Sweden: Wel-Unfairy Tale

Since the communism´s final debâcle (at least in its "dictatorship of proletariat" form) in the end of the 80´s another model has arised as the only option for former communist activists: the social-democracy, so called the "welfare" state.

The experience of more than 40 years of social-democrat party rule in Sweden has created a model that has enlightened all the leftist hearted (and minded) people. The strong appeal of a big state government taking care of all people, from craddle to tomb has kept people distant from the economic liberalism practiced on the other side of atlantic sea. For them, SD is more fair and includent than the old wild capitalism preached by oldies Reagan and Thatcher...

Here in Brazil the same situation occurs.

But it seems that the model is cracking...
Read this excelent article

Paradise Lost: Swedish, European Economy Muddled in Mediocrity

by Dale Hurd

CBN News Sr. Reporter
December 6, 2004
CBN.com – STOCKHOLM, Sweden -- The good times just keep rolling along in Sweden's social-democratic paradise. Welcome to a veritable welfare wonderland, where everyone is taken care of from the cradle to grave; where alcoholics can retire on government pensions; where the average worker calls in sick one day a week, even if he or she is not sick; where drug addicts get disability checks and the where the real unemployment rate is close to 25 percent. If all this sounds like a recipe for disaster, congratulations for grasping some basic economic principles that most Swedes, and in fact, most Europeans, still haven't figured out.

If Sweden ever was an economic paradise, welcome to what is turning into paradise lost. Economists here seem to think that all that is needed are a few tweaks. But this bloated welfare state needs more than a tweak. That's not likely, because most Swedes, and most of the world, assume Sweden has found a combination of socialism and capitalism that works. But does it work?

“Uh, No,” comments Frederik Erixon. “It's quite simple. No, it doesn't work.”

Erixon, one of the few free market economists in Stockholm, says Sweden's standard of living continues to fall farther and farther behind.

“Sweden is much poorer today in comparison to other countries than say 10, 20, 30 years ago,” Erixon continues. “The GDP (gross domestic product) growth has been declining for a number of decades.”

Sweden's official unemployment rate is six percent, but that figure is "cooked", to use an economic expression. Because it doesn't include another six percent on sick leave, at least 10 percent on disability, and a significant chunk of the nation's high school and college graduates are well, just loafing. This according to top Swedish Economist Stefan Folster:

“If one adds all that together, it's probably fair to say that one in four people is not in work but could be,” Folster says.

All Swedish workers get a minimum of five weeks of vacation every year. Not enough, apparently, because, as we mentioned, the average worker also takes one sick day a week, often to work a second job, because taxes take at least half of their first income.

Sweden's welfare state has even managed to turn alcoholism into a career option, since government policy effectively pays people to stay home, drunk.

But if you want to be a Swedish entrepreneur, then you have a problem. Most small businesses in Sweden consist only of the owner. It's too expensive to hire employees and too difficult to fire them. Just ask Trucking Company owner Lars Jansson.

"Somebody said it's easier to divorce your wife than to terminate an employment,” explains Jansson. “When you hire someone it's extremely difficult to fire him if he's not doing his job."

"Economically productive behavior is very difficult to pursue," agrees Erixon.

But it's a similar situation across most of Europe, which continues to fall farther and farther behind the United States.

A study by the Swedish free market think tank Timbro found that the United Kingdom, France, Germany and Italy now have a lower per capita Gross Domestic Product than all but four U.S. states.

So you might think that would make Europeans want to change their economies to be more like ours, and you would be wrong.

First off, most Europeans don't know that they're poorer than Americans are. Their media, which is largely anti-capitalist, and people like Michael Moore, tell them that the quality of life in America is awful.

In fact, there are so many European misconceptions about America that it took a book to hold them all. In “Cowboy Capitalism”, German journalist Olaf Gersemanna, a business reporter who lives in the U.S., demolishes the strange myths that many Europeans believe about America: that most of us have to work three low-wage jobs just to make ends meet; that America only has low unemployment because we throw so many people into prison, and that most Americans don't have healthcare.

Even the head of one of Germany's most pro-business parties has said that in America, "…freedom is the freedom to sleep under bridges."

Our cameraman discovered that's also a freedom enjoyed by Europeans.

But Swedish economist Folster says Swedes would rather be poor than have an American-style economic system, which is so cruel.

"Poverty is to a greater extent than in most European countries,” points out Folster. “Homelessness, wide income distribution, and things like that that many Swedes are afraid of."

They should be afraid of their own future. Mauricio Rojas, a free market economist from Chile, who has lived in Sweden for 30 years, says the welfare state is turning what was once one of the hardest working nations in the world into a nation of idlers, which is also killing the welfare state itself.

Says Rojas, "Because the welfare state needs people paying taxes, working, behaving in a moral, responsible way. But people say, ‘I don't need to go work. I have too much. I'm tired. My children need me.’ And the state's going to pay."

And Sweden's problem is Europe's problem: high taxes, low growth, huge welfare payouts, and a shrinking population.

Gersemanna says these days, German politicians refer to "the American way" with a sneer. But compared to Europe, the American way looks pretty good.