The Swedish author Nima Sanandaji has produced a new report in defense of the free markets. He shows that an over-bearing welfare state, along with high taxes, has damaged the economy in Sweden as well as undermining its social capital. It suggests that it is only through focusing on increasing economic freedom and introducing more choice in public services that the Alliance for Sweden has rebuilt the country's economy. This report contradicts everything that Democrats believe about Sweden.
Here is a summary:
Sweden did not become wealthy through social democracy, big government and a large welfare state. It developed economically by adopting free-market policies in the late 19th century and early 20th century. It also benefited from positive cultural norms, including a strong work ethic and high levels of trust.
As late as 1950, Swedish tax revenues were still only around 21 per cent of GDP. The policy shift towards a big state and higher taxes occurred mainly during the next thirty years, as taxes increased by almost one per cent of GDP annually.
The rapid growth of the state in the late 1960s and 1970s led to a large decline in Sweden’s relative economic performance. In 1975, Sweden was the 4th richest industrialized country in terms of GDP per head. By 1993, it had fallen to 14th.
Big government had a devastating impact on entrepreneurship. After 1970, the establishment of new firms dropped significantly. Among the 100 firms with the highest revenues in Sweden in 2004, only two were entrepreneurial Swedish firms founded after 1970, compared with 21 founded before 1913.
High levels of equality and favorable social outcomes were evident before the creation of an extensive welfare state. Moreover, generous welfare policies have created numerous social problems, including high levels of dependency among certain groups.
Descendants of Swedes who migrated to the USA in the 19th century are characterized by favorable social outcomes, such as a low poverty rate and high employment, despite the less extensive welfare state in the USA. The average income of Americans with Swedish ancestry is over 50 per cent higher than Swedes in their native country.
Third World immigrants have been particularly badly affected by a combination of high welfare benefits and restrictive labour market regulations. In 2004, when the Swedish economy was performing strongly, the employment rate among immigrants from non- Western nations in Sweden was only 48 per cent.
Since the economic crisis of the early 1990s, Swedish governments have rolled back the state and introduced market reforms in sectors such as education, health and pensions. Economic freedom has increased in Sweden while it has declined in the UK and USA. Sweden’s relative economic performance has improved accordingly.
Download the report here
Showing posts with label big government. Show all posts
Showing posts with label big government. Show all posts
Monday, September 10, 2012
Sunday, September 2, 2012
The Swedish healthcare model has a grim outlook
The Swedish welfare state is forcing its citizens to pay 44.4 percent in tax revenues on the gross national product to pay for its from cradle to grave entitlements. Compared to the U.S. tax burden of only 24.8 percent its a staggering number. The tax pressure on the Swedish middle class exceeds 60 percent and this is not enough to cover the shapely raising costs for the socialized healthcare system.
The Swedish socialized healthcare model is a proof of that the ObamaCare system is an utopian idea. The Health care bill in Sweden is growing steadily every year. A sharp increase by 13 percent more in tax, or significantly increased fees will be necessary to meet the needs, according to the Swedish economists Stefan Ackerby. To increase the tax pressure up-to 74 percent on the middle class would be impossible. But the political class making the decisions shy away from taking a stand.
Each year the Swedes pay more money on health care. Between 1993 and 2008 health care spending increased by 70 percent (from 149 billion to 256 billion Krona in real terms). This represents an increase from $2,700 to $4,230 per Swede. Anders Klevmarken, emeritus professor of econometrics, and Björn Lindgren, professor emeritus of health economics, has analyzed the demographic change and concludes that health care costs could increase by another 270 percent by 2040 – that is almost a tripling of spending. Such an increase would mean that every Swedish need to shell out an additional $8,500 per year, or $710 per month. This impossible to pay for the Swedish middle class. In debate variations of private funding are proposed, since its almost impossible to increase the tax burden. It may be through higher fees when you go to the doctor, or the cost ceiling will be raised.
