Some people on the left, democratic socialists, such as AOC and Sanders, say that when they’re talking about socialism, that they’re not talking about Venezuela, but about Sweden, and other Scandinavian countries, which, in their minds, are examples of how socialism can be successful. They want us, the United States, to emulate the Scandinavian-style of socialism found in those countries.
But, there’s a problem. When you look at the facts of how Scandinavian-style socialism played out, you’ll notice that it wasn’t as successful as you think it was. In fact, it wasn’t successful at all. It created a system that hindered economic growth, lowered the per capita income of those living in those countries, was extremely wasteful with its tax revenues, and rewarded people for not working and contributing to their society. But let’s start at the beginning. Let’s set this up. Let’s talk about Sweden.
History
Sweden entered the industrial revolution in the mid-to-late nineteenth century with extremely low taxes and levels of regulations imposed on businesses. In fact, at the time, it had the lowest taxes and lowest level of regulations in Europe. This made for one of the freest business climates on the continent.
And what happens when you keep taxes and the level of regulations very low? You maximize the profit margins of the businesses working in that kind of environment. And what does that do? It maximizes the level of economic growth in that environment. And what does economic growth do? As businesses grow, they need more workers, and when the demand for workers is higher than the supply of workers, it forces businesses to pay higher and higher wages to acquire and keep workers – this motivates workers to leave lower-paying jobs for a higher-paying jobs, and also stops workers from leaving for another job because their employers raise their wages to make sure they don’t leave. Also, when businesses can’t find enough workers, it motivates them to innovate and invent new technology that allows more goods to be created with less workers, which improves productivity, and this drives up the aggregate wealth and per capita wealth in society.
All of this worked in favor of Sweden, its economy, per capita income, and level of wealth. It certainly helped that Sweden wasn’t involved in either World War, which would have diverted its resources and limited its economic growth – in fact, Sweden hadn’t been to war since 1809. All of this allowed Sweden’s economy to grow and grow, almost uninterrupted, allowing it to enjoy the world’s highest per capita income growth from 1870 to 1950.
The high-quality level of Sweden’s economic freedom in the late 19th and early 20th centuries caused many extraordinary people to rise up and create successful long-standing businesses and new inventions. For example, Volvo, Saab, and the telecommunications giant Ericsson, were founded during this time period. As for inventors, there were many. These included Alfred Nobel, who invented dynamite; Gustaf Dalén, who started the gas company AGA; and Sven Wingquist, the engineer who invented the self-aligning ball bearing.
This well-off economic climate, along with the community-based culture, allowed Sweden to have the buffering it needed, allowing it to be poised to handle the negative economic effects of socialist policies on their country without the more devastating consequences those policies would have inflicted on less-well-off nations. Yes, whether you want to admit it or not, those socialist policies eventually adopted by Sweden caused them to become less well-off than it would have been had it not gone down the socialist road, which is proof to those of us looking at the data that socialism was indeed a failure even in Sweden. But, because Sweden still looks like it’s doing well, all thanks to having an economy strong enough to absorb the shocks of socialist policies, advocates look at Sweden as a successful example of socialism. But this is just a myth. Don’t believe me? That’s alright. Just keep reading to allow me to explain my argument.
Things started to change, though, in the 1950’s. You see, in the 1930’s Sweden was seeing the national socialism, otherwise known as fascism, going on in Germany and Italy, and became enamored and infatuated with that style of central planning. Of course, by the end of World War 2, the term fascism had fallen into disfavor, but not the whole idea of state-controlled central planning as is core to fascism. That idea kept being pushed, except under the name of socialism, or democratic socialism.
Sweden kept creating new socialistic and social welfare programs under their idea of democratic socialism, and this caused taxation rates to increase substantially from the 1950’s to the mid-1970’s. In 1950, the tax rate was about 20 percent, but by 1975, a mere quarter century later, the tax rate had more than doubled to over 50 percent. All these taxes were to pay for all of these social welfare programs created by politicians that supposedly helped, took care of, and showed compassion towards, Swedish citizens. And, of course, all of these programs required massive government bureaucracies to manage these programs. All of this caused government spending to go through the roof, and even though they raised taxes massively to pay for these programs, it wasn’t enough money, forcing the Swedish government to borrow large amounts of money to make up for the difference, which caused Sweden to have a large national debt.
