The Non-Existent Stairway To Socialist Heaven In Sweden

Music to read by:

There's a lady who's sure all that glitters is gold
And she's buying a stairway to heaven
When she gets there she knows, if the stores are all closed
With a word she can get what she came for
Ooh, ooh, and she's buying a stairway to heaven

...

 
And it's whispered that soon if we all call the tune
Then the piper will lead us to reason
And a new day will dawn for those who stand long
And the forest will echo with laughter

...

And as we wind on down the road
Our shadows taller than our soul
There walks a lady we all know
Who shines white light and wants to show
How everything still turns to gold
And if you listen very hard
The tune will come to you at last
When all is one and one is all, yeah
To be a rock and not to roll.

And she's buying the stairway to heaven

"92 percent of Americans prefer Swedish model to US model when given a choice"

- Favourite talking point of American Progressives

"There are '92% of Americans,' who are sure all that glitters is gold,

And they are buying a non-existent Stairway to Socialist Heaven in Sweden..."

On a continent of 500 million people and plagued by debt crises, one country has no budget deficit at all and is currently returning to surplus.  With a GDP set to grow by 4% this year, this same country is consistently among Europe's fastest growing economies.

That country is Sweden. For many years, the Progressive-Socialist Left has pointed to the "Swedish Model" upon which to build ideal economies and societies.  Far too often, however, "foreigners have drawn the wrong lessons from Sweden's success."

 

"Whenever I give a lecture, anywhere in Europe, about economic reform, I always get the following response: 'But you come from Sweden, which is socialist and successful—why should we launch free-market policies ?'  The simple truth is that Sweden is not Socialist." 

- Johnny Munkhammar, a Moderate Party member of the Swedish Parliament and the author of "The Guide to Reform"

 

Many American Leftists often point to the "superiority" of Scandinavian "socialism" over the allegedly horrible United States, which they claim is the example of the ravages, extremes, and inequities of laissez-faire capitalism.  The claim that the United States is an example of laissez-faire capitalism is laughable in itself since such hasn't existed in the country since, at least, 1913.  Simply put, one cannot have laissez-faire capitalism when the Federal Reserve is manipulating the market via artificial interest rates and the government is dictating housing policy, for example, both of which affect natural supply and demand exchanges.   In 2011, Hong Kong, Singapore, Australia, New Zealand, Switzerland, Canada, Ireland and Denmark were all rated more economically free than the United States.  This post, however, is not about the Henny-Penny horrors of capitalism in the United States, but the alleged Stairway to Socialist Heaven in Sweden.

 

Between 1980 and 1992, Sweden lost ground relative to other rich countries, according to a McKinsey study. Since 2009, however, Sweden has one of the faster-growing economies in Western Europe. The growth has been led by the private sector, where jobs are multiplying at what Radio Sweden calls "a record pace."  Tight fiscal policy has pushed the public sector's share of GDP back down toward 50% and the goal is to push is still further lower. The economy is growing, the budget is balanced, unemployment is declining.  The governing centre-right coalition was re-elected last year; the once dominant Social Democrats suffered their worst defeat since before World War I.  As an aside, the coalition has declined to partner with the Sweden Democrats, who are anti-immigrant and, according to some, tend to have National Socialist leanings.

“There is a general change in Swedish society.  Social-democratic ideas are losing their grip on Sweden, and we are getting more and more individualistic.”

- Jenny Madestam, a political scientist at Stockholm University, New York Times, 9 September 2010

"By the late 1980s, though, Sweden had started de-regulating its markets once again, decreased its marginal tax rates, and opted for a sound-money, low-inflation policy. In the early 1990s, the pace quickened, and most markets except for labor and housing were liberalized. The state sold its shares in a number of companies, granted independence to its central bank, and introduced school vouchers that improved choice and competition in education. Stockholm slashed public pensions and introduced private retirement schemes, keeping the system demographically sustainable.