Already now Swedish patents has to pay all kinds of non-deductible fees up to $1,000 altogether. And the social health insurance does not cover the fees per day when hospitalized. The worst effect of the socialized health care system is the rationing causing patients to wait in line for month, if they can survive, to receive the treatment they are imagining that have paid for to get instantly. For the citizens that are better off its common to buy a private insurance for medical treatment in time, which is the smart way to go ahead in the queue. Since 2007, the market for private health insurance increased sharply by 58 percent. Medical insurance is paid to 80 percent by employers and as a benefit for employees. From an employer's perspective, private health insurance makes it possible for the employee to quickly return to work, thus reducing production loss. For the employee, a private health insurance contribute to a faster recovery and increased security for the economy and health.
After half a century of big socialist government and lack of personal accountability Sweden is in fact gradually forced to move away from the direction the USA is moving towards. The Americans are moving towards less economic freedom and a destroyed foundation for economic growth. The citizens of U.S. are risking the same development as the Swedes faced between 1960 and 1990, when income taxes for the average Swede doubled from approximately 30 to 60 percent. Is ObamaCare something the American middle class is willing and prepared to pay for?
The Swedish socialized healthcare model is a proof of that the ObamaCare system is an utopian idea. The Health care bill in Sweden is growing steadily every year. A sharp increase by 13 percent more in tax, or significantly increased fees will be necessary to meet the needs, according to the Swedish economists Stefan Ackerby. To increase the tax pressure up-to 74 percent on the middle class would be impossible. But the political class making the decisions shy away from taking a stand.
Each year the Swedes pay more money on health care. Between 1993 and 2008 health care spending increased by 70 percent (from 149 billion to 256 billion Krona in real terms). This represents an increase from $2,700 to $4,230 per Swede. Anders Klevmarken, emeritus professor of econometrics, and Björn Lindgren, professor emeritus of health economics, has analyzed the demographic change and concludes that health care costs could increase by another 270 percent by 2040 – that is almost a tripling of spending. Such an increase would mean that every Swedish need to shell out an additional $8,500 per year, or $710 per month. This impossible to pay for the Swedish middle class. In debate variations of private funding are proposed, since its almost impossible to increase the tax burden. It may be through higher fees when you go to the doctor, or the cost ceiling will be raised.
Already now Swedish patents has to pay all kinds of non-deductible fees up to $1,000 altogether. And the social health insurance does not cover the fees per day when hospitalized. The worst effect of the socialized health care system is the rationing causing patients to wait in line for month, if they can survive, to receive the treatment they are imagining that have paid for to get instantly. For the citizens that are better off its common to buy a private insurance for medical treatment in time, which is the smart way to go ahead in the queue. Since 2007, the market for private health insurance increased sharply by 58 percent. Medical insurance is paid to 80 percent by employers and as a benefit for employees. From an employer's perspective, private health insurance makes it possible for the employee to quickly return to work, thus reducing production loss. For the employee, a private health insurance contribute to a faster recovery and increased security for the economy and health.
After half a century of big socialist government and lack of personal accountability Sweden is in fact gradually forced to move away from the direction the USA is moving towards. The Americans are moving towards less economic freedom and a destroyed foundation for economic growth. The citizens of U.S. are risking the same development as the Swedes faced between 1960 and 1990, when income taxes for the average Swede doubled from approximately 30 to 60 percent. Is ObamaCare something the American middle class is willing and prepared to pay for?
Wednesday, May 23, 2012
No they can't! Why big government in Sweden has failed
What can U.S. learn from Sweden in the past and its contemporary move towards Neoliberalism? The dominating picture of Sweden as a successful far left socialist society does have very little to do with reality. The absolute truth is that the Swedish Socialist Democratic party has failed to deliver on its utopian egalitarian promises. Though the Swedes are dissatisfied with the outcome of most socialist reforms many still believe in economic equality.
After years of expensive socialist experimentation and a constant growth of government the people finally voted 1991 for a change in direction. The conservative party Moderaterna formed a coalition government based on the principle that the time of collectivism was out and that the society should be greater than the state. Unfortunately the right-wing government inherited an economy in severe decline. Sweden was in a deep recession between 1991 and 1993. From the 1970's to the beginning of the 1990's the Swedish GDP growth had fallen behind the other industrialized countries and the purchasing power adjusted GDP per capita fell relative to other industrialized countries in recent decades, from a fourth place in the 1970s to a 14th place in the 1980's. In lack of a coordinated political coalition program, and some racist statements by the conservative party, the Swedish Social Democratic Workers' Party managed to form a minority government after the 1994 election.
