographic of Swedes was effectively working "off-the-books" or less than they preferred. Sweden's tax structure even made it financially advantageous for many to stay on the dole instead of getting a job.

But with a non-Social Democrat coalition government's election in 2006, Sweden's reform agenda resumed. On the revenue side, property taxes were scaled back. Income-tax credits allowing larger numbers of middle and lower-income people to keep more of their incomes were introduced.

To be fair, the path to tax reform was paved here by the Social Democrats. In 2005, they simply abolished -- yes, that's right, abolished -- inheritance taxes.
But liberalization wasn't limited to taxation. Sweden's new government accelerated privatizations of once-state owned businesses. It also permitted private providers to enter the healthcare market, thereby introducing competition into what had been one of the world's most socialized medical systems. Industries such as taxis and trains were deregulated. State education and electricity monopolies were ended by the introduction of private competition. Even Swedish agricultural prices are now determined by the market. Finally, unemployment benefits were reformed so that the longer most people stayed on benefits, the less they received.

So what were the effects of all these changes? The story is to be found in the numbers. Unemployment levels fell dramatically from the 10 percent figure of the mid-1990s. Budget-wise, Sweden started running surpluses instead of deficits. The country's gross public debt declined from a 1994 figure of 78 percent to 35 percent in 2010. Sweden also weathered the Great Recession far better than most other EU states. Sweden's 2010 growth-rate was 5.5 percent. By comparison, America's was 2.7 percent.

Of course Sweden's story is far from perfect. Approximately, one-third of working Swedes today are civil servants. Some of the benefits of tax reform have been blunted by Sweden's embrace of carbon taxes since the early 1990s. That partly reflects the extent to which many Swedes are in thrall to contemporary Western Europe's fastest growing religion -- environmentalism.

High unemployment also persists among immigrants and young Swedes (25.9 percent amongst 15-25 year olds). This owes much, Bartholomew observes, to "the high minimum wage imposed on the various industries by the still-powerful unions. Those who cannot command a good wage are not allowed to work for a lower one." On the income side, average Swedish wage-earners in 2009 still took home less than 50 percent of what they cost their employer. The equivalent figure for Britain was 67 percent....
Posted by John Weidner at September 30, 2011 9:11 PM
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