Obama And The Swedish Welfare State

Stockholm, Sweden.  Do you think America would be better off with a Swedish-type welfare state?

This question tends to evoke strong reactions from both the left and right, yet few understand Sweden's economic history and the revisions it has been making to its welfare-state model in recent years. Sweden was a very poor country for most of the 19th century.  The poverty of those years caused many to emigrate from the country, mostly to the U.S. Upper Midwest.

Beginning in the 1870s, however, Sweden created the conditions for developing a high-growth, free-market economy with a slowly growing government sector. As a result, Sweden for many years had the world's fastest-growing economy, ultimately producing the third-highest per capita income, almost equaling that in the United States by the late 1960s. Sweden became a rich country before becoming a welfare state.

Sweden began its movement toward a welfare state in the 1960s, when its government sector was about equal to that in the United States.  By the late 1980s, government spending grew from 30 percent of gross domestic product to more than 60 percent of GDP.

Most full-time employees faced marginal tax rates of 65 percent to 75 percent, as contrasted with 40 percent in 1960. Labor-market regulations were introduced to make it very difficult to fire workers. Business profits were taxed heavily, and financial markets were regulated heavily.

By 1993, the government budget deficit was 13 percent of GDP and total government debt was about 71 percent of GDP, which led to a rapid fall in the value of the currency and a rise in inflation.

These policies and outcomes greatly diminished the incentives to work, save and invest. Economic growth slowed to a crawl. Other countries that avoided the excess spending, taxing and regulation of Sweden grew more rapidly, leaving Sweden in the dust. Sweden is still a prosperous country, but far from the top, and its per capita income has fallen to just about 80 percent of that in the United States.  

Sweden vs. the U.S.




GDP Per Capita (PPP basis, U.S. Dollars):







2009 Economic Freedom of the World Ranking



2009 Total Government Spending as a Percent of GDP



Total Government Debt as a Percent of GDP:










Budget Deficit:







Maximum Marginal Personal Tax Rate:


     2011 (proposed)


35% to 46%*

46% to 58%*

Corporate Tax Rate (2009)



 *The lower rate refers only to federal rate, the higher rate reflects addition of state income taxes for those states that have income taxes.


In the late 1980s and 1990s, Sweden began an economic course correction that continues today. Marginal tax rates were reduced for most of the population.  The wealth tax and inheritance tax were abolished. Financial markets, telecommunications, electricity, road transport, taxis and other activities were deregulated. Privatization of industry was begun, and the current government is continuing the process.

The generosity of some welfare and other benefits has been reduced, with the goal of making work more economically rewarding relative to government benefits. Also, trade liberalization has been expanded greatly. The result has been a pickup in economic growth, and Sweden is no longer falling further behind other developed countries.

One notable success has been pension reform. Sweden was the first nation to implement a mandatory government retirement system for all its citizens. Sweden, like the United States and most other countries, was then faced with an increasing, unfunded social security liability as a result of low birthrates and people living much longer.

After studying the problem in the early 1990s, the Swedes approved in 1998 moving toward a Chilean private pension system, first developed by former Chilean Labor Minister Jose Piñera. (Seventeen countries have adopted variations of the Piñerian system, which has been very successful in Chile.)

The new Swedish pension system has four key features, including partial privatization, individual accounts, a safety net to protect the poor and a transition to protect retirees and older workers. The benefits have been substantial budgetary savings, higher retirement income and faster economic growth.

Those who wish to chase the Swedish model need first to decide which model they seek: The high-growth, pre-1960 model; the low-growth model of the 1970s and 1980s; or the reformist, welfare-state model of recent years.

The irony is that the current Democrat Congress and administration are rapidly emulating the parts of the Swedish model that proved disastrous and rejecting those parts that are proving to be successful.

Most Swedes now understand that they still have a good distance to go to further strengthen the market economy to ensure continued growth. Thus, they continue to move toward reducing the size of government rather than increasing it.

If the Obama Democrats were wise enough to learn from the Swedes, they would be moving toward trade liberalization rather than away from it. They would be moving to at least partially privatize Social Security. They would not seek to prevent the abolition of the death tax. They would be reducing rather than increasing regulations.

They would be reducing rather than trying to increase marginal tax rates on work, saving and investment. They would be reducing the corporate income tax as was done in Sweden.

Finally, the Obama Democrats would be reducing government spending rather than increasing it and not running deficits as large as those that almost sank the Swedish economy 16 years ago.

