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The New Swedish Model
The Foundation for Economic Education ^ | March 1, 2013 | Sandy Ikeda

Posted on 03/04/2013 3:50:59 AM PST by 1rudeboy

Among policy nerds back in the day, “Swedish model” meant the brand of social democracy practiced in Sweden in the second half of the twentieth century. (Somebody would usually crack wise about Anita Ekberg whenever the phrase was uttered.) But for a very long time, whenever the problems of socialism were discussed, it was common to hear people say as a kind of shut-up argument: “Ah, but socialism works in Sweden; what about the Swedish model?”
 
Swedish social democracy created an extensive welfare state—including comprehensive health care, generous unemployment benefits, and marginal tax rates commonly in excess of 70 percent. But that followed years of relatively free-market policies in the early twentieth century, which generated impressive economic growth. Government intervention in Sweden didn’t really get going until the 1960s.
 

The Economist on “Northern Lights”

 
Interventionists in the United States could learn something from what’s going on now in Sweden (although I fear they won’t). According to a recent spread in The Economist magazine
 
Sweden has reduced public spending as a proportion of GDP from 67 percent in 1993 to 49% today. It could soon have a smaller state than Britain. It has also cut the top marginal tax rate by 27 percentage points since 1983, to 57%, and scrapped a mare’s nest of taxes on property, gifts, wealth and inheritance. This year it is cutting the corporate-tax rate from 26.3% to 22%.
 
Compare these rates with the U.S. tax rates, under the 2013 tax law, of 39.6 percent on incomes above $400,000 (filing single) and 35 percent on corporations.
 
But in some sense the current dramatic policy changes in Sweden are just a continuation, after an interruption of several years, of a dis-interventionist trend that began in the 1990s. The “new” Swedish model is not really that new. Indeed, Sweden has climbed to 30th out of 144 countries in economic freedom according to FreetheWorld.com, compared to the United States, which has fallen to 18th, just ahead of Germany (31st) and far outpacing France (47th) and China (107th).
 

So What About the United States?

 
The federal deficit numbers in the United States, however, look worse compared to Sweden’s. Again, according to The Economist,
 
Sweden has also donned the golden straitjacket of fiscal orthodoxy with its pledge to produce a fiscal surplus over the economic cycle. Its public debt fell from 70% of GDP in 1993 to 37% in 2010, and its budget moved from an 11% deficit to a surplus of 0.3% over the same period.
 
The current federal deficit—the annual excess of government spending over tax revenue—is around $1.1 trillion.
 
The accumulated debt of the United States federal government now exceeds $15 trillion, which is roughly equal to the current gross domestic product (GDP), the dollar value of all goods and services produced in the U.S. economy in 2012. That means that the federal debt as a percentage of GDP is now slightly more than 100% percent (compared to 37 percent in Sweden). 
 
The United States does compare favorably to Sweden in federal spending as a percentage of GDP. For the United States, that’s about 39 percent, versus over 50 percent for Sweden. Including state and local spending boosts this figure somewhat over 40% percent of GDP for the United States, but that’s still significantly below Sweden's figure. Sweden, though, with one-thirtieth the population of the United States, has a per capita GDP of $57,091 to the United States’s $48,112.
 

If Sweden Can Do It, Can the United States?

 
Some fear that a debt-to-GDP ratio above 100 percent places the United States past the fiscal “point of no return”—that is, past the point where in modern times governments have been able to significantly reduce the percentage of debt to GDP. How did things get so bad?
 
Milton Friedman brilliantly characterized the main alternative politico-economic systems as follows: 
 
1) spending my own money on myself (capitalist model)
 
2) spending my money on someone else (Christmas model)
 
3) spending someone else’s money on myself (rent-seeking model)
 
4) spending someone else’s money on someone else (socialism)
 
He went on to say that the problem with socialism is that eventually you run out of other people’s money.
 
