Should the U.S. Follow Sweden’s Example?

Spencer Caron

Opinions Editor

Ah, Sweden! The Scandinavian nation emphatically cited by Bernie Sanders, Alexandria Ocasio Cortez, and other so-called democratic socialists when pressed if they are earnestly advocating for the type of economic order causing famine and social unrest in Venezuela right now. Before this article continues any further, it is necessary to clarify something up front: this piece is not meant to, per se, critique socialism (or Marxism for those who see socialism’s logic through to the end) as a sociopolitical economic system. In full transparency, however, I do not personally support socialist reform (in an overwhelming majority of cases) for myriad reasons. The purpose of this piece is to shed light on the fact that Sweden does not truly present an alternative to capitalism and the presumably “un”-democratic socialism. In fact, in at least a few ways, Sweden could be cited by economic conservatives as a nation after which the United States ought to model itself. The implications of finding Sweden to be rather anti-socialist would prove numerous and debatable, but specifically, they should make voters ask, “What exactly does Senator Sanders want, then?”

Why exactly is Sweden so frequently cited by many democratic leaders as one of the nations that have “gotten it right”? First, Sweden enjoys a high standard of living, and is the seventh richest nation in the world when measured by GDP numbers. In this sense, Sweden seems to serve as proof that a “fairer” and hierarchical system does not inevitably lead to nation becoming poorer. In other words, it seems to challenge the conservative stereotype that a departure from capitalism is perfectly correlated with a descent into squalor.

Second, Sweden’s extremely low crime rates are often bundled in as a natural positive byproduct of socialist economic reform. Surely, high-level scholarship has been, and is being, done on the causal effect–I am ill versed on the findings of these studies so will refrain from making further comment on them–of income inequality on crime, but suffice it to say, they are surely confounding variables in this system. Namely, Sweden’s population is roughly 25% that of California, and, let us accept the theory for the sake of argument that much of crime, discrimination, etc. is due in some part to the troubled history of race/ethnicity relations. It would stand to reason, then, that a racially/religiously/ethnically homogenous population would experience lower levels of social unrest.

The social dynamics of Sweden are far too complex to be dealt with here, but the economic policies of the “socialist success story” can be at least surveyed. Let’s start basic: socialism, properly construed, involves publicly owned and regulated means of production. Now, debate is to be had regarding the extent to which certain industries remain private in Sweden today, just as the United States, a capitalist country, has socialist tendencies. (Think Social Security, Medicare, the Post Office, etc..) What is not debatable is that Sweden’s most truly socialist period was during the 1970s and ‘80s, a period that yielded an economic recession. Especially after the Oil Embargoes of the 1970s, Sweden’s government began to increase taxes and the national government spent over half of its GDP each year. Moreover, Jonah Norberg’s documentary Sweden: Lessons for America? details long lines outside of welfare offices and declining quality of consumer goods. Facing such a declining economic environment, Sweden began to privatize state owned businesses, Absolut Vodka, and the railway system, for instance, as well as eliminate the inheritance tax. Perhaps most shocking in contrast to the narrative sold about Sweden today is the fact that the pension system was privatized after all political parties agreed that the current socialist pension system was headed for insolvency. (I urge readers to look into the history of Sweden’s economic transformation, for an article of this scope cannot adequately capture its history.)

So, taken together, it can be said that Sweden’s most socialist period (1970s-1980s) corresponded with the lowest standard of living and gravest economic struggles, and free market approaches turned the country around economically. (Simplistic though it may seem, the numbers are available on Wikipedia for corroboration.) This said, one cannot deny the fact that Sweden supports a larger, more comprehensive welfare state than does the United States. For instance, Swedes are treated in a publically funded health care market, the elderly are looked after, and maternal and paternal leave is longer lasting and guaranteed to all Swedes. One would be remiss, however, to leave out the fact that Sweden has an extensive school choice voucher system. (They saw classroom improvement within the private schools as well as in the surrounding public schools!) One is also hard pressed to think of a democratic socialist who would be caught advocating for such a reform in the United States.

But what Senator Sanders and cohorts always fail to mention is just how these services are paid for. There simply is no way that, on the one hand, Swedes enjoy myriad welfare benefits that the United States lacks, while, on the other hand, does not have an economic system that generates taxable wealth; this tax-money generating economic system is free-market capitalism. We have seen that Sweden moved towards privatizing the means of production during post recession years. In addition, Sweden trades more than more other countries, and their corporate tax rate is lower than that of the United States. (Yes, really.)

While the solution, when stated plainly, in the United States is to tax the rich at high levels so as to have money to redistribute to the poor, the Sweden model is more akin to taxing the middle and lower classes to pay for the very services these classes will be “provided with” by the state. The Economist magazine is one of many sources to note that the typical worker (Senator Sanders’ favorite American character) brings in around 40% of their wages. Put another way, 60% of what their labor is worked is taken by the state in the form of taxes. No wonder the state can then provide that worker with childcare, doctor’s visits, etc. This is not to say the tax model is bad, but just that it should be properly understood so as to elucidate the difference in what Sanders, et al are calling for in the United States.

There exist many valid critiques of American capitalism. In my estimation, the unhealthy relationship between the state and big business is the main concern, not capitalistic economic policies themselves. My rather untutored opinion aside, what seems to be undeniable is that free markets are engines of wealth creation. How a state decides to tax that wealth is a separate, though related issue. What ought to cease is the broad, overly idealistic praise of Sweden from leading democrats and so-called democratic socialists; unless, that is, they wish to join fiscal conservatives in cheering on privatization, robust trade, and lower corporate tax rates. Then I join Bernie in saying, “We need to look at Sweden!”

Facts and Figures from “Sweden” Wikipedia page, “Pension Reform in Sweden” from the Heritage Foundation, and Sweden: Lessons for America?  A documentary by Johan Norberg.

 

 

 

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