Converging interests

The world is rife with examples of collusion between government interests and big business. Our own President, Nicolas Sarkozy, has been elected thanks to and with the support of conglomerates like Bouygues, his friends possess most of the French press, which is definitely why it is so lenient as far as illegal aliens are concerned. Big business can have advantages in some circumstances, let us say it is an incentive for smaller business to aggrandise so that ancillary profits constitute an appreciable accretion of wealth to the existing margin, as it all too often results in monopolies like Microsoft. It blatantly contradicts the interests of consumers not to mention its negative impact on competition. However, occasionally the country may benefit from their existence, as Capodistrias mentioned, an alliance between big business and government largely paved the way to victory in WWII. As far as I am concerned I am instinctively suspicious of such business owing to my favouring competition as an effective economic tool and to the fact the it could be tempted to coalesce with governments at the expense of the common good, as KO justly pointed out.


Well despite Atlanticist's best efforts Kappertism has infected the right side of the TBJ.

Whining? Just observation Atheling. You're the one who started slinging the "crap" around in this thread. R E V I E W  Y O U R  P O S T S. Is that slow enough for ya?

If you think Soros is an isolated figure in the global business community, a rogue Capitalist, then you really don't have the knowledge base to embark on the ranting that you have launched into on this thread and the subjects you DEMAND be addressed.

More Blustering

Still no substantiation for your assertions, Capo?

Do please enlarge my "knowledge base".


Big Business vs Big Government is a false dichotomy.

They exist semantically as seperate entities and there are certains perks and affectations that go with each one, but the personnel move almost seamlessly, fluidity from corporate post to goverment post, sometimes, often they hold them concurrently.

This state of affairs accelerated tremendously during  the Clinton-Gore years, the consequences of which have been a disaster not only for this country but for the world.

In the 90s I remember sitting with a delegation of deputy ministers from one of the former SSRs as we were about to launch a US gov't funded antitrust training program for them in the US. The VP from one of the big consulting firms in the US, who was primary on the contract, came in to give a introductory pep talk. The essence of his talk was that they should learn how to exploit their high ranking gov't positions to obtain high paying jobs in the private sector , national or foreign it didn't matter, then the VP stated bragging of his own success in the US, they could go back into gov't at even higher levels and subsequently cash out again repeating the process until their foreign bank accounts runnth over. Of course, the deputy minsters loved this talk because it reinforced something they knew all too well from their Soviet days, consequently, antitrust theory and how to maintain a competitive market did not fare too well.


Of course, the anecdote above captured pretty much what happen in the former USSR as a whole and I had a nice  perch from which to see it happen. Essentially, the Russians, particularly, listened to what we told them they had to do to set up a capitalist, market based economy and tried to adapt, but then the more they saw how the Westerners (gov't, business, and NGOs) really did "business," they said okayy we can do that and even better and that is how the oligarchs were born. Russians are great mimics and great actors, though a little over the top at times.  

I freely admit there are limits to comparing Big Business with Big Government. How do you compare winning WWII with an opera and ballet center in Seattle? But the money and power thing are not as inseperable as you think, just ask a Buffet, a Gates, a Soros, or a Gore.



Well put. Hank Paulson is a pertinent example of what you are describing. Structurally, the different positions in the system are attached to different roles and goals, but individuals can mix them up quite thoroughly.

A conservative accepts the value of combining monarchic, aristocratic and popular elements in a constitution. Perhaps we are discussing how the aristocratic element has captured the other two (aristocracy now being synonymous with plutocracy).


Ad hominem? How disingenuous/obtuse of you.

Atheling do you even read your own post before posting?

Why should I respond to "content" when so little thought and so much vitriol goes into them? 


You have not proven anything. Instead of whining about my "vitriol" at your obtuseness, how about providing some similarities to the examples I provided regarding big government? George Soros is one example mentioned, but among the many, many big corporations out there, how about giving some examples of how they are just like big government?

I hear a lot of blustering from you, but not much content.


KO said:

"I would never say big business does exactly what our socialist revolutionaries do."


KO, why not?


What's the difference between someone like George Soros and one of the old Red Directors of the USSR days? 


"Never" is the problem I have with your statement.


Don't be intimidated by Atheling's rants, she appears to have selected moral outrage at leftists and people who don't agree with every point she sputters in amazment.



"You do realize, don't you, that the US government allowed these illegals in the country?"

Yes I do realize that roughly half of the illegals enetered the country legally thru NIS/USCIS. You obviously don't have a clue why and how.

'Big business' in the West has corrupted almost every sector of our economy and hence our society. And it really doesn't matter if a pig at the trough has an American flag tatooed on its posterior or a hammer and sicle, there's only one good thing to do with a stuffed pig.

What was that about apples and oranges?

