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The Sweden Model We So Admire (Vol. 23)

Updated: Feb 7, 2023

analyticsbox | Oct 27, 2021

Sweden Modal

Be Careful What You Wish For.

It isn't What the Politicians Tell You

Politicians today believe that we should follow the political policies of other countries. Some of the programs for welfare, ‘free’ entitlements, and redistribution sound appealing on the surface. BUT as good economists will tell you, there is more to what is seen that needs to be understood. We must look at the whole picture to understand certain policies and how they really work.

Let’s take a hard look at Sweden.

First, Sweden is not Socialist, it is a free enterprise/market economy, with a lot of redistribution policies. (They did have a 20 year period experimenting with real Socialism, in the 70’s and 80’s, but it failed and was discarded.)

Some of the issues are described in our PowerPoint #9. Here are some of the issues that are glossed over when discussing their approach:

  1. They do not just tax the rich, they tax everyone, a lot, squeezing the poor and middle classes heavily. They pay overall about 50% more in taxes than here. It is not Robin Hood, they tax all with high flat tax rates on income when working and give back when not working or retire. It is more like a redistribution over your life cycle, not just from rich to poor today..

  2. There is a 25% value added tax (VAT) on most consumption.

  3. There is no inheritance or gift tax.

  4. There is no wealth tax (tried and failed, then repealed).

  5. The corporate tax rate is 21%.

  6. Even with very high taxes, they have a significant annual deficit.

  7. There is no national minimum wage mandated (there are privately negotiated minimums).

  8. They have national health insurance, BUT, long waiting lines.

  9. They offer private health insurance if you want timely health care (it is a significant fringe benefit offered to entice employment).

  10. There is significant student debt, even though basic college tuition is ‘free’.

  11. Economic growth rates were highest before instituting the ‘welfare state’ when taxes were low and government was small. Big government has slowed the rate of growth.

  12. Their electric grid is significantly powered by hydro electric, and nuclear (40% is nuclear).

  13. If we want to copy Sweden, it has has largely deregulated markets, largely abolished occupational licensing, reduced international tariffs, reformed Social Security so it is sustainable (they have partially privatized the pension system), and they have a national school voucher system (and with the competition from private schools, public schools have improved).

Sweden is a small country (10 million population), with a largely homogeneous population, unlike the US. So there are many differences.

But U.S. politicians who are pushing an agenda, do not discuss the real world, and you need to evaluate the whole picture to understand

The Bottom Line

We continuously hear the PBS (Political Bull Shit) from politicians who selectively pick out facts to emphasize the policies they want. We need to cut through this and look at the whole picture, which offers a very different view of various proposals. Once you understand the facts, then you can vote for what makes the most sense for you.

Understand Economics, then Vote Smart!

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