redbloodedamerica:

How Sweden Got Rich – and Almost Poor

Ah…Sweden, what a great nation!  Where no one is poor and everybody’s healthy.  We’ve solved the problems, we’ve squared the circle, we proved that big government can result in great prosperity.

No…that’s dead wrong.

You know the old joke?  How do you end up with a small fortune?  You start with a large fortune,and then you waste a lot of it.  And that’s the Swedish experience.  We got rich once upon a time because of free markets.  

Between 1850 and 1950, Sweden’s income per capita increased eightfold, and taxes were lower than 20% of GDP, lower than in other Western countries, and much like the United States.  Only then, when we were already rich, did we start to build a large welfare state, and that hurt us.  

In 1974, Sweden was 50% richer than the average OECD country, 20 years later that gap had halved, and it ended in a terrible economic crisis.  Sweden fell from being the 4th richest country, to the 13th.  Despite its reputation for being a worker’s paradise, real wages were stagnant for 20 years.  

Then we reintroduced free market reforms, and then in the next 20 years, real wages increased 70%.  So Sweden is much like other places, free markets worked here, it made us rich, but then big government almost ruined us.  But reforms since then got us back on track.