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Source link: http://archive.mises.org/15287/stagnating-socialist-sweden-2/

Stagnating Socialist Sweden

January 11, 2011 by

Sweden has done pretty well during the financial crisis. Some people, like Paul Krugman, seem to think this is due to extensive bailouts and the nationalization of private corporations at the beginning of the 1990s. Wrong. FULL ARTICLE by Per Bylund

{ 50 comments }

fundamentalist January 11, 2011 at 9:30 am

Very interesting article, but socialists don’t care about private sector job growth. They don’t care about reducing poverty, increasing wealth or any of the measures of well-being that most of us care about. All they care about is equality. After all, most socialists in the US hold up poverty ridden Cuba as a model. Modern socialists are also the “greens” where poverty is a virtue because it saves the planet.

J. Murray January 11, 2011 at 12:12 pm

They should. Without a healthy private sector, socialists have nothing to tax, and socialism dies. Then again, if the private sector is healthy, people realize they don’t need socialism.

Phinn January 11, 2011 at 12:24 pm

During his campaign, Obama was widely quoted as saying “I love the market” or maybe even “I love the free market.”

At the time, it sounded very much the way someone would say, “I love cheeseburgers!”

Jim January 11, 2011 at 2:42 pm

Most people who are (what most here would) consider socialists, or have some other name for the same thing (everything from neoconservatives to left-wing anarchists), don’t really think in the extreme terms that they are often accused of. We’re talking about people, not just ideas. Ideas are one thing. But people often have a whole range of ideas – often they are completely contradictory.

I know many lefties who cheer any and all regulatory handicaps of business, but then in the next breath talk about the virtue of raw milk and the great bakery down the street. I know people who – at the SAME TIME – claim to hate capitalism because it is both too competitive and yet simultaneously monopolistic. I know one “green” who pretends to be poor and once loudly declared inheritances to be immoral and wrong! … until she, only weeks later, got one herself. All the time people want freedom of all types for themselves, but they’re scared of what might happen if their neighbors also had the same freedoms.

Most people, left, right or whatever, just don’t consider whether their ideas are consistent. They just sway and bend whenever the wind blows. Ideology is just a bandwagon for most people – kind of like smoking – that later becomes a way of life. Assuming that “greens” or “socialists” or “conservatives” or “anarchists” are obsessively interested and lilly white pure in their ideas is really giving most people way too much credit. In fact, that’s probably giving ANY people way too much credit. It’s very important to distinguish between bad ideas themselves, and the “banality of evil” (to paraphrase Arendt, Milgram, Boetie and many others) in actual human beings.

iain January 12, 2011 at 8:11 am

Great post Jim.

Jukka January 13, 2011 at 5:07 pm

As much as I love the daily articles, your post was the most thought provoking and inspirational thing I’ve read in months.

Thanks, Jim.

Jake_nonphixion January 15, 2011 at 2:37 pm

This is a very intriguing point. To focus on one tangential part of this point – I think that there is a lot to be said about the distinction between political and business entrepreneurs. This is where many of the logical contradictions come from. People, and most of the time rightfully so, identify the “small guy” as a business entrepreneurs, and large corporations as organizations which derive much of their power through unjust political manipulation.

So, while it might seem like there is a contradiction in hating capitalism but cheering local businesses, in most peoples minds there really isn’t.

Craig January 11, 2011 at 6:20 pm

At the time, it sounded very much the way someone would say, “I love cheeseburgers!”

I thought it sounded like someone would say, “I love my mother-in-law!”

Ryan January 11, 2011 at 10:08 am

According to Austrian business cycle theory, Sweden is currently experiencing not a recovery, but a period of phony growth spurred by artificially low interest rates comparable to the Greenspan years in the US.

http://www.riksbank.com/templates/stat.aspx?id=17184

The Swede January 11, 2011 at 10:46 am

Most definitely a phony recovery. A couple of generations have grown up with a feeling in their bones that there are no jobs. There are so many unemployed, well-educated, people you almost need a university degree to flip burgers. Unions are successful in propping up wages for the simple jobs and putting on sob shows as soon as anybody takes a below-union-wage job.

