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FIRST-PERSON: An economic lesson from Sweden

DALLAS (BP)–There’s bewilderment in the land over the growing cost and reach of government. In his column June 3, historian and author Victor Davis Hanson asks the question on many Americans’ minds: “At a time when Europe is discovering that its democratic socialism does not work, why in the world is the United States doing its best to copy it?”

Most people think of Sweden as the most blatantly socialist European nation. Among developed countries, it is the largest welfare state, with a top income tax rate of 57 percent, one of the highest in the world. The Swedish government pays workers 80 percent of their salaries during sick leave, which can be for an indefinite period of time. Also, Sweden has a system of “free” health care.

In 1970, Sweden was the third richest country in the world. But its welfare state expanded to the extent that by 1993, Sweden had fallen to No. 18. According to the Heritage Foundation, in 2006, Sweden’s per capita disposable income was lower than the average in Western Europe. Sweden’s growth rate is miniscule and real unemployment hovers at around 15 to 20 percent.

The Swedes have come to the realization that something must change. So, based upon lessons learned from watching the Soviet Union collapse, and from its own financial crisis that took place in the ’90s, Sweden has taken a turn toward the free market. Sweden has implemented school choice, emphasizing vouchers up through the senior year of high school. It also has a public pension system where payouts can actually be adjusted if contributions to the system fall.

At 57 percent, Sweden’s tax rate is actually down from an unbelievable 87 percent in the 1970s. A punishing wealth tax, similar to our “death tax,” was abolished. Spending, though still very high, is down by nearly 10 points as a percentage of Gross Domestic Product since the early ’90s. While U.S. car companies and auto parts dealers have received bailout money, Sweden allowed its signature car company, Saab, to fail.

America, as a nation, is not comfortable with socialism. Arthur Brooks, an author and the president of the American Enterprise Institute, observes that in America, Tea Partiers protest “the government’s encroaching on the free enterprise system” and “the fact that the state is spending too much money bailing out too many people.” By contrast, in Greece, citizens take to the streets “because their government — in the face of its worst economic and perhaps existential crisis in decades — won’t pay the lavish pensions to which they feel entitled.”

Americans are not there yet, and we must reverse encroaching socialism before we get stuck in it.
Penna Dexter is a conservative activist and frequent panelist on the “Point of View” syndicated radio program. Her weekly commentaries air on the Bott and Moody Radio Networks.

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