SWEDEN STINKS

THE POLITICALLY INCORRECT GUIDE TO SOCIALISM

by

Kevin D. Williamson

Chapter 7

WHY SWEDEN STINKS

GUESS WHAT?

• Swedes in capitalist America fare better than those who live in Sweden.
• Sweden's socialist "successes" can't be repeated in most other countries.
• Socialism has turned Sweden into a nation of petty swindlers.

            Venezuela, North Korea, the Soviet Union, Mao's China, pre-reform India, American inner-city schools, Amtrak, Sri Lanka's graphite industry, Mexico's nationalized banks in the 1980's, Cuba, Laos, Vietnam, Bangladesh, Libya, the Sandinista regime--there's an expansive catalogue of socialism, from the national to the local, from the general to the particular, that socialists do not want us to discuss when we analyze socialism.  The list of nations they do want to talk about is very short, and it reads: Sweden.

            Writing in Britain's Independent (2006), Hamish McRae called Sweden "The Most Successful Society on the Planet,"  Not to be outdone, Polly Toynbee of the Guardian (2005) christened it "The Most Successful Society the World Has Ever Known." [*NOTE: Superlatives here are OPINIONS not FACTS!] In 1976, Time described Sweden as a veritable utopia operating under samhället, Sweden's more liberal answer to Marx's dictatorship of the proletariat and North Korea's "Juche Idea":

                        It is a country whose very name has become a synonym for a materialist paradise.  Its citizens enjoy one of the world's highest living standards, and a great many possess symbols of individual affluence: a private home or a modern apartment, a family car, a stuga (summer cottage) and often a sailboat.  No slums disfigure their cities, their air and water are largely pollution-free, and they have ever more leisure to indulge a collective passion for being ut i naturen (out in nature) in their half-forested country.  Neither ill-health, unemployment nor old age pose the terror of financial hardship.  In short, Sweden's 8.2 million citizens have ample reasons for being satisfied.  In fact, most are.

                        ...The samhället's cradle-to-grave benefits are unmatched in any other free society outside Scandinavia.  Swedes enjoy free public education through college, four weeks' annual vacation, and comprehensive retraining programs if they want to switch careers....In pursuit of new ways to ease the Angst of life, a local politician actually proposed that the government provide free sex partners for the lonely.  [*NOTE: Nothing is free.  The people are bribed with their own        money!]

            Sweden in particular, and the Scandinavia model of socialism more generally, have given American socialists the best piece of evidence for their case.  One of the most perceptive among them, Jesse Larner of Dissent magazine, attributes the supposed success of Swedish-style socialism to its disinclination to centrally plan the entire economy. "Hayek understood at least one very big thing," Larner writes (2008), "that the vision of a perfectible society leads inevitably to the gulag."  But the Scandinavian model, he argues, makes room for a less authoritarian, more genuinely democratic expression of socialism, one that is not held hostage by the petty corruption and endemic misallocation of resources associated with other kinds of socialism.  "The possibility of non-totalitarian models of social democracy, like those that emerged in Europe after the war, should alert the reader to Hayek's limitations," he claims.

            Can one have socialism without central planning?  Larner argues for exactly such a thing, and other like-minded "market socialists" have pressed for similar arrangements.  Hayek was writing about Lenin, Stalin, and Hitler.  The limitations articulated by Hayek, they argue, do not apply to other, less centralized kinds of socialism.  Larner writes:

Comprehensive models of how society should work reject the wisdom of solutions that actually do work and deny the legitimacy (indeed, from Lenin to Mussolini to Mao to Ho to Castro to Qutb, deny the very right to exist) of individuals who demonstrate anti-orthodox wisdom.  Defenders of these models are required by their own rigidity to invent the category of the counterrevolutionary.  To Hayek, this is what socialism, communism, and collectivism--he makes little distinction between them--mean: the dangerous illusion of perfectibility.  The only kind of socialism he considers in Road to Serfdom is state-managed, perfect-society utopianism, in which the direction of the economy and all of its inputs are   planned, with the accompanying political and moral degradation that Hayek demonstrates quite convincingly.

