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 more free
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.
