‘Trust not taxes have made Sweden a success’

'Trust not taxes have made Sweden a success'
Swedish kronor. Photo. Jessica Gow/TT
Writer Nima Sanandaji tells The Local that Sweden's large welfare state isn't responsible for its economic success and argues that struggling countries such as Greece would do better to learn from the Nordic country's trust and transparency instead.

Sweden and other Scandinavian countries are envied by the world. So it makes sense that in times like these when other European economies such as Greece are having problems, commentators often look north to trace the ingredients of successful societies.

It makes sense for people to admire Sweden. Sweden and other Nordic countries have social and economic success; their people enjoy a high quality of life and have a long life span.

But while many link these factors directly to policy; what they miss is that the countries were already successful before the welfare state became so large.

In the early-to-mid-twentieth century, Sweden had a small and efficient welfare state. At this point taxes were around 30 per cent of the economy and the welfare systems were focused on providing high quality services such as basic education.  

Working ethics were strong and people weren't overly reliant on public income support. Sweden combined prosperity and entrepreneurship with low income inequality and a high life span.   

Why did Sweden and other Nordic countries become so successful? As I point out in my new book “Scandinavian Unexceptionalism” the Nordic culture of success is a key reason. 

Scandinavia has an unforgiving climate, far from the sunny beaches of Greece. In years gone by people would have starved to death in the cold north if they did not work hard. Scandinavia differed from Russia (and much of Europe) since Scandinavian farmers were not serfs, but rather independent land owners.

Widespread ownership promoted individual responsibility  as well as cooperation. In addition Scandinavia has long had a tradition of transparent and efficient government. Lastly, particularly Sweden has enjoyed a long period of peace.

Some might be surprised to read that Scandinavian countries had an even higher lead in lifespan campared to other developed nations in 1960, before the expansion of the public sector, than today. This shows us that culture matters. Scandinavians have long been health concious, loving long walks in nature.

All in all, trust, responsibility, peace, free markets and successful limited welfare states made Scandinavian successful. High taxes and third-way socialism came after this transaction, and were not necessarily successful policies. Sweden for example experienced a long period of stagnation after turning towards state control of enterprises and a large public sector. A large share of the population continues to be supported by taxpayers rather than work.

Countries such as Greece have tried to introduce a Scandinavian welfare state, withouth having the norms and responsible policies in place to actually collect the taxes and limit overutilization. Their systems have predictably been failures.

Perhaps they should learn from the true Nordic success story, realizing the importance of personal responsibility and trust. Trust and individual responsibility is like oxygen: when you have it you don't think about it, however when it goes away you can struggle to breathe.  

Nima Sanandaji is a writer and academic. His most recent book 'Scandinavian Unexceptionalism' was published in conjunction with the Institute of Economic Affairs in London and is available online

Nima Sanandaji. Photo: Private