But if Sweden, a country in which the welfare state has been so entrenched over so many decades, can make such dramatic, even radical, changes in its interventionist habits, why couldn’t the United States? A comparably dramatic reform here—perhaps “revolution” comes closer to describing what would be needed—is certainly possible, despite staggering institutional barriers, tenacious entrenched interests, and sheer economic ignorance. 
 
The biggest obstacle, as I see it, is not having the strength of will to sustain the relentless intellectual and political battle needed to overcome all those other obstacles. And in all honesty, I find it hard to be very optimistic about that.
 

The Greek Model

 
Well into my sixth decade of life, one of the things I think I’ve learned is that radical change and the will to see it through are indeed possible—beyond any so-called point of no return—but only when it’s clearly a matter of life and death. There has to be a sense of urgency, even desperation, to the extent that you become willing to do whatever it takes to survive. But of course desperation is tricky; desperate people can easily make matters worse. It’s perhaps during crises, moments of widespread desperation, that a well-developed philosophy of freedom can have its finest moment by guiding desperate people toward real solutions.
 
So does the United States have to follow, say, hapless Greece—with its bloated welfare state, strangling regulation and taxation, and monetary profligacy—before our crony-capitalist system develops cracks wide enough for enough of us to see that embracing liberty and rejecting statism is our last, our best, and our only hope?
 
I’m afraid our economy will have to look much more like the Greeks’ before we’ll muster the will to follow the example of the Swedes.


TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; Front Page News; Government; Politics/Elections
KEYWORDS: sweden
I know what you were thinking. Now sit up straight and read. There will be a quiz on Friday.
1 posted on 03/04/2013 3:51:08 AM PST by 1rudeboy
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To: Toddsterpatriot; expat_panama; Mase; 1010RD

ping


2 posted on 03/04/2013 3:52:01 AM PST by 1rudeboy
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To: 1rudeboy

My prediction is that this thread will soon be filled with pics of tall, slim, blond Nordic women.


3 posted on 03/04/2013 3:53:31 AM PST by vladimir998
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To: 1rudeboy
still....you would be wise to post a pic or two. no matter how brilliant this article may be, some FR peeps will not switch gears quickly enough to appreciate it. A pic of a real Swedish model will appease the masses AND, perhaps, lead the reader back to the article to give it a proper read.

just sayin. :P (and I'm sayin this as a chick...but I knowz my FReepers!)

4 posted on 03/04/2013 3:56:32 AM PST by ZinGirl (kids in college....can't afford a tagline right now)
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To: vladimir998
My prediction is that this thread will soon be filled with pics of tall, slim, blond Nordic women.

I doubt it.


5 posted on 03/04/2013 3:56:52 AM PST by central_va (I won't be reconstructed and I do not give a damn.)
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To: ZinGirl
Dr. Sandy Ikeda


6 posted on 03/04/2013 3:59:30 AM PST by 1rudeboy
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To: 1rudeboy

For your quiz on Friday, I suggest the following term for the Vocabulary section: cultural homogeneity. This is the primary reason the Swedes could move back from the precipice and why the author’s basic point about the US likely following the Greek model before a total overhaul.


7 posted on 03/04/2013 4:00:20 AM PST by T-Bird45 (It feels like the seventies, and it shouldn't.)
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To: 1rudeboy

I remember reading a really interesting quote in a National Geographic article on Sweden, so it must have been 15 or 20 years ago, as I bet I dropped my subscription due to their blatant in-your-face Leftism around 15 years ago.

In the article, they were talking about Swedish socialism with a Swede, who basically said they were in a better place politically than we were, as they had realized they had taken the wrong path, and had reversed course, while we were still going full speed ahead. Even if at that moment, they were much more socialist than we were.

Looking back, he may have nailed it.


8 posted on 03/04/2013 4:07:45 AM PST by FreedomPoster (Islam delenda est)
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To: 1rudeboy

“The New Swedish Model”... Yes, I was expecting a cute blue eyed blond!!!

Excellent article. In response to the question, “Can we do it too?” I fear not as we have ourselves in a double bind with interest rates.

