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By Global Public Square staff
Conservatives often describe President Obama as a socialist. According to those critics, the president's goal is something called "Swedenization" – sky-high taxes, bloated government, and ruinous welfare policies. Well, the president should have taken some of these conservatives with him to Sweden this week. They would have found a country very different from the Socialist Sweden of the past.
You know how conservatives hate inheritance taxes – or "death taxes"? Well, guess which country has no inheritance tax – Sweden. In fact Sweden today is characterized by a very free market, freer and less regulated than the United States in many areas. It does have high income taxes, but it uses these to fund things like health care and pensions that are far more efficiently run than their counterparts in America. Indeed, Sweden tends to be near the top of most rankings on quality of life and competitiveness.
The old image of Sweden has much truth to it – 20 years ago. In 1995, Sweden had the largest government in Europe as a share of the economy. About 65 percent of its GDP was government spending – the nightmare scenario for the American right. Since then, Sweden has been reforming, opening up its economy and becoming market friendly and efficient. By 2012, government spending had fallen by a fifth. Sweden is now in sixth place, behind even France.
Another outdated notion is that the Swedish model of generous healthcare and affordable education would run up enormous budget deficits. In fact, while America's deficit is 5.7 percent, Sweden's is one-eleventh that amount at 0.5 percent. Or consider labor markets. While the United States government bailed out Chrysler and General Motors, Sweden did exactly the opposite – the iconic Saab was allowed to go bankrupt in 2011. Volvo was acquired by a Chinese automaker.
It turns out that socialist Sweden is not as socialist or crazy as the American right would have you believe. Instead, the changes of the last two decades reveal a Swedish government and people who are pragmatic and adaptable.
When Prime Minister Fredrik Reinfeldt came to power as part of a center-right coalition in 2006, he moved to cut corporate taxes, and Swedish companies now pay lower tax rates than American ones. And the downsizing of government is part of a regional trend. In neighboring Norway, the leader expected to win next week's elections is a conservative, running on a campaign to cut taxes.
Slowly but surely, Scandinavian countries are moving away from big government to smart government. Despite the tax cuts and the recent move to the right, Scandinavian states are still big spenders, but increasingly efficient and effective spenders. So although Sweden may have been a last minute addition on the Obama travel schedule, that doesn't mean there aren't important lessons to learn there.
Scandinavian countries have picked the best of right and left. It's time we re-defined the word "Swedenization" – instead of a slur, it's an example of smart economics.