            In many ways, the Scandinavian model is superficially attractive, and no critic of socialism can afford to ignore its successes.  While Venezuela's state-run grocery stores exhibit failures that have obvious parallels in American public schools, the Scandinavian countries seem to offer an exception.  Why?

            To understand the apparent success of Scandinavia socialism, it is first necessary to understand the culture and economic conditions that gave rise to this system, which on the surface appears to be radically more successful than the alternative models of socialism.  The free-market economist Milton Friedman was among those who understood that there is something deep in Scandinavian culture that greases the machinery of socialism.  When a Scandinavian socialist boasted to Friedman, "In Scandinavia, we have no poverty," his reply was astute: "That's interesting--because in America, among Scandinavians, we have no poverty, either."  That isn't quite true: the poverty rate for Swedish Americans is about 6.7 percent, according to economists Geranda Notten and Chris de Neubourg.  The poverty rate in Sweden?  Also 6.7 percent.

            What seems undeniable is that the Scandinavian countries, especially Sweden, have much more effective government institutions than does the U.S.  "Sure, the taxes are sky-high," say admirers of Swedish socialism, "but at least they get something in return."   One of the things they get in return is a relatively efficient government, and one with low levels of corruption.  Effective public institutions are characteristic of societies with high levels of social trust, and Sweden is just such a society.  The bad news for the rest of the world--but especially for highly complex societies such as the United States, India, and China--is that the social conditions that produce these high levels of trust are not generally transmutable.  (And it's bad news for Sweden, too, which is rapidly transforming itself into the sort of society that will not be able to support the relatively successful welfare-state arrangements that characterized it throughout most of the twentieth century.)

He Fought Socialism... And Socialism Won "Carl Bildt, Sweden's new 42-year-old conservative prime minister, aims to steer Sweden back into the family of free-market nations. 'Collectivism and socialism have been thrown on the scrap heap of history,' he told us during a recent visit.  'There is no compromise worth having between state control and capitalism.' " Wall Street Journal, April 1992

            Highly trusting societies tend to be ethnically, religiously, and linguistically homogenous, relatively small, and often culturally insulated by the use of a rare language such as Swedish or Icelandic.  So culturally homogenous are the Scandinavian-style socialist success stories that most of them (Iceland, Norway, Denmark, and Finland) still have taxpayer-supported state churches, something that would be anathema in a religiously complex society such as the United States.  Sweden itself had a state church until 2000, and the Church of Sweden, a Lutheran congregation, still enjoys something close to an official status, listing 73 percent of Swedes as members--in a country that is 85 percent atheist.

            Even if diversity-celebrating Americans wanted to reproduce the social conditions underpinning Swedish socialism, it would be impossible for them to do so, just as it would be impossible for them to become a nation of less than 300 million residents.  At times, this obvious fact becomes apparent even to American policy makers predisposed toward Swedish-style socialism.  Barack Obama, when challenged by a critic to explain why Sweden managed its banking crisis with relative aplomb compared to American clumsiness in this regard, said,

                        "They took over the banks, nationalized them, got rid of the bad assets,      resold the banks, and, a couple years later, they were going again.  So you'd             think,   looking at it, Sweden looks like a good model.  Here's the problem:    Sweden had five banks.  We've got thousands of banks.  You know, the scale       of the U.S. economy and the capital markets are so vast and the problems in   terms of managing and overseeing anything of that scale, I think, would--our assessment was that it wouldn't make sense.  And we also have different traditions in this country." (2009)

            Somehow, a precisely parallel set of facts and equally obvious conclusions eluded this genius and his party when it came to reforming American healthcare policy!