These decisive economic liberalizations, and not socialism, are what laid the foundations for Sweden's success over the last 15 years. After the reforms of the early 1990s, Swedes' real wages increased by roughly 35% in a decade. And, as businesses have become more productive and people's incomes have risen, living standards improved. More people eat at restaurants now, more people travel abroad, more people buy DVDs and new cars. More people get more."

According to the World Values Survey and other similar studies, Sweden combines one of the highest degrees of individualism in the world, solid trust in well-functioning institutions, and a high degree of social cohesion. The definition of individualism as concern for the well-being of the self (as opposed to others) does not bring with it a preference for the inequality of outcomes. In fact, those with a strong commitment to individualism also show care and concern for others‘ well-being. The values of individualism are also quite compatible with humanitarian values, e.g. The Humanitarian Foundation of Public Support for Social Welfare, American Journal of Political Science, by Stanley Feldman, State University of New York at Stony Brook and Marco R. Steenbergen, University of North Carolina at Chapel Hill, (2001),  p. 660; Handbook of Social Psychology, Volume 2, 5th Edition, Susan T. Fiske, Daniel T. Gilbert, Gardner Lindzey, (2010); and, Values in the West: A Theoretical and Empirical Challenge to the Individualism-Collectivism Cultural Dimension, World Psychology 1(2), by Shalom H. Schwartz and Maria Ros (1995), pp. 91-122.Among the 160 countries studied in the and released in the 2011 Index of Economic Freedom, Sweden ranks 21st and is one of the few countries that increased its economic freedoms during the financial crisis. 

Sweden gets higher scores for liberal markets than Germany and Belgium, or reformers such as Cyprus and Georgia.  We will discuss these issues and compare them to the United States below in the section on Income Inequality.

 

I.  Taxes

As Emre Ergungor has noted, the “the marginal income tax rate on full-time workers earning the average hourly wage increased from 35% in the second half of the 1960s to 65% in 1976.” Most full-time employees faced marginal tax rates of 65% to 75%, as contrasted with 40% in 1960.

In 2009, the government announced deep cuts in personal income taxes “to stimulate the economy,” together with planned reforms to improve the business climate and create incentives to start companies.

An individual's income is divided into 3 categories: business income, employment income and capital income.

Business (corporate) income effective corporate tax rate is only 26.3% compared to the 35% U.S. corporate tax rate and average effective combined Federal and state rate of 39.3%.

There are only two tax rates for income generated from employment:  20% and 25%.  In the United States, 10%, 15%, 25%, 28%, 33%, and 35%.

Capital income (capital gains and dividends) is taxed at 30% or 21% if offsetting losses exceed $14,524.80, as opposed to 15% on both in the United States.  Unlike business and employment income, capital income is NOT subject to municipal, funeral or church taxes.  Furthermore, capital income can be offset against both or either employment and business losses.

Individuals pay both national income tax and municipal income tax. In 2010, individual income tax rates in Sweden change between 54% and 61%.  The maximum, average, combined income and social security tax for high earners is 57.77% (including mandatory pension contributions), but in the United States, the top 5% can pay as much as 58%, depending on income taxes in their home states and municipalities.

In 2010:

The national income tax for incomes between $53,497.27 and $76,586.78 was 20%.

The national income tax for incomes in excess of $76,586.78 was 25%.

Average municipal tax rate by 2010 is 31.56%.

Average contribution to the Swedish Church, excluding funeral fee is 0.99%

Average funeral fee is 0.22%

National Income Tax: 20/25%

AVERAGE TAX RATE: 57.77%

In the Sollefteå Kommun (local government):

Maximum municipal tax rate, including contribution to the Swedish Church and funeral fee was: 36%

National Income Tax was: 20/25%

MAXIMUM TAX RATE: 61.00%

In the Ragunda Kommun:

Maximum municipal tax rate, including the funeral fee but NOT the contribution to the Swedish Church was: 34.75%

National Income Tax was: 20/25%

MAXIMUM TAX RATE WITHOUT CHURCH TAX: 59.75%

In the Kävlinge Kommun:

Minimum municipal tax rate, including contribution to the Swedish Church and funeral fee was: 29.73%

National Income Tax: 20/25%

MINIMUM TAX RATE: 54.73%

In the Vellinge Kommun:

Minimum municipal tax rate, including the funeral fee, but NOT the contribution to the Swedish Church was: 29.00%

National Income Tax was: 20/25%

MINIMUM TAX RATE WITHOUT CHURCH TAX: 54.00%



Sweden does have a 25% VAT, which is a horribly regressive tax that hurts the poorest the most.

