Scandinavia is no socialist Valhalla

Scandinavia is no socialist Valhalla, by Medeline Grant.

Viewing Scandinavian countries as socialist — or even left-wing — overlooks an essential truth about how their economies are organised. While these nations do have high taxes and generous welfare, in many respects, their markets are unusually free, adopting exactly the kind of policies that the British Left, with its rigid adherence to central planning and intervention, spends its time fighting against. …

The very concept of central government setting a “one-size fits all” policy to cover all jobs and sectors is utterly alien to the Scandinavian economies. Neither Sweden, Norway nor Denmark actually has a minimum wage. Instead, wages are decided by mutual agreement between unions and employers, which usually vary according to the industry or occupation in question. In this respect, Scandinavian labour markets are far more flexible and decentralised than Britain’s.

Corporate tax rates in Scandinavia compare favourably with those of overtly capitalist countries. Sweden and Denmark’s are among the lowest in the EU 15, while Finland’s, at 20 per cent, is on a par with Britain. Norway has the highest rate of the five countries, but, at 27 per cent, is still significantly lower than America’s (nearly 40 per cent). …

In a recent count, about 20 per cent of public hospital care and about 30 per cent of public primary care was provided by private companies – compared with around 6 per cent in Britain.

Meanwhile, Sweden’s education system – inspired by the ideas of that well-known socialist thinker Milton Friedman – allows parents to top-up the cost of private schooling with government-funded vouchers, and has led to a surge of choice and competition in schools. …

They became rich on capitalism until 1970, went more socialist and became relatively poorer, and are now rejecting socialist excesses:

In the 1970s, the size of the Swedish state began to expand in earnest under successive socialist governments. Punitive taxation, including effective marginal rates that topped 100 per cent in some cases, prompted a mass exodus of wealthy citizens and entrepreneurs, including, famously, the filmmaker Ingmar Bergman and IKEA founder Ingvar Kamprad.

By 1993, when public spending had reached 67 per cent of GDP, Sweden had dropped from being the 4th richest nation in the world in the 1970s, to the 14th. Both Swedish and Danish citizens have since begun to reject “tax and spend” at the ballot box and recent years have seen a growth in support for centre-right parties, promising fiscal restraint.

hat-tip Matthew