Experienced by the damage the right ring parties formed the "Alliance for Sweden" that led to success for the Conservatives (Moderaterna) in the 2006 election and change of government. Unfortunately after 70 years with mostly socialist governing the Swedish mindset has been characterized by a strong egalitarian belief. During the 2006 campaign the new right ring alliance presented a less socialistic alternative (compared to the traditional socialist party program), and changed the language toward a more socialistic terminology. The Conservatives' (Moderaterna) slogan was striking: "We are the new workers’ party." The formula has obviously worked since the Alliance for Sweden won the election in 2006 and was reelected in 2010. Since 2006 Sweden is making tax cuts and has a libertarian finance minister, Anders Borg, who was named the most effective finance minister in Europe by the Financial Times.
Sweden is not known for tax cuts and schools established on private initiatives. While big government Obama has been driving down the U.S. economic freedom ranking over the past three years, by sharp contrast Sweden’s highly efficient regulatory system, have raised its country's economy (in the 2012 Index of Economic Freedom). President Obama need to sit down with Sweden's finance minister Borg for a lesson on how to achieve a real economic recovery.
Borg’s mission has been to reduce the Swedish government. His “stimulus” was a permanent tax cut. To the critics this was fiscal lunacy — the so-called “punk tax cutting” agenda. Borg, on the other hand, thought lunacy meant repeating the socialist economics of the 1970s and expecting a different result! Three years on, it’s pretty clear who was right, according to Borg. “Look at Spain, Portugal or the United Kingdom, whose governments were arguing for large temporary stimulus.” “Well, we can see that very little of the stimulus went to the economy. But they [the PIIGS countries] are stuck with the debt.” Tax-cutting Sweden, by contrast, had the fastest growth in Europe year 2011, when it also celebrated the abolition of its deficit. Borg continued to cut taxes and welfare-spendings to pay for it; he even cut property taxes for the rich to lure entrepreneurs back to Sweden. The last bit was the most unpopular among the left, but for Borg, economic recovery starts with entrepreneurs.
Borg mean that, if cutting taxes for the rich encouraged risk-taking, then it had to be done. "In most cases, the company would not have been created without the owner," he says. "There would be no Ikea without [Ingvar] Kamprad. We would not have Tetra-Pak without [Ruben] Rausing. They are probably the foremost entrepreneurs [Sweden] have had in the last few decades, and both moved out of Sweden." Borg believes that a high wealth tax and an inheritance tax, makes people to emigrate because it becomes too costly to own a company in such an environment. Ownership is a production factor. Entrepreneurs are a production factor. And his godson tells that, "these people are rich and you can obviously argue that we want to encourage social cohesion. But it is also problematic if you drive out entrepreneurs from your country, because they are the source of job creation."
Sweden is the unlikely champion of (Ronald Reagan) supply-side economics, with ideas now-days too radical for most Americans. There is a cross-party support in Sweden for profit-seeking state schools, which Obama won’t attempt. Borg’s tax-cutting policy was accompanied by a 268-page book explaining the dynamic link between lower taxes and more jobs. Such a document would be unthinkable from big government Obama.
In 1991, the right-wing government passed a law in Sweden that allowed new schools to be established on private initiatives. Today parents, teachers, charities and private businesses, can start their own school in competition with existing government operated schools. Not only did the reform create new, higher-performing schools, it also spurred improvements in old institutions forced to compete for pupils.
The Swedish school system is also one of the world's most liberated. Only Chile's school system is on a similar level. What's completely unique is that the Swedish government doesn't care who owns the school. In twenty years Sweden went from one of the world's most regulated school systems on this planet to the world's most free.
If Sweden has learned its lessons from big government politics, Americans should also be able to learn from the Swedes that high taxes and a bad school system will slow down any economic recovery. Americans must put a harder pressure on all politicians to limit the power and size of its government, if the Untied States of America should be able to survive.