Unlike in the United States, there is no marriage penalty.  Spouses and children residing in the same household are all taxed separately and eligible for the maximum deductions.

In 2004, the Swedish Parliament, after considering reports by the Swedish Tax Office that the death tax and its companion, the wealth tax, had already cost the government a staggering $200-plus billion in lost revenue – more than half the current Swedish GDP – Swedish policymakers realised that the inheritance tax was a recipe for economic disaster.  Accordingly, the Swedish people – including the labour unions – put ideology and party labels behind them and the government repealed the inheritance/estate/death tax.

On 16 December 2004, the Riksdag also repealed all gift taxes.  The repeal was originally to have taken effect on 1 January 2005, but following the 2004 Indian Ocean Tsunami, which killed more than 500 Swedes, the tax was made effective retroactively to 17 December 2004.

In March 2007, Sweden abolished the 1.5% wealth tax.  At the time, it was only one of 4 remaining countries in the OECD that continued to tax wealth.
 
Lastly, a new system of income-tax credits lets working people with average incomes keep what amounts to an extra month of wages, after taxes, per year.



II.  Income Inequality


According to a study on inequality by researchers at the Organization for Economic Cooperation and Development (OECD), when it comes to household taxes (income taxes and employee social security contributions), the United States "has the most progressive tax system and collects the largest share of taxes from the richest 10% of the population. In fact, its tax system is far more progressive -- meaning pro-poor -- than similar systems in countries most Americans identify with high taxes, such as France and Sweden."  Furthermore, the study also shows that, while most countries rely more on cash transfers than taxes to redistribute income, the United States stands out as "achieving greater redistribution through the tax system than through cash transfers."

Progressives love to harp about the GINI coefficient and the alleged rape of the poor inflicted by the Bush tax cuts.  During the mid-2000s, the OECD average GINI score was 45.  The GINI coefficient for the US was 46 and it was 43 in Sweden -- not exactly night and day.

During the reign of the Social Democrats, "Swedes, usually perceived in Europe as a comfortable, middle class lot, [were] poorer than African Americans, the most economically deprived group in the United States."

In 2002, a shocking report was released and headlines in effect that said "If Sweden was part of the United States, it would displace Mississippi at the bottom of the list" screamed from newspapers around the world.  The Swedish Institute of Trade, which, according to Reuters, "compared official U.S. and Swedish statistics on household income as well as gross domestic product, private consumption and retail spending per capita between 1980 and 1999."  The study used "fixed prices and purchasing power parity adjusted data," and found that "the median household income in Sweden at the end of the 1990s was the equivalent of $26,800, compared with a median of $39,400 for U.S. households." Furthermore, the study pointed out that Swedish productivity had fallen rapidly relative to per capital productivity in the United States.

"Weak growth means that Sweden has lost greatly in prosperity compared with the United States...Black people, who have the lowest income in the United States, now have a higher standard of living than an ordinary Swedish household," said the trade group's chief economist, Robert Gidehag.

If Sweden were an American state, it would be the poorest as measured by household income, said Gidehag.  The median income of African-American households was about 70% of the median for all American households, while Swedish household median income was just 68%.

Let's play a game:  It's called "Compare the tax rates of Olav, Inga, Sven, Ilse and Viktoria, who live in the Sollefteå Kommun in Sweden, to the average, middle class American, who American Progressives claim pays 40.3% (25% Federal income tax plus 15.3% payroll tax) -- which is incorrect anyway, because the middle class doesn't pay a 15.3% payroll tax -- that is, unless Progs want to finally admit that taxes on businesses are passed onto employees (through lower wages/benefits) and/or pensioners (retired school teachers) and/or shareholders (union pension fund, individuals with 401ks) and/or consumers)."  Olav earns $55,000, Inga earns $100,000, Sven earns $150,000, Ilse earns $250,000, and Viktoria earns $1,000,000,000.  For ease, we will not consider any deductions or marginality and all income comes from employment.

