By John Stossel | The Daily Signal
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.