The Dark Side of a Socialist Paradise

            Sweden's high level of cultural cohesion, like that of its Scandinavian neighbors, has its drawbacks, however.  Sweden in recent years opened itself up to high levels of immigration.  Why?  Well, Sweden currently has what sociologists describe as a "deathbed" fertility rate of about 1.88 children during the childbearing lifetime of each female.  That is to say, one couple (two people) produce fewer children than needed to replace themselves.  A fertility rate of 2.2 is required as a minimum for a culture to survive into the next generation.  As no society in history has ever survived fertility rates so low,  Sweden, as with almost every other Western culture, China, Japan, and others, cannot save itself.  It has begun to run out of laborers to run its infrastructure.  So within a generation or two, there will be a place called Sweden but there will be no Swedes there.  Moreover, importing large numbers of unskilled laborers needed to reduce the population deficit but who will never be able to generate the tax revenues needed to keep aging Swedes in comfort forebodes a very bleak future for those who chose to trust the government promises of old-age benefits, etc. These will soon become impossible to deliver.  Socialism makes having children very expensive, especially with confiscatory tax structures required by an expanding bureaucracy.  When the state swears you'll be cared for from cradle to grave and birth control is abundantly available, people, as it turns out all over the world, don't bother to produce the children they really will need to comfort them in their old age.  When each young Sven sees his entire salary confiscated to support two or more retirees and "disabled" citizens, he won't be staying in Sweden for very long.  He'll easily do the math and see that he'll never receive for himself any benefits in his native country.  Will he wish to emigrate to another socialist "paradise?"

            About 13 percent of Sweden's population today is foreign-born, though it's worth noting that the largest group of immigrants are Finlandsvensk--Swedish-speaking people from neighboring Finland--who share similar cultural traditions and are easily assimilated into Swedish society.  For non-Scandinavian immigrants, who include refugees from the Balkans, Africa, and the Middle East, prospects are very different.  The British journalist Christina Patterson, who spent her childhood summers in Sweden, laments the country's "near-universal conformism" and describes the situation thus: "In a country where pretty much everyone is blonde and beautiful (Goering, I discovered, spent a happy summer at my childhood seaside resort), the non-white immigrant is greeted with generous welfare benefits and a hefty dose of suspicion."

            What they are not greeted with are jobs.  While immigrants constitute nearly 15 percent of the working-age population, they make up a far higher proportion of the unemployment.  In fact, Sweden has one of the highest disparities between immigrants' unemployment and native-born unemployment in the developed world.  Its labor market is severely segregated along racial lines, as the Swedish economist Johan Norberg reports:

                        Unemployment problems in turn result in de facto segregation.  Despite     little history of racial conflict, the labor market is more segregated than in America, Britain, Germany, France, and Denmark--countries with far more  troublesome racial histories than Sweden.  A report from the free-market Liberal Party ahead of the election in 2002 showed that more than 5 percent of all  precincts in Sweden had employment levels lower than 60 percent, with much  higher crime rates and inferior school results than in other places.  Most of these   precincts are suburban, so outsiders rarely see them.  The number of segregated precincts has continued to grow.  In some neighborhoods, children grow up without ever seeing someone who goes to work in the morning.  Pockets of unemployment and social exclusion form, especially in areas with many non- European immigrants.  When Swedes see that so many immigrants live off the government (i.e. taxpayers), their interest in contributing to the system fades.

            As in other parts of western Europe, the segregation of immigrant areas leads to insularity, crime and, in some cases, radicalism.  Last year, Nalin Pekgul, the Kurdish chairman of the National Federation of Social Democratic Women, explained that she was forced to move out of a suburb of Stockholm because of crime and the rise of Islamic radicalism.  The announcement sent shock waves through the entire political system.  "A bomb waiting to explode" is one of the most common metaphors used when social exclusion in Sweden is discussed.

            Those immigrants who do keep their entrepreneurial spirit intact often take it elsewhere.  Hundreds of unemployed Somalis and Iranians leave Sweden every year and move to Britain, where they are often successful in finding work.  The contrast in experience can be staggering.  The Swedish economic historian Benny Carlson recently compared the experiences of Somali immigrants in Sweden with those of their counterparts in Minneapolis, Minnesota.  Only 30 percent had a job in Sweden, about half as many as in Minneapolis.  And there are about 800 businesses run by Somalis in Minneapolis, compared to only 38 in Sweden.  Carlson quoted two immigrants who together summed up the disparity.  "There are opportunities here," said Jamal Hashi, who runs an African restaurant in Minneapolis.  His friend, who migrated to Sweden instead, told a different story: "You feel like a fly trapped under a glass.  Your dreams are shattered."