Olav lives in Sollefteå and earns $55,000: 56%  

Olav lives in America and earns $55,000:  30.3%  (ONLY FEDERAL AND FICA TAXES)

Inga lives Sollefteå and earns $100,000: 61% 

Inga lives in America and earns $100,000:  40.3%  (ONLY FEDERAL AND FICA TAXES)

Sven lives Sollefteå and earns $150,000: 61%

Sven lives in America and earns $150,000:  43.3%  (ONLY FEDERAL AND FICA TAXES) 

Ilse lives Sollefteå and earns $250,000: 61%

Ilse lives in America and earns $250,000:  48.3%  (ONLY FEDERAL AND FICA TAXES)

Viktoria lives Sollefteå and earns $1,000,000,000: 61%

Viktoria lives in America and earns $1,000,000,000:  50.3%  (ONLY FEDERAL AND FICA TAXES)

As you can see, the progressivity is much, much greater under the American tax system than under the Swedish model.

Now, let's assume that all income save that of Viktoria's comes from employment.  Her income is derived from capital - capital gains and/or dividends - which is exempt from the national income tax, which was 20/25%, and the maximum municipal tax rate, including contribution to the Swedish Church and funeral fee, which was 36%.
 

Olav lives in Sollefteå and earns $55,000:  His tax rate is 56%.

Inga lives Sollefteå and earns $100,000: Her tax rate is 61%.

Sven lives Sollefteå and earns $150,000:  His tax rate is 61%.

Ilse lives Sollefteå and earns $250,000:  Her tax rate is 61%.

Viktoria lives Sollefteå and earns $1,000,000,000: Her tax rate is 30%.

In 2010 in Sweden:

Person A, who earned $75,000 from employment, had a 20% national income tax rate.

Person B, who earned $100,000 from employment, had a 25% national income tax rate.

Person C, who earned $1,000,000,000 from dividends and capital gains, paid a 30% tax rate...

BUT:

Person A and Person B also paid an average municipal tax rate of 31.56%.

Person C paid NO municipal tax.

Person A and Person B also paid an average contribution to the Swedish Church of 0.99%.

Person C paid NO contribution to the Swedish Church.

Person A and Person B also paid an average funeral fee of 0.22%

Person C paid NO funeral fee.

When A, B, and C die, no taxes whatsoever will be paid on their estates whether they are worth $1 or $1,000,000,000.

III.  Government Spending & State-Owned Corporations

Sweden began its movement toward a welfare state in the 1960s, when its government sector was about equal to that in the United States.  At that time, government spending accounted for about 30% of GDP. By the late 1980s, government spending had grown to more than 60% of GDP.  Soaring taxes funded a dramatic expansion of government: The public sector accounted for 20% of total Swedish employment in 1965 and 38% in 1985. 

By 1993, the government budget deficit was 13% of GDP and total government debt was about 71% of GDP, which led to a rapid fall in the value of the currency and a rise in inflation.

According to a McKinsey & Co. analysis of per capita GDP and purchasing-power parity, Sweden went from being the fifth-richest OECD member in 1970 to being the 16th-richest in 1998. Since then, propelled by ambitious free-market reforms, it has regained much (though not all) of the ground it lost.

"By the late 1980s, though, Sweden had started de-regulating its markets once again, decreased its marginal tax rates, and opted for a sound-money, low-inflation policy. In the early 1990s, the pace quickened, and most markets except for labor and housing were liberalised. The state sold its shares in a number of companies, granted independence to its central bank, and introduced school vouchers that improved choice and competition in education. Stockholm slashed public pensions and introduced private retirement schemes, keeping the system demographically sustainable.