Over time the portion of the Swedish population supporting the public sector decreased substantially, all while the portion of the population working in the public sector increased substantially, meaning (this is how it appears to me) that less and less people were over time supporting and sustaining more and more people. Not only that, but more and more people were getting paid by the welfare state to not work, meaning even more burden on the taxpayers.
The Backpack Analogy
Let me present to you a good analogy to help you understand my perspective on this matter.
Imagine that there is a person walking down a path with a backpack on their back. This person who is walking down that path represents the economy. The path itself represents economic progress. The faster the person walks, the faster the economic progress. The backpack represents the government and the public sector tied to the government, which offers the “basic supplies” that the person (the economy, society) needs to walk down the path, but can also become a burden to the person if he’s not careful.
Think about the backpack – the smaller it is, the easier it is for that person to walk down the road; inversely, the larger and heavier the backpack, the more it slows down that person. You could even make the backpack get so large and heavy that the person can’t keep walking anymore. In fact, you could make it so heavy and burdensome that the person, representing the economy, collapses under its weight.
Now, if the person collapses, what do you think is the best way to get them back on their feet so they can keep moving again? The best way is to remove most of the excess weight found in the backpack, or when the person tries to stand back up, they will fall back over again, and get nowhere. Of course they need the backpack as it has some of the basic supplies the person will need as he walks down the road, which represents some of the basic structures of government that are needed in a stable society for a healthy economy to work. Hopefully, by this time, the person, representing the economy, has enough sense to realize that he’s got way too much stuff in his backpack, representing a government that’s so large and burdensome that it’s put too much of a burden on its economy that it caused it to collapse. By this time the person removes a lot of stuff he thought he needed but now realized that he doesn’t, and that all those things did was hinder his progress of walking down the road.
Imagine that after the person collapses, some experts come up to him, apparently devoid of any common sense, and they explain to him that the best way for him to get back on his feet is to keep the backpack on, and put even more weight into it. Do you think that would work? Absolutely not! This is what the United States did in the 1930’s under the administration of President Franklin D. Roosevelt – his policies effectively increased the length of the Great Depression, making it two or three times longer than it would have been if he had gone the other direction and reduced government size and control, and taxes and regulations – his policies caused the pain and suffering of tens of millions of people to be increased and lengthened.
There’s one more element to consider, imagine the person isn’t weak, but has built up their strength to become very strong. Because he’s strong, he can handle heavier burdens in his backpack than people who aren’t as strong, but still the weight of the backpack slows him down. Maybe he doesn’t collapse like weaker people, representing other nations, but still he’s walking much slower than he would have been had his backpack been much lighter.
In this analogy, the size of the government and the public sector, if allowed to grow and grow, represents more and more of a burden on economic growth and progress. The smaller the burden, the faster the economic progress and growth; the larger the burden, the slower the economic growth and progress in that country. This is one of the reasons why it would benefit us to have a limited size of government and government programs, including social welfare programs.
Sweden is represented by the person walking on the road and who has built up his strength. Because Sweden had a strong economy, it could handle the burden of a bigger and bigger government. It may not have collapsed due to its economic strength (although it came close), but the burden of big government certainly did slow it down, even to the point where it couldn’t move forward anymore.
Venezuela is represented by the person whose backpack became so big and heavy that it collapsed under its excessive weight. And, to make matters worse, its leaders think that the best way to get back on its feet are to increase the size of government even more and let the state take over even more control – that’s like the person who collapsed and then thinks that the best way to stand back up is to put even more weight in their backpack, as if that’s really going to make things better. Venezuela would do itself great service by learning from our mistakes that we made here in the United States in the 1930’s.
Back to Sweden
Remember what I said – Sweden started going down the socialist path in the 1950’s, and by the mid-1970’s had a taxation rate more than 2 1/2 times what it was 25 years earlier. As a country, they were like the person in my analogy that was carrying a backpack that was becoming so heavy that they couldn’t even walk forward anymore. Events finally came to a head in the 1980’s.
The excessive burden of big government and high taxes caused a collapse of economic growth in the 1980’s, and Sweden’s government attempted to jumpstart its economy by creating a massive expansion of credit, but all that did was cause real estate and stock market bubbles that eventually burst, which caused even more economic chaos to ensue. To try to stop the economic chaos caused by this massive expansion of credit, Sweden reacted by going in the opposite direction, making its Swedish Central Bank drive up interest rates to a whopping 500 percent, which was even worse on the economy. By 1990, Sweden had fallen from fourth to twentieth place in international income comparisons.