Big business vs. big government

Capo, I'm not arguing for any superior merit for big businesses in these "latter days of the law," only that they have a different place in the system from government actors and different goals. As atheling states, their goal is money. Big government types in government seek not money (generally) but the aggrandizement of government in order to distribute money and other goods (sometimes to themselves). Big businesses are thus influential clients of big government, not its equals or patrons. (They can be patrons through campaign support and by providing favorable publicity, but in that sense they are similarly placed to the rest of us, if not similarly ill-equipped.)

Thus big businesses and government can work hand in glove, both for the common good, and against it. There is no need to lump them together as equally pernicous, or to claim that one is virtuous and the other demonic. We can all agree that the trough of government-allocated power and wealth needs to be a lot smaller so that everyone does not have to constantly defend himself from state-sponsored/state-approved robbery.

To respond to your mention of Soros, he represents the worst of big business in his manipulation of government for wealth, but he is also a leftist ideologue with the will and the power to grow government. He is a big business patron of big government. He is unusual, possibly analogous to politically active Hollywooders who use their wealth to try to grow government for ideological reasons. But there are less extreme versions of similar orientations. How about investment bankers who try to shape policy that both protects their money and makes sure the government is powerful enough to do that? There is a basic philosophical difference among our people about the proper role and scope of government, and plenty of people who believe in big government both inside and out.


"The Rant" is this a new twist on the Socratic method?

Very effective.




More disingenuousness?

How about focusing on the content of my post instead of resorting to ad hominems?

That tells me you haven't an argument.


atheling asked:

"Do please show where "big business" is hiring purple shirted union members (or variations thereof) to intimidate protesters of Obamacare." 

No they hired millions of non-shirted, non-union illegal aliens who swamped our communities, highways, hospitals, schools , etc and intimidated Americans from  using the very infrastructure they were taxed to build.

Atheling I can go into detail how they Bush administration, along with DEMS and Repubs in Congress, gutted the regulatory agencies for several industries. Big Ag and Big Finance offer  stunning examples of how big business reached into the halls of agencies  and used them to crush competition in the marketplace.Why do you think so many BIG Finance, IT etc. signed on to the Obama change train? 


I'm sorry I don't have time now, but I leave you with one question : how many certified fraud examiners did the SEC hire after the ENRON scandal?


How disingenuous you are.

You do realize, don't you, that the US government allowed these illegals in the country?

Second, hiring illegals because you're a cheap, greedy bastard is not comparable to the takeover of various industries to empower the reach of the government and expand its control over the people.

You're comparing apples to oranges. Big business seeks to eliminate competition to increase their profit. Greed. Big government seeks POWER.

Why can't you understand this? Why are you so obtuse?


@Capo, traveller, KO, et al

If you are all so certain that "big business" does exactly what this Administration and the Democrat Party is doing, please provide examples.  Specifics, instead of general, vague statements.

Do please show where "big business" is hiring purple shirted union members (or variations thereof) to intimidate protesters of Obamacare.  And do give examples where big business is using organizations like ACORN to commit voter registration fraud... and please show where the media, who is far left, aids them in their goals. 

Also, please give examples where big business grabbed authority to control the Census, when it was originally run by the Commerce Department.
Please indicate where big business set up a site where their toadies can report "fishy" information they overheard in conversation, or received in emails.

You don't have to provide exact similarities, but please give some specific examples that parallel the goals and activities of Dear Leader's administration.









I would never say big business does exactly what our socialist revolutionaries do. I will say some businesses exploit the evils of big government, and the evils of government's failure to do its job. Business thus collaborates with the socialists to benefit at the expense of the common good.


Yes, but they do it out of GREED.

The Feds are gobbling up the private sector for POWER. Corrupt big business is not interested in running the US. They are interested in exploiting legislation, as you say, for for money.

At least there are some benefits from big business. If it weren't for Microsoft, Seattle would not have had a new Arts Center for opera and ballet. If it weren't for big business we wouldn't have as much money for the arts, period.

This ridiculous assertion that they do the SAME thing is wrong headed, misguided, and blind to reality.

I do not fear big business. I fear my government.


Dear Atheling,

I appreciate and agree with so many of your posts, however, on this issue I find myself in agreement with KO and Paganini.

My agreement is based on first hand observation. I wish it was not true, but, unfortunately, most of the big captains of industry and commerce of recent decades are a lost generation of self-absorbed, self-important little twits, who have the intellectual and moral depth and breadth of an 18 year old with his first convertible.


I don't disagree with your analysis of their character.

But I disagree with Paganini who is comparing their actions to that of Obama and the Democrat Party Machine. What they are doing is unprecedented in US history.

Why can't you see this?

@ atheling

Obama = mayor Daley and his machine.