After years of expensive socialist experimentation and a constant growth of government the people finally voted 1991 for a change in direction. The conservative party Moderaterna formed a coalition government based on the principle that the time of collectivism was out and that the society should be greater than the state. Unfortunately the right-wing government inherited an economy in severe decline. Sweden was in a deep recession between 1991 and 1993. From the 1970's to the beginning of the 1990's the Swedish GDP growth had fallen behind the other industrialized countries and the purchasing power adjusted GDP per capita fell relative to other industrialized countries in recent decades, from a fourth place in the 1970s to a 14th place in the 1980's. In lack of a coordinated political coalition program, and some racist statements by the conservative party, the Swedish Social Democratic Workers' Party managed to form a minority government after the 1994 election.
Experienced by the damage the right ring parties formed the "Alliance for Sweden" that led to success for the Conservatives (Moderaterna) in the 2006 election and change of government. Unfortunately after 70 years with mostly socialist governing the Swedish mindset has been characterized by a strong egalitarian belief. During the 2006 campaign the new right ring alliance presented a less socialistic alternative (compared to the traditional socialist party program), and changed the language toward a more socialistic terminology. The Conservatives' (Moderaterna) slogan was striking: "We are the new workers’ party." The formula has obviously worked since the Alliance for Sweden won the election in 2006 and was reelected in 2010. Since 2006 Sweden is making tax cuts and has a libertarian finance minister, Anders Borg, who was named the most effective finance minister in Europe by the Financial Times.
Sweden is not known for tax cuts and schools established on private initiatives. While big government Obama has been driving down the U.S. economic freedom ranking over the past three years, by sharp contrast Sweden’s highly efficient regulatory system, have raised its country's economy (in the 2012 Index of Economic Freedom). President Obama need to sit down with Sweden's finance minister Borg for a lesson on how to achieve a real economic recovery.
Borg’s mission has been to reduce the Swedish government. His “stimulus” was a permanent tax cut. To the critics this was fiscal lunacy — the so-called “punk tax cutting” agenda. Borg, on the other hand, thought lunacy meant repeating the socialist economics of the 1970s and expecting a different result! Three years on, it’s pretty clear who was right, according to Borg. “Look at Spain, Portugal or the United Kingdom, whose governments were arguing for large temporary stimulus.” “Well, we can see that very little of the stimulus went to the economy. But they [the PIIGS countries] are stuck with the debt.” Tax-cutting Sweden, by contrast, had the fastest growth in Europe year 2011, when it also celebrated the abolition of its deficit. Borg continued to cut taxes and welfare-spendings to pay for it; he even cut property taxes for the rich to lure entrepreneurs back to Sweden. The last bit was the most unpopular among the left, but for Borg, economic recovery starts with entrepreneurs.
Borg mean that, if cutting taxes for the rich encouraged risk-taking, then it had to be done. "In most cases, the company would not have been created without the owner," he says. "There would be no Ikea without [Ingvar] Kamprad. We would not have Tetra-Pak without [Ruben] Rausing. They are probably the foremost entrepreneurs [Sweden] have had in the last few decades, and both moved out of Sweden." Borg believes that a high wealth tax and an inheritance tax, makes people to emigrate because it becomes too costly to own a company in such an environment. Ownership is a production factor. Entrepreneurs are a production factor. And his godson tells that, "these people are rich and you can obviously argue that we want to encourage social cohesion. But it is also problematic if you drive out entrepreneurs from your country, because they are the source of job creation."
Sweden is the unlikely champion of (Ronald Reagan) supply-side economics, with ideas now-days too radical for most Americans. There is a cross-party support in Sweden for profit-seeking state schools, which Obama won’t attempt. Borg’s tax-cutting policy was accompanied by a 268-page book explaining the dynamic link between lower taxes and more jobs. Such a document would be unthinkable from big government Obama.
In 1991, the right-wing government passed a law in Sweden that allowed new schools to be established on private initiatives. Today parents, teachers, charities and private businesses, can start their own school in competition with existing government operated schools. Not only did the reform create new, higher-performing schools, it also spurred improvements in old institutions forced to compete for pupils.
The Swedish school system is also one of the world's most liberated. Only Chile's school system is on a similar level. What's completely unique is that the Swedish government doesn't care who owns the school. In twenty years Sweden went from one of the world's most regulated school systems on this planet to the world's most free.
If Sweden has learned its lessons from big government politics, Americans should also be able to learn from the Swedes that high taxes and a bad school system will slow down any economic recovery. Americans must put a harder pressure on all politicians to limit the power and size of its government, if the Untied States of America should be able to survive.
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