These decisive economic liberalisations, and not Socialism, are what laid the foundations for Sweden's success over the last 15 years. After the reforms of the early 1990s, Swedes' real wages increased by roughly 35% in a decade. And, as businesses have become more productive and people's incomes have risen, living standards improved. More people eat at restaurants now, more people travel abroad, more people buy DVDs and new cars. More people get more.

Last year, the state's total tax take comes to 45% of GDP down from 56% ten years ago.  In contrast, the United States' total (Federal, state, and local) tax revenues as a percentage of GDP was 41.35%.  (Total spending was $6,017 trillion and the GDP was $14,551.8).

IV.  Economy

Between the 1960s and mid-2000s, labour-market regulations were introduced to make it very difficult to fire workers. Business profits were taxed heavily, and financial markets were regulated heavily.  These policies and outcomes greatly diminished the incentives to work, save and invest. Economic growth slowed to a crawl. Other countries that avoided the excess spending, taxing and regulation of Sweden grew more rapidly, leaving Sweden in the dust.
 
As a result of the prudent economic stewardship of the centre-right coalition and a relatively conservative financial sector, Sweden entered the 2008 global recession on a sound footing. Similarly to the rest of the EU and US, it endured a ghastly spike in unemployment, but because its export-driven recovery has been so vigorous, the Sveriges Riksbank, the Swedish central bank, is now concerned about inflation risks. In the second quarter of 2010, Sweden posted a 4.6 percent annual growth rate, which prompted the Wall Street Journal to hail it as “the biggest success story in post-recession Europe.”

 

At the end of 2010, Sweden had one of the lowest debt-to-GDP ratios in the entire developed world:  39.8%, as well as a balanced budget.  In contrast, at the end of FY2010, the United States' debt-to-GDP ratio was 92.97%, its deficit-to-GDP ratio was 8.89%, and its deficit was a staggering $1.45518 trillion.

The Prime Minister, Fredrik Reinfeldt, has announced that the government "will deliver on tax cuts for 6.1 million workers and pensioners ... (when/if) a surplus (is) in place.”  Additionally, the Finance Minister, Anders Borg, has announced plans to privatise another $14 billion worth of state assets. 

In Sweden, GDP per capita is while in the U.S. it is $46,381.

In 2010, the World Economic Forum ranked Sweden as the second-most competitive economy on Earth, behind only Switzerland.

In the 1990s, the government started to deregulate financial markets, telecommunications, electricity, road transport, taxis and other activities. 

Though mainly state-owned corporations historically accounted for about one fourth of the market capitalisation of the Stockholm Stock Exchange, the government has privatised or plans to privatise most of its crown jewels, including the stock exchange itself (sold), the Apoteket pharmaceutical distribution monopoly (615 of the 945 state-owned pharmacies have been sold to private owners), the former alcohol manufacturing and distribution monopoly Vin & Sprit (sold), and major state-owned telecoms (still owns Teracom), real estate (not completely divested, but moving in an opposite direction from the United States and Akademiska Hus Ab has been privatised), and financial firms (sold). Industry itself has always been overwhelmingly in private hands, and Sweden has a lot of world-renowned companies for a country of only nine million people, including Volvo, SKF, Ericsson, Skanska, Electrolux, Sandvik, Atlas Copco, Ikea, and H&M.

"ANNUAL growth as high as 6.4% in the first quarter. Unemployment falling fast. The budget in surplus this year. Public debt heading to below 40% of GDP. How did the Swedes do it?  Luck, partly ... Sweden is a big manufacturing exporter ... GDP rebounded in 2010 after a sharp fall in 2009. Being outside the euro helped, because the krona fell before climbing back. But the main answer is the prudent pro-market policies of Fredrik Reinfeldt’s four-party centre-right coalition, which came to power in October 2006."

In the 1990s, Saab and Volvo sold their passenger car divisions to General Motors and Ford, respectively, while holding on to their lucrative truck, heavy equipment, and aerospace operations.

In early 2009, as General Motors teetered on the edge of bankruptcy and the American government started crafting its takeover of GM and Chrysler, the Swedish government firmly rejected the idea of a Saab bailout.