Banks and financial institutions cannot lend long term at the current low interest rates, thus virtually all mortgages, student loans, and many of the commercial loans are either flow through money from the government or government guaranteed. If we allow interest rates to creep up (as they should at the rate the Fed is printing money, it will take 100% of our tax revenue just to pay the interest on the outstanding debt. This is without considering Social Security and other unfunded or underfunded programs which we have already entitled to people.

Between the Fed printing money and propping up the government with loans, purchasing treasury securities to keep interest rates low, pumping many $$$ into a low volume stock market to prop up prices, and the government manipulating the cost of living index to keep interest rates low and wage increases checked....... WE ARE SCREWED!!!

We are a facade government waiting for the balloon to burst any day. There is absolutely no way to make it through this nightmare without a new government formulation that wipes the slate clean, takes away everyone’s golden egg laying goose, screws the debtors, and lets the taxpayers get back to their individual businesses.


9 posted on 03/04/2013 4:08:46 AM PST by tired&retired
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To: 1rudeboy

Thanks for the ping. At the website the trend inticates that Sweden was as high as 17th in 2001 and so has fallen to 30th today. Who moved up and how would be an interesting article.


10 posted on 03/04/2013 4:43:53 AM PST by 1010RD (First, Do No Harm)
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To: 1rudeboy

Thanks for the ping. At the website the trend inticates that Sweden was as high as 17th in 2002 and so has fallen to 30th today. Who moved up and how would be an interesting article.


11 posted on 03/04/2013 4:44:15 AM PST by 1010RD (First, Do No Harm)
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To: 1rudeboy

The “Swedish model” works only if all the participants are Swedish models. When the other demographics begin to get mixed in there, then the scheme begins to break down, as all Swedes are not of the tall, Nordic female of exquisite beauty persuasion. There are the swarthy stocky people, the immigrants without a common culture with the rest of the Swedes, and the grumpy old guys who have seen life at its best and worst, but nobody listens to them.

Imagine how this could be applied here in the USA, with its diverse ethnic backgrounds, and less of a commitment to God, country and the family every day. Socialism would have less chance of working here in this country than it did in the Soviet Union, where they finally had to fold up their theories and tents, and surrender to the reality of the Universe, which is NOT compatible with the command economy model.

Command economies, though they appear to be “efficient”, finally have to resort to force to compel its individual members to conform to the needs of the commune, at the expense of their own personal wants and/or needs. If the individuals have the means to resist, or like Gandhi, the will to simply not participate, in sufficient number, the imposed system fails rapidly. Even if somehow, the system can be made to work by making the participation less onerous and a little more rewarding to the individual, like recognizing merit and endowing them with some authority to make at least some of their own decisions, still the sloth that is endemic in the greater numbers will eventually stall out the system.

Having too little order in the world is thought to be a negative factor, while having too much is regarded as just a total death cult. There is probably a fine balance between too much and too little, but so far, mankind has not been inclined to maintain that equilibrium. Of all the various ways to construct tribal law, perhaps the American Experiment came closest for a couple of hundred years, but now, whatever gyroscopes had been set spinning to stabilize the situation have burst loose of their moorings, and threaten to now tear apart the whole structure.

The balkanization of America is only one of several futures for the territory once known as “the United States of America”.


12 posted on 03/04/2013 5:24:29 AM PST by alloysteel (What is all too obvious, is not obvious to all. Until it is too late to reverse course.)
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To: FreedomPoster

As far as I know the Swedish educational system never deteriorated to the point that ours in the USA has. I see our two greatest real weaknesses lying in the reality behind two of our most vaunted so-called strengths, the “educational” system and “diversity”.


13 posted on 03/04/2013 5:39:30 AM PST by RipSawyer
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To: T-Bird45
For your quiz on Friday, I suggest the following term for the Vocabulary section: cultural homogeneity. This is the primary reason the Swedes could move back from the precipice and why the author’s basic point about the US likely following the Greek model before a total overhaul.

Your comments are dead on.

I'm still disappointed in the shocking lack of pictures of scantily clad babes on this thread.