And of course the low interest rates are building up a HUGE real estate bubble, and as usually the experts testify there is no such thing. The “independent” Riksbank is raising rates but when the pressure mounts they will fail to muster the courage to carry it through.

james b. longacre January 11, 2011 at 11:35 am

While the private sector has provided zero net job creation, the public sector has seen monstrous growth during this period ….

maybe its a phony myth too…a fraudulent lie.

anyway, if true, if teh public sector has grown maybe the streets are much cleaner and park mainenance has been improved, etc.

Patrik Karlsson January 11, 2011 at 4:17 pm

“maybe the streets are much cleaner and park mainenance has been improved, etc.” LOL
I’m a regular train commuter in southern Sweden and guess what happens when it snows and temperatures fall below freezing point… delays, delays, cancelled train, delays, cold railcars, delays, crying staff, delays and so on.
Oh, what does the government do?
1. Blame the taxpayers who gave them to little money
2. Decrease compensation for delayed trains (money back on 30 mins late instead of 20 mins)
3. Reduced number of departures
4. Reduced amount of railroad cars (somehow they suddenly got a shortage)

Joakim Kämpe January 12, 2011 at 9:01 am

What Patrik says about southern Sweden also applies to Stockholm btw :) The commuter trains, subway, and the national railway. Somehow the snow and cold comes as a surprise to everyone, every single year..

In fact, the problems are not just exclusive to the winter or when the snow comes, there are problems and delays due to lack of maintenance all year round. For instance, there was a story of people being trapped on a train in the middle of nowhere for 6 hours (not being allowed to leave the train) because the maintenance rail car sent to “rescue” people broke down too! And for like one month I have a recollection of similar events happening … it sort of brought back images of when I was reading Atlas Shrugged.

Patrik Karlsson January 12, 2011 at 10:01 am

The air conditioning on the trains broke down a few times this summer, so it’s not just during wintertime the government railroad fails.
Btw, they built a new trainstation, underground, in Malmö, the benches at the platform are tilted forward so you can’t sit on them without supporting with the legs, this is tiredsome , especially for elderly persons. I can imaginethat military interrogators would let their victims sit on theese, to “get them soft”. Which private company treats their customers like this?

Another swede January 12, 2011 at 4:13 pm

Personally I don’t understand why there are so many young well educated people left in sweden. I moved to switzerland, and everything that the swedes do wrong, the swiss do right (well ok, that’s quite an overstatement, but on balance, more right than wrong in switzerland).

So I would urge all young educated swedish people to move to another country. As I usually say:

“The great thing about sweden is that regardless of where you move in the world, you can be sure of two things. 1. Better weather and 2. Lower taxes. ”

Take care and see you in switzerland.

Best regards,
Dan

Patrik Karlsson January 13, 2011 at 4:10 am

“The great thing about sweden is that regardless of where you move in the world, you can be sure of two things. 1. Better weather and 2. Lower taxes. ”
Agree, unless you move to one of our scandinavian brother countries as they have equally high taxes and the same weather.

Jukka January 13, 2011 at 5:27 pm

The snow and cold comes as a surprise to the (govt. controlled) Finnish railway monopoly too. Every year. But I’ve read the news papers and therefore know that according to studies it all could be solved with better funding by the government. All they need is more money.

What I just wrote might sound sarcastic and I apologize for that. After all, this is the best country in the world* in addition to being most competitive in EU** and with the best school system in the world***, so I must be an idiot for not appreciating it all.

* http://yle.fi/uutiset/news/2010/08/newsweek_finland_worlds_best_country_1907500.html
** http://www.hs.fi/english/article/Finland+most+competitive+EU+economy/1135234514846
*** http://www.oecd.org/document/60/0,3343,en_2649_201185_39700732_1_1_1_1,00.html

P.S. Just put those links there to show the level of absurdity in the world we live in. If you know Finland, you’ll have a good laugh.