By the 1990’s, Swedish citizens were learning the hard way a very important lesson about socialism – it doesn’t work and never has. They could have avoided the pain and suffering they wrought on themselves by learning from the mistakes of others, but they didn’t. (In fact, other’s mistakes in socialism date back as far as the early 1600’s, to two of America’s first colonies, Jamestown and Plymouth.)
At this time, the mid-1990’s, they started to elect more conservative governments who sharply reduced the marginal income tax rates, abolished currency controls, privatized several government enterprises that had earlier been nationalized, deregulated bank lending, and they greatly deregulated the larger economic sectors in the Swedish economy, including telecommunications, airlines, and retail enterprises. And on top of all this, they implemented deep government spending cuts. All of this helped to greatly ease the burden on the Swedish economy. From the standpoint of my earlier analogy, the person was about to fall over from the weight of their backpack, but, at the last moment, they removed a bunch of the crap that caused too much weight in their backpack, and that greatly helped to ease the burden, allowing that person, representing Sweden, to continue moving forward again.
Lessons Learned
This socialist era caused a big setback for Sweden, and they have not, to this day, completely recovered from that setback. Sweden’s socialist welfare state worked against their well-being, not for it. It hurt them, not helped them. The Swedish Economic Association released a report, based on a study, in 2009, that discovered that between 1950 and 2009 the Swedish economy had failed to create any new jobs on net. In other words, every job created in Sweden’s vast government bureaucracy caused enough burden to Sweden’s economy that it caused a job to be lost in the private sector. The net results for job creation during that time period came to nil. Of course, Sweden’s population grew during that time period, but that increase in the number of people can be accounted for by the increase in the welfare doles. Eventually, all of this burden from the massive size of Sweden’s socialist government took such a toll that its economy almost came tumbling down, had it not been for conservative reforms that took place to greatly ease the burden on Sweden’s economy and allow it to begin moving forward again.
Progress has been made since then, however. Sweden’s national debt, which was a whopping 80 percent of their GDP in 1992 has continued to shrink because of these reforms, so that in 2008 it had shrunk down to 40 percent. But, despite the slow economic recovery that has taken place in Sweden since the mid-1990’s, which has allowed it to gain some economic ground back that it had previously lost, you might be surprised to learn that Sweden still has a lower per capita income than the state of Mississippi, which is the lowest-income state in the United States.
If you’re a socialist like Bernie Sanders or Alexandria Ocasio-Cortez, or some other progressive on the political left that wants to model countries like Sweden, you’ll probably be surprised that Sweden is heading in the opposite direction, away from socialism. Sweden has been privatizing their social security program, their education system, and their socialized health care system. Because socialized health care in Sweden led to shortages, rationing, and long wait times, they’ve decided to reintroduce private health insurance, which has helped to alleviate some of the problems socialized health care causes.
Although conservative reforms are helping to restore Sweden’s economy, the negative social effects will continue to hurt Swedish society for generations. For example, there are so many Swedes that live off of “sick benefits” and what they call “early retirement” that economists estimate that the true unemployment rate in Sweden is at least three times higher than the “official” unemployment rate. And then there’s the people that are paid by the government to participate in what they call “labor market political activities,” which is yet another way that they use to reduce the “official” unemployment rate. Notice how in socialized countries governments try to downplay negative social patterns, such as unemployment rates, that are caused by socialist programs, or its burden on the economy, by redefining those patterns in ways that allows them to be recategorized – in that way the negative social patterns can be “minimized” and socialist politicians can make the false claim that their socialized programs are good for society, even when the data proves otherwise. Just redefine what the data means and play it off.
