Sweden is held up as a socialist’s paradise, proof that big government can deliver big results. However, a new report argues that Sweden’s economic success occurred because social and cultural capital as well as its unique historical circumstances. Indeed, Sweden came out on top in spite of, rather than because of, the socialist policies.
Firstly, the foundations of Sweden’s later success were created between 1870-1936, before the ascendency of the Social Democratic party. The giants of Swedish industry, Volvo, Ikea, and Alfa Laval, all arose during this era of largely unregulated capitalism. Low taxes and pro-business attitudes reigned, and the results are manifest.
Secondly, the authors posit that Sweden’s continued success rests upon social and demographic factors outside the reach of government policy. As they put it, “The perceived advantage of Swedes over other countries rose before the rise of the welfare state”. The factors underlying Sweden’s success are the “Lutheran work ethic” and the “cohesion of a largely homogenous population with particular social values”.
To prove the second point, the authors attempt to show that Swedes living abroad have enjoyed just as much success as their counterparts that did not emigrate. One example is that the poverty rate for Swedes living in Sweden is identical to the poverty rate for Swedes living in America (6.7%, using the same threshold calculations. Furthermore, many government programs in Sweden, such as the enormous State-run healthcare apparatus, have not produced a demonstrable difference in the life expectancy of Swedes. For example, “In 1950, before the rise of the high0tax welfare state, Swedes lived 2.6 years longer than Americans. Today the difference is 2.7”. Enormously expensive socialized medicine has produced only a negligible difference in citizen’s health.
Since governments cannot force their citizens to adopt a Lutheran work ethic or create a largely homogenous population without engaging in large scale social engineering (inappropriate on one side of the scale, genocide on the other), what lessons can the struggling state learn from the Swedish model? Simply: that growth and wealth creation is best left to individual entrepreneurs, and the best action the government can take is to create a pro-business environment in which these individuals have the highest chance of success.