Beefcake the Mighty January 11, 2011 at 5:01 pm
Rahvin January 11, 2011 at 12:33 pm

I think two more aspects can be mentioned with regard to Sweden. Firstly, Sweden has (or at least had) a lot of natural resources and the exploitation of these resources helped to sustain the system and to provide jobs (and plus there is also that other natural advantage of being a big country with a small population). The second point is that while tax rates for people are very high, tax rates for business are actually low (which is why Sweden scores rather well in business environment rankings, for example here: http://www.economist.com/node/8908422 ). I would want to see what all those left-wingers who keep advertising the Swedish model would say to THAT…

2pac January 11, 2011 at 12:52 pm

dont they also have less regulation than the US in business also ?

Peter January 11, 2011 at 1:00 pm

Very nice resource! Added to the Sweden page.

Barry Loberfeld January 11, 2011 at 1:43 pm

Careful with “socialism” — Sweden is what Mises called a “hampered market economy”:

http://mises.org/etexts/mises/critique/section2.asp

Jordan Viray January 11, 2011 at 3:05 pm

That was published when a more capitalist Sweden was not yet a distant memory. Nations are rarely ever purely capitalist or socialist but modern Sweden is comparatively socialist.

Patrik Karlsson January 11, 2011 at 4:06 pm

No growth in the private sector for 55 years… Socialists here in Sweden say “since there has been no job growth in the private sector, why should it even exist?”.

Russ the Apostate January 11, 2011 at 7:19 pm

That’s a bit like crippling a horse, and then saying that since the horse can no longer run, it should be shot.

Caley McKibbin January 11, 2011 at 9:27 pm

Well, abolishing the private sector was the point, right?

Gil January 12, 2011 at 3:50 am

Interesting point. Will we wake up one day and watch the news to find out the Swedes’ standard of living is now comparable to Cuba or Haiti?

Stefan January 12, 2011 at 6:41 am

I think it’s more likely you will wake up one morning and find out that Sweden’s standard of living is higher than that of the US. We’ve been moving in the right direction since the nineties and are continuing on the path back to capitalism (albeit slowly), while the US is moving rapidly in the other direction.

Patrik Karlsson January 12, 2011 at 3:39 pm

I agree that the path to capitalism is indeed slow. But I think swedes are much more docile and obedient towards the state than americans are, so it will take very long time for Sweden to be wealthier than the US. Most people don’t even bother when the government inch by inch rolls out the police state, they rather crack open a beer and watch swedish idol on TV.

Another swede January 12, 2011 at 4:18 pm

While we’re at it, let me add another anecdote. I was bored one day in switzerland, so I decided to call someone from “moderaterna” (the biggest party in sweden, many years ago, leaning towards the right, but today moving more and more to the left).

I told them “I found something great in switzerland, why don’t you let yourselves be inspired?”

Their answer: “Please, please, do you think that you can just change society? We are the biggest people in sweden so the majority is very happy as it is. And by the way, the maternity leave is longer in sweden, so atleast something is better than switzerland”.

I then proceeded with asking him what incentive scheme would provide the best motivation for a politician to act giving him the two options

1. (As politicians in sweden are paid today) After 8 years in parliament, you get a life time salary, without having to do anything else for the rest of your life unless you take a new job, in case the compensation gets lowered with your salary.

2. You are paid by how good a job you do, that could be, letting your voters set your salary.

The politician in question then quickly excused himself, because he had a meeting.

Sweden is going down the drain. Sad but true.

Best regards,
Dan

Stefan January 12, 2011 at 4:30 pm

You’re probably right that Swedes in general are less suspicious of the state than Americans. But at least “we” know we’re “socialists”.. Many Americans still believe they live in the land of the free where capitalism reigns supreme (and hence won’t fight the trend, at least not if the president of the moment happens to be Republican, because as everyone knows they’re on the side of liberty and markets, right?).

Sweden has been paying off its national debt, lowered taxes without raising the inflation rate, we don’t have any expensive wars to fight and even the socialistic policies that we do have are often softer than the implementation of the same policies in America. For instance, we do have rent controls, but the prices are continously adjusted to the true costs, which keeps them from doing the severe kind of damage rent control has done in places like New York, despite inflation. Also our version of the war on drugs is much less repressive than the American equivalent. The Swedish state fights that war largely in schools and the media (ie through propaganda), not with SWAT teams.