“The Swedish state is not prepared to own car factories.” 

- Maud Olofsson, the Minister of Enterprise

The government still owns SJ AB - a passenger train operator; Jernhusen AB, which owns railway stations and some residue buildings following the disbandment of Statens Järnvägar, the national railroad industry, in 2001; LKAB - a state-owned mining company; Svenska Spel - a regulated gambling market; Rymdbolaget - the Swedish space company; Systembolaget - a chain of liquor stores; and Vattenfall - a power company.

GDP per hour worked was the world's 12th highest at $50 in 2009, compared to $27 in South Korea (29th) and $59 in United States (4th).  GDP per hour worked is growing 2½ per cent per year for the economy as a whole and the trade-terms-balanced productivity growth is 2%.

According to the OECD, deregulation, globalisation, and technology sector growth have been key productivity drivers.

V.  Social Programmes

Perhaps, as a result of their Lutheran heritage that has imparted to the Swedes some common sense and a work ethic, unemployment benefits, sick leave and early retirement plans have all been streamlined to encourage work.


 A.  Welfare and Unemployment Benefits

The generosity of some welfare and other benefits has been reduced, with the goal of making work more economically rewarding relative to government benefits.

The maximum $1,650 after-tax monthly employment benefit is hardly lavish, and in most cases it expires after 300 days.

The number of people receiving such welfare—which soared during the Socialist decades—has fallen by 150,000 since 2006, a main reason for Sweden's remarkably sound public finances.


B.  Jobs Programmes, Minimum Wages, Labour Exemptions and Flexible Contracts

The government offers retraining, employment subsidies and reduced employer social contributions to encourage companies to hire the unemployed, with additional enticements such as lower minimum wages and flexible contracts for hiring people under 25.


C.  Disability Insurance and the Move to Work


The 2006 OECD series, Sickness, Disability and Work, explores some of the reasons behind a phenomena found in all OECD countries, but focusing on Sweden, namely:  "How is it possible for average health status to improve while many workers continue to leave the labour market permanently due to health problems, forced to rely on welfare to survive while at the same time, many working-age adults with reduced work capacity are denied the opportunity to work?"

When the current government came into office in 2006, almost 30% of the working-age population was unemployed, underemployed or receiving other social benefits, and its initial reforms focused on unemployment. Some 200,000 people have joined the labour market since then. More recent changes have been concerned with advancing employment possibilities for those affected by sickness and disability.

"Since 2006 when Sweden had the highest level of dependence on sickness and disability benefits in the OECD (14% of the working age population), significant reforms have taken place to address structural issues dating back to the mid-1990s when a shift from unemployment benefits occurred. The hitherto time-unlimited sickness benefit was capped to six months and those no longer eligible becoming expected to seek to continue work in an amended or different job, including in one with a different employer if necessary. This reform is particularly significant because it aims to address one of the key problems affecting many other countries: people holding on to the wrong jobs for too long."

What has changed since 2006?

Situation in 2006:

Unlimited sickness benefit duration

Situation in late 2008:

Sickness benefit for a maximum of one year, but only if after if after 180 days there is no work capacity to perform any job. Prolonged sickness benefit can be granted for a maximum of 550 days.

Situation in 2006:

The employer finances the first 14 days of sickness absence and 15% afterwards, and is required to prepare rehabilitation investigation.

Situation in late 2008:

The employer finances only the first 14 days, and may be asked to provide the SIA with information it needs for rehabilitation planning. The SIA can demand that a sick worker request from their employer a certificate showing what has been done to accommodate the
employee.

Situation in 2006:

Disability benefit can be either temporary or permanent.

Situation in late 2008:

Disability benefit is only granted for permanent reductions in work capacity.

Situation in 2006:

Disability beneficiaries are entitled to their benefit if they attempt work for up to two years; they will be reassessed if at work for longer.

Situation in late 2008:

Disability beneficiaries are guaranteed not to be reassessed if they attempt paid work and are allowed to earn a substantial amount of income and still keep their benefit.

Situation in 2006:

No tax advantage for employing a person with disability.