14 posted on 03/04/2013 7:14:26 AM PST by zeugma (Those of us who work for a living are outnumbered by those who vote for a living.)
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To: 1rudeboy

The inside story of the decline of socialism in Sweden began with why it had any seeming success at all.

Socialist systems are terribly inefficient, and always grow far beyond the ability to be self supporting, so usually they fail on their own unless there is a non-socialist system from which they can parasite. Eventually they grow beyond that as well.

In the case of Sweden, the nation was divided in half between the egregious spending of the socialists, and the huge profitability of the Swedish arms industry, one of the largest in the world.

True to form, the socialists increasingly taxed the arms industry more and more, until it was almost at the breaking point. There was just no more money to take from it.

So the socialist Prime Minister, Olof Palme, decided to nationalize the arms industry. Bad idea.

While the arms industry was willing to suffer for Sweden, it was not willing to die for socialism.

But “fate” intervened, and when Olof and Mrs. Palme were taking an evening walk, someone walked up behind them and put one or more bullets into Mr. Olof’s brain, then walked away.

Initially, a “usual suspect” was rounded up, tried and convicted of the crime, but eventually his conviction was overturned on appeal, and the crime remains unsolved.

But this signaled the end of much of socialism in Sweden, as the problem of no money remained. So the new, non-socialist government began cutting government, leading to the relative prosperity they have today.


15 posted on 03/04/2013 8:07:44 AM PST by yefragetuwrabrumuy (Best WoT news at rantburg.com)
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To: T-Bird45
cultural homogeneity. This is the primary reason the Swedes could move back from the precipice

That, and the fact that the US has more than thirty times Sweden's population.  Maybe we could compare America to all of Europe and Sweden to say, North Carolina.

...Sweden has reduced public spending...   ...it is cutting the corporate-tax rate from 26.3% to 22%.   Compare these rates with the U.S...

FWIW the Heritage Foundation's overall economic freedom comparison ranked Sweden 18 --8 places below the US at 10.

16 posted on 03/04/2013 9:34:06 AM PST by expat_panama
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To: 1rudeboy

http://www.thegatewaypundit.com/2013/03/awful-swedish-socialists-now-more-capitalist-than-american-democrats/


17 posted on 03/04/2013 10:55:06 AM PST by Para-Ord.45
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To: truth_seeker; 1234; A knight without armor; AIM-54; Allan; american colleen; AndyPH; anguish; ...
Ping to the Swedish Ping List.
18 posted on 03/04/2013 11:02:44 AM PST by Charles Henrickson (Approaching my fifty-tenth birthday, on March 7.)
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To: Charles Henrickson

...bud I'm not svedish, I'm norVEjen!...

19 posted on 03/04/2013 11:55:20 AM PST by expat_panama
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To: T-Bird45

Socialism works for a short time as a population dies off; in the rest of Europe it failed more quickly than in Scandinavia because of the costs of the foreigners they imported to run their countries while the natives died off. Scandinavia is simply deferring the same fate.


20 posted on 03/04/2013 1:52:55 PM PST by kearnyirish2 (Affirmative action is economic war against white males (and therefore white families).)
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To: tired&retired
There is absolutely no way to make it through this nightmare without a new government formulation that wipes the slate clean, takes away everyone’s golden egg laying goose, screws the debtors, and lets the taxpayers get back to their individual businesses.

You nailed it, TR. That is precisely what needs to (and is) going to happen when this ponzi scheme runs its course. Let us pray that good Americans don't die in the process.

21 posted on 03/04/2013 2:57:05 PM PST by Windflier (To anger a conservative, tell him a lie. To anger a liberal, tell him the truth.)
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To: expat_panama

The chart at Heritage as well as this ranking both give lie to the belief that “economic liberty is liberty.” Clearly there is more as I wouldn’t want to live in the top five “countries”. They’re all nice in their own way, but you don’t have general liberty in those top five.


22 posted on 03/05/2013 3:55:26 AM PST by 1010RD (First, Do No Harm)
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To: 1rudeboy

I am disappointed, I expected some gorgeous blonde swedish model. But what do I find another story about socialism. I am going to saab!