Sweden already has some advantages over the US when it comes to freedom and the gap is getting smaller.

Patrik Karlsson January 13, 2011 at 4:38 am

To be honest, I hate the new “right-wing” regime more than the old “left-wing” one. They are supposedly for more free market but raise taxes. For example on januari 1st the newespapers reported on higher taxes for the year:
-higher gas tax
-higher CO2 tax on gas
-higher tax on property trading (stämpelskatt)
-tobacco
-higher tax on energy
-tax on USB memory sticks and harddrives
Now does anyone complain? Of course not, this is Sweden and we happily obey every dictat from the regime.

Joe January 13, 2011 at 6:27 pm

Stefan,
I loved your comment, “But at least we know we are socialists.” I wish more people in the USA would own up to that. You can hardly get them to call themselves “Liberal.” The latest thing in this country is now they are calling themselves “progressives.”
Anyway, it is hard to compare Sweden with the USA. The big problem is that Sweden has a small and homogeneous population. That is not the case here. If I lived in a country like Sweden I could see how “sky would be the limit” if capitalism was given sway. You people would be on top of the world. Just think what your country could accomplish. It would be a lot easier for you guys. Give it a try.

Patrik Karlsson January 14, 2011 at 5:34 am

Joe
“You people would be on top of the world. Just think what your country could accomplish. It would be a lot easier for you guys. Give it a try.”
You are absolutely right. Sweden actually did just that, from 1850 to 1950 Sweden together with Japan had the worlds highest growth. This was because of great market liberaliations during the 19th century. That is the period when Sweden got rich, 1850 sweden was one of europes poorest countries, 1950 one of the worlds richest. If you ask a socialist or go to a government school they would, of course, say that sweden got rich because of great socialist redistribution and big government. Swedens march to the highest taxes in the world occured in the 1950-70s, In1950 I read that Sweden had lower taxes than the US.

Leon January 12, 2011 at 7:06 am

Sweden is not only or even primarily being ruined by socialism, but by non-European and especially Islamic immigration and racial integration.

Socialism is a wrecker of nations, but so is immigration and Islam. How are you Swedes, masters of a wonderful, formerly white nation (which I remember as being almost all-white as late as the early 80s), enjoying all your lovely Third World Islamic immigrants? Do you still think immigration has anything positive to offer white countries? Does it increase the liberty of whites? Are you preachy liberal Swedes better informed now about the reasons for America’s alleged awful ‘racism’? Would you like your nation back? Would you like the non-Europeans removed from Swedish soil forthwith?

Rahvin January 12, 2011 at 7:59 am

racist bullshit

iain January 12, 2011 at 8:14 am

Horrible horrible post. Your are a conflated idiot using Islam and Non-Europeans as a scapegoat for the consequences of your own ignorance.

Colin Phillips January 12, 2011 at 9:23 am

Woah, this post is not really appropriate for Mises.org.

Cash January 12, 2011 at 8:37 am

Rahvin and iain: Leon happens to be right. The country is getting packed with people that don’t belong there! The imigrants’ country of origin is terrible because that’s the way they are! There is truth is the genetic differences between people. Your comments can only be defended by calling people racists because you have no legitimate defense.

Colin Phillips January 12, 2011 at 10:12 am

“People that don’t belong there” ? Seriously? Because where you’re born is all that matters, right?
In the Misesian tradition, it is common to be wary of falsely aggregating many disparate, individual elements into a single object. That’s the Keynesian approach, and it is criticised for concealing the finer mechanics of a situation.

I fear you may have fallen into a similar trap with this racism of yours. By seeing everyone from any one particular country of origin as being a homogenous part of a singular whole, you will naturally not be able to discern differences which exist, or understand patterns in behaviour.

