Stockholm syndrome

The architects of the cradle-to-grave Swedish welfare system said that if it couldn't work there, it wouldn't work anywhere. Well, it didn't and it doesn't, says Investor's Business Daily (IBD).

Funding the welfare state is a massive strain on a free economy. Entitlements and the administrative bureaucracy to manage it must be paid for. The only way to do that, aside from printing more currency, is to tax and tax again the wealth-, prosperity-creating private sector. That's a recipe for stagnation, not growth, says IBD:

Sweden's slope became most slippery from 1960 to 1980, when public spending increased from 31 per cent of the economy to 60 per cent in order to keep the Swedes rolling in government payments and to fund the bloated public sector.

Sweden today ranks about equal with the fifth-poorest U.S. state in per capita income.

Likewise, among the wealthy nations that make up the Organization for Economic Co-operation and Development (OECD), it slipped from fifth in income in 1970 to 15th in 2004.

There's not much optimism for a turnaround. Johan Norberg, a Swede himself, explains in the current issue of the National Interest that as "old attitudes about work and entrepreneurship" fade and dependence on the public sector grows, the country's once-vibrant economy will continue to fall behind.

Source: Editorial, Stockholm Syndrome, Investor's Business Daily, June 13, 2006; and Johan Norberg, Swedish Models, National Interest, Summer 2006.

For text (subscription required): http://www.investors.com/editorial/IBDArticles.asp?artsec=20&artnum=3&issue=20060612

For Norberg text: http://www.nationalinterest.org/ME2/dirmod.asp?sid=&nm=&type=Publishing&mod=Publications%3A%3AArticle&...

For more on International: http://www.ncpa.org/pi/internat/intdex1.html

FMF Policy Bulletin/ 20 June 2006