23 posted on 03/05/2013 11:05:21 AM PST by hondact200 (Candor dat viribos alas (sincerity gives wings to strength) and Nil desperandum (never despair))
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To: 1rudeboy

Can we turn around the slide into socialism?

Of course we can - we have already done it. Ronald Reagan led the way and demonstrated to the world what really works economically. The Swedes, the Russians, the Chinese and many others took the lesson as their socialist economic policies hit the wall.

Unfortunately, turning back from socialism is a bit like making peace in the Middle East - its been done dozens of times. Those bastards never quit. Turning back socialism is not something that can ever be finished.

Eternal vigilance is the price of freedom.

Swedish models just don’t stand out as anything special:

http://images.nonexiste.net/popular/wp-content/uploads/2013/02/As-a-swede-whenever-I-see-something-about-Sweden-in-the-title.jpeg


24 posted on 03/05/2013 2:28:19 PM PST by BeauBo
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To: 1rudeboy

Can we turn around the slide into socialism?

Of course we can - we have already done it. Ronald Reagan led the way and demonstrated to the world what really works economically. The Swedes, the Russians, the Chinese and many others took the lesson as their socialist economic policies hit the wall.

Unfortunately, turning back from socialism is a bit like making peace in the Middle East - its been done dozens of times. Those bastards never quit. Turning back socialism is not something that can ever be finished.

Eternal vigilance is the price of freedom.

Swedish models just don’t stand out as anything special:

http://images.nonexiste.net/popular/wp-content/uploads/2013/02/As-a-swede-whenever-I-see-something-about-Sweden-in-the-title.jpeg


25 posted on 03/05/2013 2:28:26 PM PST by BeauBo
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To: 1rudeboy

Can we turn around the slide into socialism?

Of course we can - we have already done it. Ronald Reagan led the way and demonstrated to the world what really works economically. The Swedes, the Russians, the Chinese and many others took the lesson as their socialist economic policies hit the wall.

Unfortunately, turning back from socialism is a bit like making peace in the Middle East - its been done dozens of times. Those bastards never quit. Turning back socialism is not something that can ever be finished.

Eternal vigilance is the price of freedom.

Swedish models just don’t stand out as anything special:

http://images.nonexiste.net/popular/wp-content/uploads/2013/02/As-a-swede-whenever-I-see-something-about-Sweden-in-the-title.jpeg


26 posted on 03/05/2013 2:28:40 PM PST by BeauBo
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To: alloysteel
“The balkanization of America”

In a democracy, numbers dictate the future.

About 25% of the American electorate is Black, Hispanic, or Asian.

Their numbers are growing - through immigration, birth rate, and voter participation.

As a group, they consistently vote 75% for the Democrat Party.

About 40% of whites consistently vote for the Democrat Party.

That means the Democrat Party starts each election with about 49% of the vote.

Add in a relentlessly biased MSM and uninspiring center-left Republican candidates, and there is almost no possibility of reversing our money printing and debt suicide policies.

27 posted on 03/08/2013 2:39:46 AM PST by zeestephen
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To: zeestephen

Numbers are misleading when the demographics involved reside solely in big cities.


28 posted on 03/08/2013 4:10:18 AM PST by Yekaterina Derevko (Why does no one notice whent he Russians prepare for war....)
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To: Yekaterina Derevko
Not sure I understand your point.

Yes, Democrat voters are concentrated in large urban areas.

That concentration does help the Republican Party maintain a small majority in the House of Representatives.

And, it helps a little bit with state governors, U.S. senators, and some electoral votes.

But in general the political news for Conservatives is quite threatening.

Every day older white Republicans die off.

They are being replaced by Hard Left immigrant citizens, by their very Liberal first generation children, and by higher and higher levels of non-white voter participation.

The “new” Americans are demanding European Socialism and relativist values.

If the Republican Party caves on “Amnesty” - and I think they will cave - Conservatives will be permanently outvoted, and we will lose what little political power we still have left.

29 posted on 03/08/2013 2:16:05 PM PST by zeestephen
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