Pointing out that a particular commenter is racist, as Leon quite certainly is, does not need defending. It is the blind assertion that race has any bearing on the state of an economy that needs to be defended. Luckily for the civilised world, nobody has yet made a coherent, logical, or empirically valid case for racism, so I can feel quite justified in asking you to shut the hell up.

iain January 12, 2011 at 10:55 am

Cash. Leon’s views are clearly racist. I doubt he would deny it or be ashamed. I called him a conflated idiot and he is. At the very least because he is a racist cretin.

My comments with regard to Leon being a conflated idiot can easily be defended… The Mises daily article discusses many government policies in Sweden their effects. In contrast Leon offers no evidence or even argument that Sweden in being ruined with the exception that non-white people now live there. Hence, he is obviously racist, illogical, and a nasty idiot.

I notice you offer no defence of your own, at most half true, comments….

Jim January 13, 2011 at 5:41 pm

Doesn’t anyone who can pull his or her own weight in society has a right to make a living anywhere that they can rightfully own property, just like any other productive citizen? If a productive black man buys a business in Sweden, why is he not an asset to society? There are plenty of white Swedes (at least I assume – I’ve never been to Sweden) who don’t pull their own weight. Do they belong there? And if they could somehow be replaced with anyone who doesn’t need public welfare, even if they’re muslim, isn’t that a benefit to everyone?

Patrik Karlsson January 14, 2011 at 5:45 am

Jim
To my knowledege the racists in Sweden belong to the group that you would call “white trash”, many of them live off welfare or have low paying jobs and are poorly educated. Losers that often complain that “the immigrants take the jobs” or if they have a job they say “the immigrants live off welfare”. That said, the overwhelming majority (95% or so) in Sweden are not racist and see the advantages of immigration.

Mr Whipple January 17, 2011 at 9:46 pm

I think the problem that is being alluded to is, you can’t have an open borders policy AND social welfare programs.

openinvestment January 12, 2011 at 9:37 am

My comments aren’t accepted here?

Forwardlook February 10, 2011 at 6:09 am

Interesting views. I am in the process of moving from Finland to Sweden and to me it feels that Sweden might have about 20 years left before real trouble begins. Many here seem to think that Islam immigration is not a problem but have you really looked into this? Islam is seldom a huge problem when muslims are in a clear minority. The trouble begins when the percentage rises and it rises fast due to the continued immigration and very high nativity rate. Look what happened to Lebanon, once a prosperous Christian economy in the area turned into a slaughterhouse when muslims came into power. This isn’t a racist view but a realistic view of the world. If these immigrants, many of whom seek asylum and get huge handouts from the government, would be grateful, like most of us would be in their situation,they would live in peace and try to get involved in the society and its values which saved them. Instead they burn out their own neighborhoods and throw rocks at the firemen and police officers who are coming to help. There are similarities in Sweden today to what happened in for example Detroit decades ago on a local level. A large number of people who live on government programs that tend to lead to passivism, poor self esteem and a demand for more handouts in the name of “social justice”. Nothing is ever enough and once the ball is rolling the following tax increases hurt the local economy and jobs start to disappear. This starts an evil circle and the “help” that politicians provide has often disastorous results. Like bussing in Detroit to mix kids from poorer areas to schools in better areas. Bit by bit the tax base is ruined when the wealthier people start to move out due to crime and violence. I just watched a Swedish documentary where they had to separate Swedish students from immigrants at a large school due to all the problems. All the doors were locked and the only place where the two groups met was the cafeteria and even this created problems. Poverty can not be erased by government handouts that continue forever, it only creates slaves that become prime targets for radical propaganda. Add to this a religion that considers it being superior to anything else and that in the end everything else should be erased you are having some serious problems in particular in a country where “political correctness” is a way of life and noone speaks of the real problems. Swedes often mention the US as a good example of a melting pot that gained a lot from immigration. No one can deny that is a fact. But how can you compare a nation that drew people from all over the world as a place where YOU could make it with YOUR OWN HANDS like everybody else instead of relying on handouts? The problem is that the immigrants in Sweden do not share the Swedish ideals but want to continue their way of life in Sweden and also convert swedes in the process. This is a very scary scenario.

