Monday, July 25, 2005


American conservatives should be shouting the Swedish experience from the rooftops

What would American conservatives say of a country that NOT ONLY has an extensive system of government-paid vouchers for private schooling but also has an extensive system of government-paid vouchers for private hospitalization? And what if the same country had ALREADY made big cutbacks in the size of government? A dream for the distant future? Not quite. That country does already exist. It is Sweden. Probably because the mainstream media turn a blind eye to it, most people seem totally unaware that Sweden is moving steadily AWAY FROM the "Swedish model". In the early 90s, the Swedish government was spending nearly three quarters of the national income. That is now down to about half.

Sweden still has a long way to go of course. After their big economic meltdown in the early 90's (huge unemployment and welfare benefits that could no longer be paid for) they undertook an exemplary program of privatizations and made big cuts to both taxes and welfare benefits but there are still huge disincentives to work in Sweden. Incomes are kept pretty uniform regardless of what you do -- meaning that there is little incentive either to improve one's skills or to work hard -- and the sickness benefit side of the welfare system is still a huge racket. People on sickness benefits no longer get a higher income than they would by working but the benefits are still close to wages and access to the system is very easy. So huge numbers of Swedes have declared themselves too ill to work.

As a consequence, average Swedish incomes have fallen well behind American standards -- as indexed by the most objective criterion we have: GDP per capita. When purchasing power is taken into account, the picture is even worse. A cup of coffee, for instance, is likely to cost you three times as much in Sweden as in the USA. Individual Swedes do however manage their money well so there is little visible sign in Sweden of their lower incomes. Visible poverty in any modern society mainly reflects bad decisions rather than lack of income. Money now buys options rather than survival.

So Leftists who advocate high taxes and pervasive welfare need to be told that the country that went furthest in that direction hit a rock years ago and has been paddling in reverse ever since.

More here (PDF)


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