How Come Scandinavia is So Well-Off?

It is assumed that Socialism is at its zenith in the Scandinavian countries, yet they do not seem to have the insurmountable problems that Europe and the US face. Why is that?

Charles R. Anderson provides some information little known to most Americans:

Is the U.S. More Socialist than Scandinavia?

It is in that we have a more progressive overall tax system than the Scandinavian countries of Denmark, Norway, and Sweden do.In Denmark, the poorest 30% pay 14.1% of all taxes.  In the United States, the poorest 30% pay only 6.1% of taxes.  In Denmark, the richest 30% pay 48.7% of all taxes.  But in the United States, the richest 30% are soaked for 65.3% of all taxes.Our poorest 30% in the U.S. pay only 43% of the portion of all taxes paid by the poorest 30% in Denmark, which most Americans assume is much more socialist than we are.  Meanwhile, our richest 30% pay 34% more of the total tax burden than do the richest 30% in Denmark.  These are not small differences in the degree of our socialism.  They are Titanic, with Titanic consequences.  We are more into the envy of class warfare than are the Scandinavians!

The United States has one of the most progressive tax systems in the world.  None of the Scandinavian countries are as bad at soaking their richer citizens and at giving their poorer citizens a pass in taking responsibility for the costs of the very government programs on which they have an equal vote.  Americans are clearly living the socialist dream that those with the greatest income will carry those with less income.  We are living by the socialist mantra that each shall provide to the rulers according to their means.  The rulers will then use the money to subsidize those they who will support them politically with votes or money and to provide distracting circuses.

As with all countries that have tried to live by socialist principles, we are finding that many of the more able or willing to produce are having second thoughts.  We are finding that some of the more able and responsible shrug and retire early.  Or that some simply slowdown and hold their cards until such blithering fools as Obama and Harry Reid are removed from their positions in the 2012 elections.  The majority of businessmen are in such a holding phase just now.  Our economy is in the doldrums as a result and we will not see any growth either until after the November 2012 elections with an Obama loss or until it is absolutely clear that he will lose.  Atlas has Shrugged and is waiting to see if he should put the World back on his shoulder at a later time.

The tax comparisons come from Government vs. Markets: The Changing Economic Role of the State (2011) by Vito Tanzi.  Tanzi is a senior economic official of the IMF.  The tax burden numbers for Denmark and the United States are given by Richard W. Rahn from an article published in the Washington Times on 31 August 2011.  That article also appears on the CATO Institute website here.

Posted by Charles R. Anderson, Ph.D. at Sunday, September 04, 2011

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5 Comments

  1. A major difference is Sweden doesn’t have a permanently imbedded, generational dependent class. In the USA we have an entire class of citizenry who spend the entirety of their lives taking from and never contributing to, the treasury. In order to hold political power, the Socialist Left in this country has delivered these people to perpetual bondage. They are the new “slavers”.

  2. There is another statistic that should be factored in:

    How many pay tax and how many percentage speaking are on the dole?

    If too few people are paying for many dependent non working population: you have arecipe for fiscal failure sooner rather than later
    In south africa about 5 million pay taxes for about 60 million people! It doesn’t matter what your colour is and it doesn’t matter where the country is on the planet :
    Its clearly not sustainable!
    I suspect that USA is similar.In relation to scandinavian countries where a larger porportion of cirizens work and contribute to welfare kitty ! Usa has many more millions of illegals (!) And other groups that don’t even look for work

  3. A few notes about Sweden (since I live there) that may be of interest :

    - Sweden was headed straight over a cliff in the early 90′s, due to the socialization of basically everything during the 70′s and 80′s. Since then, we have seen decent economic growth, due to the fact that we have in fact “desocialized” parts of the economy and reformed both retirement and the social safety net

    - Our minister of finance’s catch phrase is “stable government finances”, and since the 90′s crisis there has been a rule that the government budget should yield an annual 1% surplus over each business cycle. Government debt has gone from almost 75% of GDP to the low 30′s.

    - Even the left/communist party has agreed that stable finances are necessary, and that deficit spending is damaging long-term

    - Except for some symbolic measures, we had basically NO fiscal stimulus during the last financial crisis.

    - We do have a massively progressive taxation system, and a VAT and other assorted nonsense, but at least everyone except those on welfare pay taxes. And while the socialists tried to make it “cool to pay taxes” during the last election, most Swedes agree that taxes are a pain in the ass

    - Except for those who work for the government (unfortunately, they are a significant part of the population), most people agree that the government is a bureucratic, slow, retarded organization that mostly just messes things up. And while members of parliament get decently well payed, its nothing compared to US congressmen. And you generally get LOWER wages in the public sector than in the private sector. The reason for this is that since the welfare state is still so expanded, there is budget pressure on almost all departments.

    Basically, it looks like we have seen the worst of socialism, and slowly taken a couple of steps back. The government still steals a horrifying amount of money, but we’ve been through the “aha” moment when a large part of the population realized that socialism doesn’t deliver what it promises. While 90% of the population think that its still a MUST to have free healthcare, most are aware that this means waiting for care, or in the worst case being denied it. While the socialist roots go deep, they are now entangled with a rather wide-spread feeling of scorn towards the government.

    It will be interesting to see what happens with our just recently popped housing bubble, we are among the last to see that happen. I don’t expect the economy to look great, but at least we are not headed for government insolvence/hyperinflation. Yet.

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