The Story of Scandinavia is one of Markets, Not Socialism

Everyone in America, from presidential candidates to Nobel-prize winning economists, like to paint Scandinavia as a utopian paradise where socialism has been successful, and thus a model for the policies they would implement in the United States, but comparing Sweden, Denmark, and Norway to America is problematic and wildly misguided.

Democratic presidential hopeful, Bernie Sanders, regularly invoke Sweden and Denmark as successful examples in “democratic socialism”, while at the same time completely overlooking the very thing that makes them such thriving democracies – free trade. Sweden is one of the leading voices for free trade and a proven model that trade liberalization is compatible with high wages and job growth.

What eludes Sanders and other Democratic leaders in their advocacy for socialism is the reality that if the United States were to try to adopt the Swedish model, it would actually harm, rather than benefit, the poorest Americans in society. You can’t just walk around and talk about how you should import another country’s model if you don’t understand how that country’s culture and history made it possible. An attempt to import it without having the same preconditions could be disastrous.

Congresswoman Ocasio-Cortez said in a “60 Minutes” interview that her policies “most closely resemble what we see in the U.K., in Norway, in Finland, in Sweden.” But just how egalitarian are these Nordic societies? According to Swedish author and historian Johan Norberg, not very. “One thing the American left gets wrong is that they think that Sweden has this sort of warm, friendly, fuzzy capitalist thing—no layoffs, no fierce competition, protecting the old companies and so on. And it’s really the total opposite,” Mr. Norberg says.

American leftists often call for higher taxes on “the rich” to support an expanded welfare and entitlement state like they believe the Scandinavian model to be, but Norberg says that’s another misapprehension of the Swedish system. “We have much higher taxes on the poor and the middle classes than America,” Mr. Norberg says. “And this is the dirty little secret that no one in the American left wants to talk about.”

Sweden and Denmark: “We are not Socialist.”

Across Scandinavia, leaders from Denmark, Sweden, and Norway have publicly denounced any relationship of their respective countries to socialist nations. Prime Minister of Sweden from 1991 to 1994, Carl Bildt, took to Twitter to warn Sanders that socialism is not the key to creating a great society.

Equally, former Danish PM Lars Løkke Rasmussen tried to set the record straight at Harvard some years ago with this statement; “I know that some people associate the Nordic model with some sort of socialism,” he said. “I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy.” In addition to the former Prime Minister’s proclamation, a free-market think tank in Denmark, the Center for Political Studies (CEPOS), also issued a 20-page report telling Americans that 1) Denmark is not a socialist nation, and 2) statist policies have still caused significant economic harm.

Although there are areas, especially in taxes and labor market regulation, where socialist elements still exist in the Nordics, the region is by no means socialist today. In fact, according to the Heritage Foundation’s index of economic freedom, Sweden, Norway, Finland, Iceland, and Denmark rank among the 30 most capitalist countries in the world.

Sweden – A Closer Look

Sweden has always had a strong capitalist industrial base throughout history; low taxes, low regulations, and a booming economy turned Sweden into an absolute industrial powerhouse. After the 1960s there was a large redistribution of wealth, which ultimately ran the nation’s economy into the ground because it couldn’t keep redistributing wealth that wasn’t being created and by 1990 the Swedish economy looked bleaker than it had ever before. At this point, the government started to reduce government spending, regulations and started to reform welfare programs.

In fact, there was only ever one brief period in the 1970s where Sweden experienced a financial system, which resembled communism; a big government that taxed and spent heavily, and it was recorded to be the all-time lowest point in the Swedish economy. (Also, it caused successful entrepreneurs fleeing the country with their wealth, such as Ikea’s Ingvar Kamprad). Once Sweden started shrinking the government’s role and scale back on public spending, privatized the national rail network, eliminated inheritance taxes and sold state-owned businesses, the result has been the ‘utopia’ we see today; a blossoming social and economic society which the likes of Bernie Sanders are desperate to adopt.

Misconceptions of Socialism Impoverishes Political Debate

Does Sweden have a larger welfare state than the United States? Yes. Does it have higher taxes? Yes. But we shouldn’t conflate its success with hazy ideas of socialism.
Sweden might look your socialist democratic dream because they’re taxing the rich at ridiculous rates but people should also know that lower-income earners in Sweden pay more in taxes than American low-income workers do. People who earn below-average income actually pay up to 60% in taxes. That’s not a society, which takes from the rich to help the poor; it’s a country that exploits a very loyal working class.

Bernie Sanders, AOC, and other Democratic congressional leaders ought to stop pushing for socialism in America; they need to stop hyping the idea of populism and they need to stop seducing clueless Americans with the notion of a socialist dream society which does not exist.

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