Captains of industry = reference Ike and his warnings regarding the industrial/military comples, which is today translated into financial/political complex.

Methods are different, aims are the same.

different faces, same enemy

"The goal is not to restart the economy, deliver better health care, or save the environment--none of which their programs have a prayer of doing--but to reward and strengthen political allies and permanently shift the balance of power in the U.S.A."

Well, that's well said, I am strongly convinced of what you wrote, but ... the problem is that the other side, call them 'capitalists' or 'freetraders', have tesame agenda. Most discourses on 'free trade' 'tax cuts' 'privatisation' are only in favour of the already exuberant rich and the biggest companies & cartels. It's just their excuse for (absolute) power, nothing more. Different faces, same enemy.


I'm sorry, but your second paragraph is a pile of crap.

What is going on with the Obama administration power grab is unprecedented.

Really, your tired 1960's paranoid tirade against "big business" is so passe.


Please allow me to make a 2009 tirade against big business: because of the role of government in the economy, business has to elbow its way to the legislative trough and get whatever favors it can in the form of grants, tax legislation, labor legislation, regulation, etc. It does so with vigor, necssarily. It must do so to survive. Business is also one of the greatest opposing forces the people face in trying to get control of immigration. Business unites with the leftist and ethnic (i.e. Mexican) lobbies for an unending supply of cheap labor (and expanded demand), which for the leftists means an unending supply of votes for the welfare state.

The game needs to be changed to reduce the size of government so business, labor, and ethnics are not able to use it to benefit themselves at the expense of the common good.

P.S. @BGN: Good to hear from you under your new name. I was not calling you an Obama supporter. I agree there is a non-leftist basis for publicly providing for those in need, but I don't see a non-leftist necessity for doing so at a national level or by direct delivery of services by government.


There is definitely a case to be made against big business which, by coalescing into gigantic wholes, upends competition and produces cartels that influence politics, by seeking to endlessly drive wages down, employers import aliens who are first meek and then rapidly learn whatever legal loopholes exist in order to get their share of the entitlements culture, thus serving neither employers nor the country. I therefore share your point of view.

I rather think of the state as a moderator and an umpire in the form of a national agency overlooking competition between insurance firms in order to ensure health costs are maintained within reasonable boundaries so as not to trade common good for excessive profits. Safeguards would exit in order to preclude the state from overindulging in that role. A special programme would be implemented to provide for those in need.


You miss the point.

Paganini is equating the Donks' unprecedented power grab to big business' manipulation of the market. That's sheer idiocy and patently untrue.


First of all, we shouldn’t judge Obama on a comparison of economical figures today, with economical figures in the past. Given the unprecedented economical crisis going on, that’s intellectually unfair. Nevertheless, I was a big Obama fan before the elections, But I must admit I’m a bit worried today. Obama struck me as being somebody who would stick to his principles and truth no matter what. But that also implies being able to admit one was wrong, or at the least admit that some electoral promises can’t be held given the state of the economy. His health care program has a lot of merits, but right now there simply doesn’t seem to be an economy that is able to support it. Why not just admit it, and work on the economy?

Big spending of the government, implying some reduction of the outrageous tax cuts his predecessor gave to the extremely wealthy seems understandable and even recommendable at the moment. But use the spending were the economy benefits from it the most. And that seems hardly health care.  



Those "outrageous tax cuts" you speak of also applied to those making less than $50,000/year. Really, you need to learn the facts before opining.

Second, by tax cuts to the "extremely wealthy", i.e., employers, that enabled them to grow their businesses and hire more employees. Hence, everyone wins, and unemployment drops. When's the last time a poor person gave you a job?

Like Obama, you're in over your head when it comes to American politics and economics.

Obamacare and other Chronicles

I share Richard Rahn's outlook concerning the overall situation in Sweden and the folly of the Obama administration but I would like to point out other details. First, I do not reckon 1993 figures are relevant to the comparison as this year was one of deep crisis for Sweden, and thus does not embody the average deficits and general shape of the Swedish economy between 1960 and 1993, although I do not question the present analysis on the general trend whose character is incontrovertible. However, flawed though the system was, it still delivered more prosperity in terms of growth rates than some freer economies. I am personally in favour of a limited welfare state comprising a safety net, a part-private part-public health system, and two-tier education (private schools and state schools), the latter of which Adam Smith would not have begrudged me. I think we should not tackle those problems with dogmas or pre-established tenets but rather with pragmatism and providence, which used to be the conservative streak in the UK. Never forget that liberty cannot be absolute, and is always to be envisaged in relative terms.