Ted February 14, 2011 at 10:51 pm

Forwardlook,
You make some really interesting points about the clash of cultures. Actually, I believe the United States is tainted, too, by our Civil War. That essentially forced a number of diverse cultures together in a way that has not worked well. You mention that busing of blacks in northern cities like Detroit led to “white flight” and gradual deterioration of inner cities. Well, if there had never been a Civil War, much of this would not have happened. The US would have ended up more like Canada, and slavery would’ve ended in the South within a few decades anyway. Blacks might have had better success at improving their lot in the South than they have in the North.

Don’t get me wrong: it’s not that I oppose blacks in the North or think that we can somehow turn the clock back to 1861, before that war. In my opinion, white flight, whether or not it can be explained by social factors, is immoral. It is immoral to refuse to live next to people unlike yourself, even if it does lead to a reduction in your property values. At least by any standard of Christian values.

I suppose that’s one of the reasons I look to Canada for inspiration. They have brought a great deal of immigrants into their country and integrated them well. Maybe the key is not to accept immigrants out of guilt. Canada welcomed those immigrants because they could make positive contributions to the country, not because someone said it was their duty to help the poor. Or at least that’s my limited understanding of it.

If countries like Japan and Sweden do not bring in immigrants, they are doomed to long-term economic stagnation. Only immigration can bring the new mix of diversity and creativity that allows the development of new things. Places like San Francisco, Los Angeles, and New York are places of great ethnic diversity and great centers of capitalism. Capitalism thrives on diversity.

Ted February 14, 2011 at 3:26 pm

Mr. Bylund,
Thank you for bringing enlightenment to the question of how Sweden got its house in order. However, the point remains that it did get its house in order, in spite of the huge size of its public sector. You say that Sweden has “stagnated” because all its growth is in the public sector. But why would it matter whether the growth is private or public?

Also, I have to be somewhat skeptical about your claim of private stagnation. After all, a number of Swedes show up in the annual Forbes list of the world’s richest people. Evidently, Sweden’s big government doesn’t completely stifle individual initiative.

Krugman has never denied that government must ultimately be paid for. That’s why he favors tax increases on the wealthiest Americans. I will be impressed with your analysis if you show that in fact, low taxes on the wealthy have the “trickle-down” effect claimed by Republicans over the last three decades. I didn’t see anything in your blog post indicating that. If it does not, why do you and others on the Mises site spend so much energy criticizing Krugman instead of pointing that out to the American electorate?

Camlon April 19, 2011 at 8:43 pm

Ted:
Diversity is not always good. It really depends, sometimes it is good. Sometimes it is not. In Sweden’s case it’s causing a lot of problems and bring none of the positive effects. You normally want immigrants, because they come with new ideas, and they are young. Also, diverse cities normally look better than homogenous cities.

This is the case for where I live right now. Auckland has experienced a mass immigration as welll, but they have improved the city so much. The crime has been going down, the local and immigration population are living together and the immigrants are hard workers and reducing the prices.

Malmø has the same amount of immigrants in percentage as Auckland. However, most immigrants in Malmø are living in communities where there are more than 90% immigrants. Crime has been increasing rapidly in Sweden. Also, most of them live on welfare or do low paying jobs. And they have for certain not developed new things. To do that they have to research/start companies.

Your’re right. The key is to not let people in because of guilt. Both Canada and New Zealand let qualified immigrants in, and restrict unqualified immigrants. In Sweden they are making it harder and harder for qualified immigrants to immigrate and easier for unqualified. Also, I don’t think very many qualified immigrants want to emigrate to Sweden. Still, no immigration to Sweden is better than today’s immigration.

Apart from governmental spending and labour freedom, then Sweden is just as free as US. The gap between Sweden and the US shouldn’t be this big, because Sweden is much more careful with their finances. The biggest problem for Sweden in the future is not lack of economic freedom, but their immigration problems. Demographics is important. There is no rich black countries and none of the non-oil arab countries are rich.

Beefcake the Mighty April 19, 2011 at 8:53 pm

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