            Just as Somalis in the U.S. have far different outcomes than do their brethren in Sweden, Swedes in America fare better than do their kinsmen in the mother country.  The average income for a Swede in Sweden is $36,600, while in America the average income across the board is $45,500--and the average income for American Swedes is $56,900--55 percent more than the Swedish average.

            In fact, if Sweden were a state in the United States, it would be the most destitute of all.  The poorest demographic cohort in America, African Americans, enjoy an average household income of slightly higher than the Swedish average.  The more extreme the socialism, the more extreme the poverty; while black Americans enjoy a higher standard of living than do Swedes, black South Africans under apartheid by many measures enjoyed a higher standard of living than did their contemporaries living under Russian socialism.  For instance, black South Africans owned more cars per capita in 1983 than did Soviet subjects, suggesting that even a system of intentional, wicked oppression did not enact as much material privation on its victims as did the socialist system intended to help its victims.

            Sweden does not seem poor, but it is relatively so, and it is getting relatively poorer; in 1970. Sweden had the fourth-highest average income in the world, but by 2000 it had fallen to fourteenth place, and it appears likely to head further downward.

            One reason for that is that fewer Swedes are working.  And that in itself is a strange development, inasmuch as Swedes once were among the hardest-working peoples in the developed world, working more hours than Americans and nearly as many as the workaholic  South Koreans.  Today, 10 percent of all Swedes of working age are in early retirement, collecting disability payments.  About 16 percent of the national government's expenditures goes to subsidizing workers' sick days, and employee absenteeism is at epidemic levels.  How is it that one of the healthiest group of citizens on the planet is so frequently disabled and so often too sick to work?  Was there some sort of terrible accident?  A 13,000-Saab pileup?  A Scandinavian epidemic?

            The most likely answer is this: they aren't disabled, and they aren't sick.  In Sweden, a society once defined as much by its Protestant work ethic as by its egalitarian social ideals, gaming the system--defrauding one's taxpaying neighbors--has become socially acceptable, something that would have been unthinkable to Swedes a generation ago.  Norberg argues that this shift in national psychology is a direct reaction to the incentives created by the Swedish model of socialism:

Good Thing They Have Free Healthcare! Sweden has the "sickest work force in the world," reports Swedish journalist Ulf Nilson. And Monday is the "sickest day of the week."  "Another way of describing Svenska sjukan (the Swedish disease) is to say that around one million Swedes of working age (of whom there are some five million) are not going to work today," he writes. "or tomorrow.  Or the day after.  In other words, some 20 percent..  Every fifth [working-age Swede].  In spite of everything being said the disease does not strike old women...worse than any other group.  To the contrary: according to the reports, the sickliest Swedes are young men, generally believed to be among the healthiest specimens on earth. At which point you might says: Oops, there must be something fishy here." And there is.

                        Mentalities have a tendency of changing when incentives change.  The growth of taxes and benefits punished hard work and encouraged absenteeism. Immigrants and younger generations of Swedes have faced distorted incentives and have not developed the work ethic that was nurtured before the effects of the welfare state began to erode them.  When the others cheat the system and get away with it, suddenly you are considered a fool if you get up early every morning and work late.  According to polls, about half of all Swedes now think it is acceptable to call in sick for reasons other than illness.  Almost half think that they can do it when someone else in the family is not feeling well, and almost as many believe that they can do it if there is too much work to be done at the place       of employment.  Our ancestors worked even when they were sick.  Today, we are "off sick" even when we feel fine.

            If we are to take Swedes at their word, then they are the sickest society in the developed world.  Some 20 percent of all working age Swedes receive some form of unemployment benefit, many of them related to sickness and disability--and many of them almost certainly fraudulent.

            What is perhaps most interesting about this change in national psychology is that Swedish socialism, despite its high rates of taxation and its generous array of benefits, is not an especially redistributive system.  Whereas welfare benefits in the U.S. tend to result in a great deal of interpersonal transfers--taxing Peter to pay Paul--Swedish welfare historically has been geared toward intertemporal transfers--taxing young Peter to fund old Peter's pension benefits.  By some estimates, Swedish social benefits are 80-85 percent "self-financing," meaning that beneficiaries mostly get out of the system what they have paid into it, minus the (substantial) overhead costs imposed by government management of the programs.