Situation in late 2008:

“Special new-start jobs” subsidise employers with an amount equal to twice the employers’ contributions when hiring long-term unemployed and individuals previously on sickness, rehabilitation or disability benefits.

D.  Pensions

Sweden is a world leader in privatised pensions and pension funding problems are relatively small compared to many other Western European countries.

"Sweden was the first nation to implement a mandatory government retirement system for all its citizens. Sweden, like the United States and most other countries, was faced with an increasing, unfunded social security liability as a result of low birthrates and people living much longer. After studying the problem in the early 1990s, the Swedes approved, in 1998, moving toward a Chilean private pension system, first developed by former Chilean Labor Minister Jose Pinera. (Seventeen countries have adopted variations of the Pinerian system, which has been very successful in Chile.)"

- Richard W Rahn, Senior Fellow, Cato Institute and Chairman of the Institute for Global Economic Growth, "The Swedish Model,"The Washington Times, 18 August 2009

The retirement age has been increased to 67 years.

E.  Healthcare

With regard to health care, Sweden’s single-payer system came under intolerable stress in the 1980s, with rising costs and growing waiting lists for medical procedures.  Hospitals have been privatised and the market share of private medical practitioners is on the rise. Many kinks still need to be worked out, but Stockholm, which has been most aggressive in introducing market-oriented reforms, has shown impressive results.  The capitol has also introduced a law that empowers Swedes to chose their providers for health care and other public services. This has led to a robust surge in entrepreneurship within the health-care sector, where more competition is bound to improve service.

Unlike countries like Britain, Sweden is happy to let private schools and hospitals make profits from taxpayer-financed services if outcomes are better.

As an aside, writing in the European Sociological Review, University of Washington sociologist Maureen Eger notes that Sweden has undergone a rapid transformation from a homogeneous society to a multicultural one. In 1960, foreign-born residents made up 4% of the nation’s population; that figure is now up to 13%.  As a result and by looking at census data and survey responses collected between 1986 and 2002, she report in her paper, "Even in Sweden:  The Effect of Immigration on Support for Welfare State Spending,"that “in counties with a high proportion of recent immigrants, respondents are significantly less supportive of the welfare state.”

 “Recent sociological research demonstrates that the presence of ethnic minority groups has a negative effect on Americans’ support for social welfare.  I argue that this relationship is not limited to the United States.” 

- Maureen Eger, University of Washington sociologist 

Her study appears to confirm this premise.   Further, she notes that “immigration is the only county-level variable that negatively affects Swedes’ attitudes” toward the social safety net.  This phenomenon was previously suggested in a study in the United States and cited by the Left as evidenced of the inherent racism of the evil United States, but how to explain Sweden, which is widely considered as the most egalitarian on Earth?  Perhaps, the Left should read Marx and Engels.  More than 150 years ago, they stated that homogeneous cultures were more likely to be successfully transformed into Socialist societies than multicultural ones.

VI.  Freedom:  United States v. Sweden

Business Freedom

US:  91  (-.3)

Sweden:  95  (-.5)

Trade Freedom

US:  86.4  (-.5)

Sweden:  87.6  (+.1)

Fiscal Freedom

US:  68.3  (+.8)

Sweden:  37.6 (+.9)

Government Spending

US:  54.6   (-3.6)

Sweden:   17.3  (no change)

Monetary Freedom

US:  77.4  (-.7)

Sweden:  80.1  (+.6)

Investment Freedom

US:  75.0  (no change)

Sweden:  85.0  (no change)

Financial Freedom

US:  70.0 (no change)

Sweden:  80.0  (no change)

Property Rights

US:  85.0  (no change)

Sweden:  90.0 (-5.0)

Freedom From Corruption

US:  75.0  (+2.0)

Sweden:  92.0  (-1.0)

Labour Freedom

US:  95.7  (+.9)

Sweden:  54.0  (-.9)

VII.  Decentralisation

The national government has devolved substantial power to county councils and has given them freedom to introduce market-based reforms, which most have done.

To be continued...

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