Here’s another social problem caused by socialism in Sweden: because so many people believed they are “entitled” to social welfare programs, these people never truly mature to adulthood. What do I mean by that? They never get to a point in their lives where they learn how to take care of themselves, be disciplined enough to go to work regularly without quitting, handle their finances, and all the other things they need to learn to become a responsible adult, a contributing member of society, and prosperous – you know, the very things that actually are needed for people to be in a good state. These benefit programs keep these people in an immature and irresponsible state, and on a dependent status. They act more like children than grown adults. And the worst part about all of this is that these people pass off this way of living to their children and grandchildren – the whole social welfare entitlement mentality and level of immaturity continues generation after generation. It ends up becoming a whole endless cycle of poverty and government dependency. It ends up being a whole class of people, a second class of people, that’s not quite on par with the other, contributing members of society. And the politicians who push these social welfare programs don’t mind, no, they don’t mind at all, because these welfare recipients know that as long as they keep voting these same politicians back in office, then they’ll never have to grow up, they’ll never have to mature, and they’ll never have to become a contributing member of society – they can just keep getting paid to do nothing – and the politicians that promote these programs can stay in their positions of power.
How About Here?
We see the same thing here in the United States with those who are welfare dependents. They end up chronically dependent on our social welfare programs, generation after generation, and in a place where they quite literally are a second-class citizen. They never learn the ropes and never truly mature to adulthood and never become a contributing member of society. And they keep voting back in office the same politicians because they know that as long as those politicians are in power, then they’ll never have to work. Besides, for many of them, working is frowned upon – if you work, that makes you a “chump.”
But for us in the United States, the situation is even worse than in Sweden, because we have a racial component in all of this. What do I mean? Although our political left, our progressives, our democratic socialists try to convince all of us that we’re “entitled” to these social welfare programs, “entitled” to become second-class citizens, they mainly market these programs to minorities, especially the blacks. This means higher percentages of the minority population and black population than whites take advantage of these programs, and because welfare recipients tend to be written off in government statistical manuals as poor, the same politicians who push these programs show these statistics, which show higher percentages of blacks and minorities as poor, and claim this as proof that racism is “alive and well and as bad as it’s ever been” even though these statistical disparities are not proof of racism at all, but only of the fact that minorities, especially blacks, are more likely to become chronically dependent on these social welfare programs than whites are. These politicians then use these disparities to encourage more minorities, more blacks, to become dependent on these programs, which they falsely claim are “entitlements” that can help change this disparity, even though it just makes thing worse. In reality they work more like “bait-and-trap” programs that lure minorities and blacks in, then keep them chronically dependent on these programs, which do nothing to help these people go out and do the things they need to do to actually become prosperous, and everything to keep them chronically poor.
But all this charade does is continue the welfare cycle, generation after generation, while helping to increase that statistical disparity even more, which doesn’t help things at all. In the meantime, black neighborhoods, full of immature welfare recipients, become more dangerous and more dangerous as time moves on. And the people living in those neighborhoods see this state of their neighborhoods as proof that we still have a big, big problem with racism. No, we have a really big problem with these people letting the government, at the behest of power-greedy politicians, manipulate them, which will keep happening until their eyes are opened.
Nothing good comes from this setup. All it does is increase the division found in our country, keeps us from healing and forging ahead into the future, and it does so at the expense of minorities and black people. If you’re black, or part of another minority group in our country, please open your eyes. These programs are meant to hurt you, not help you. They’re meant to keep you down, not build you up. The politicians pushing these programs are taking advantage of you, and doing it at your expense. Stop letting them trick you. They claim that we, the ones opposing these programs are the real racists; that couldn’t be farther from the truth. Our hearts ache for you and we really are trying to expose the truth here. We really do want you to be in a better place in society. In reality, they’re the ones that are being anti-black and anti-minority by keeping y’all down.
Conclusion
It’s amazing to me that democratic socialists in our country look at Swedish-style or Scandinavian-style socialism as a model that we should copy, even though that model nearly destroyed Sweden, and even though Sweden today has learned from its mistakes and has been moving away from socialism, and reducing the size of their government, lowering its taxes, and privatizing sectors of its economy that were previously nationalized, these same democratic socialists want us to ignore history, repeat the same mistakes as them, and vilify anyone opposed to such a Ponzi scheme as lacking in compassion, as if it really had anything to do with that. And they often use the term “racism” as a political-play-card to try to manipulate people, especially minorities and blacks, into supporting a socialist setup that would hurt them, not help them.
There is another lesson that could be learned here. It wasn’t just Sweden; Denmark went down a similar path of almost having its economy destroyed. And in both cases, after Scandinavian-style socialism wrecked their economies, those countries would elect political parties that represented classical liberal values and conservative economic principles to try and undo, fix, clean up all the damage caused by socialism.
Let’s learn from other’s mistakes and not repeat those mistakes, shall we?