None the less, I still agree with the assertion that Mr Messiah is doing huge harm to his country by applying outdated solutions, and misjudging the premises of the present crisis, as well as wilfully planning to retain power and increase its ambit. His criminal project to implement social security on such a scale while deficits beyond understanding still endure will lead the U.S. to bankruptcy as surely as day follows night. Even if Mr Obama were bent on actually financing the system (instead of implementing it without sufficient resources), which is apparently not, that would not work, for that would demand further taxation whose consequences would be appalling in times of crisis, contributing to the downward spiral of consumption, postponing any economic recovery. Less revenue, less spending, less consumption, less growth is a circle Mr Obama is seemingly unable to grasp. In the absence of taxation, debt would rise up to even more intolerable levels, perhaps duplicating California's grim example. Beyond the matter whether socialized health-care is desirable or not, it cannot be implemented successfully in the present conditions (and as long as hundreds of thousands of eager migrants flow to the country on a yearly basis, putting unbearable pressure on public services). I rather favour local government and, why not, health systems based partly on taxation but not depending on central government. Taxation should not go beyond a certain point, in order not to promote disincentives to work, that precept is known by economists as the Laffer curve.

Obama the leftist revolutionary

@ PVDH, BGN: You are perceptive observers and more honest than domestic Obama supporters as represented by the mainstream press. I submit that what you see as imprudence and misjudgment by the Obama administration is more economically viewed as a willingness to accept impoverishment and the failure of implemented programs as a small price to pay for revolutionary structural change in the role of government in the economy. The goal is not to restart the economy, deliver better health care, or save the environment--none of which their programs have a prayer of doing--but to reward and strengthen political allies and permanently shift the balance of power in the U.S.A. in favor of unions, government agencies, public employees, and beneficiaries of the racial spoils system.

Nothing of the sort

@ KO: I am not deceived by Obama's attempts as I made clear in my latest post; the fact that the plan will not be made financially viable underpins another volition which is, as you justly indicated, currying favour with lobbies or other interests. I also mentionned the likelihood that such reforms rather benefit racial 'minorities' (which are, most unfortunately, no minorities in entire patches of the U.S.), mostly Hispanics who are eager, immoderate consumers of welfare (another term is parasit), and would be net beneficiaries of the system as opposed to the white middle class. Be that as it may, what I meant to say is we should not ascribe leftist labels to everything, state-run or state-regulated health systems are known to work in some countries such as Denmark, the point is those countries are far more ethnically homogenous than the U.S. (and claim different traditions as to the role of states, a fact which is sadly overlooked by most readers of BJ, which is somewhat paradoxical, seeing as most of us claim to be nationalists). In the present context, socialized healthcare would be beneficial to racial minorities, while it could very well bankrupt the U.S. (that is on the brink of bankruptcy already). Forsooth, Mr Messiah and his dreams of grandeur are malevolent, you could hardly count me as an Obama-enthusiastic considering my record. It is fairly true a state-run health system would be quite an un-American idea, although the opposite also holds true in most European countries.

PS: Blueglasnost is a pseudonym I have re-activated, you used to know me under 'RepublicWarrior', which I reckon do not describe my views very accurately, considering my fondness for some constitutional monarchies.

Deaf Ears

Looks like the Swedes are on the right track.

The advice to the Obama Administration will fall on deaf ears.  They are not concerned with the American economy.  They are solely concerned with garnering and maintaining power.  And the only way to do that is to burden the people with high taxes, government regulation, and more dependency on government "largesse".

Deaf Ears 2

Is it the drive to power that makes them want to impose cap and trade, stimulus expenditures, and nationalization of health care, even if it practically guarantees significant loss of seats in 2010 and possibly loss of the White House in 2012? It is as if they seek the gratification of exercising power today, regardless of whether they will stay in office tomorrow. On the other hand, they probably correctly anticipate that the changes they make will not be completely undone, no matter how bad they are.

Deaf Ears (3)


It baffles me, that this administration is so tone deaf that they can't see the writing on the wall.

I attribute it to living in an ivory tower, surrounded by sycophantic advisors and the media.

I wouldn't be too certain about 2010. A lot can happen in a year, though I hope you're right that the GOP will retake Congress. I also hope that they have the common sense and initiative to undo the damage the Donks are inflicting on the nation. If they don't, there will be hell to pay.

Deaf Ears 4

They are blinded by what Thomas Sowell calls "the vision of the anointed." They are our masters, they know best, they are Caesar defending the plebeians from the rapacious senatorial class, they are Lenin making an omelet. I don't think there's much hope of the GOP winning back either house, but a message will be sent that Congressmen will take note of.

Ever read View from the Right? It constantly deals with your themes.