            Swedes are well aware of this fact: indeed, the "you get out of it what you put into it" mentality is one of the reasons that Swedes have accepted such a high level of taxation and such a large and expensive welfare state.  But defrauding the system through phony sick days and overstated disability claims undermines that confidence.  It not only makes the system of transfers more interpersonal and less intertemporal, it also diminishes the high levels of social trust that have made the system possible in the first place.

            It will come as no surprise, then, to learn that the Swedish model is on the socialist skids.  In fact, it looks increasingly likely that Sweden's socialist system will end up undermining the country's historically egalitarian, trusting, and hard-working ethos--leaving Swedes with the high taxes, expense, and dysfunctional public sector familiar to students of the European welfare state, but depriving them of whatever benefits such a system might have offered.

            Furthermore, it is not entirely clear what those benefits might be.  Swedes are a very healthy and long-lived people. For instance, and aficionados of European socialism  have argued that this speaks well of the country's centralized, single-payer healthcare system.  Sweden  has very low rates of poverty and an apparently egalitarian economic climate, which also are taken as evidence that Swedish-style socialism works wonderfully well.  But the fact is that all of that was true of Sweden long before the establishment of the Swedish socialist state.  In 1950, Swedes already were living, on average, 2.6 years longer than Americans, according to the Swedish think tank Captus.  Sixty years of "The Most Successful Society the World Has Ever Known" brought that differential all the way up to...2.7 years.  As late as 1980, Sweden's per capita GDP was 20 percent higher than that of the United States, but by 2001 the American per capita GDP was 56 percent higher!  A big part of that reason is high levels of taxation; whereas the Sweden of 1960 was taxed at levels approximately equal to those of the U.S. today, the country's tax rate is more than 52 percent of GDP--half of all economic output is seized by the state.

            The irony is that all of this socialism has left Sweden with a society that is, in many important ways, less egalitarian and less generous than that created by the allegedly pitiless capitalism of the United States.  While Sweden's income is much more evenly distributed throughout its society than it is in the U.S., its wealth is less evenly distributed.  Unsurprisingly, income and wealth are highly correlated in the U.S., where most rich people get rich through high-paying work and by starting businesses.  In Sweden, wealth is, in fact, less correlated with income than it is in America, suggesting that wealthy Swedes are less likely to have worked for their money than wealthy Americans, and more likely to have inherited it or otherwise obtained it through family connections.

Jobs Swedes Won't Do "Some in Washington jokingly refer to IKEA as the Swedish Embassy.  And there is no doubt it is the most successful Swedish retail outlet throughout the world.  IKEA is well-known for its lack of staff both on the floor and in the back office.  Shoppers experience IKEA as a do-it-yourself store.  The shopping style stems from the high cost of Swedish employees.  Ingvar Kemprad, founder of IKEA, constructed an employment model that minimized state-imposed labor costs." Washington Times, 2007

            Not only is Swedish socialism in many ways less egalitarian than American capitalism, the Scandinavians cannot even pride themselves on being more generous toward the poor and the disadvantaged than are the cowboy capitalists in the United States.  While studies based upon Organization for Economic Cooperation and Development statistics generally find a wide disparity between social spending in socialist Scandinavia than in the capitalist United States, those numbers fail to account for an important fact: Sweden and other northern European welfare states tax many of the benefits they pay out, whereas in the U.S. most benefits are untaxed and the tax code itself is used to provide social subsidies, though programs such as the Earned-Income Tax Credit.

            Further, that social spending usually is calculated as a percentage of GDP, but the GDP of the United States is far larger than that of the Scandinavian socialist countries.  Accounting for the differences in GDP, the tax system, and the tax treatment of welfare benefits, The United States actually ranks right in the middle of the European socialist utopias when it comes to welfare spending, at a far lower rate of taxation, with a much more robust and dynamic economy.

            Spending more, getting less: Swedish socialism looks a lot like the American public schools.