MP3 Download: http://www.fdrpodcasts.com/#/3037/scandinavian-socialism-dangers-of-the-welfare-state
Many have long praised Scandinavian countries for their high levels of welfare provision and for their economic and social outcomes. It is, indeed, true that they are successful by most reasonable measures.
However, Scandinavia’s success story predated the welfare state. Furthermore, Sweden began to fall behind as the state grew rapidly from the 1960s. Between 1870 and 1936, Sweden enjoyed the highest growth rate in the industrialized world. However, between 1936 and 2008, the growth rate was only 13th out of 28 industrialized nations. Between 1975 and the mid-1990s, Sweden dropped from being the 4th richest nation in the world to the 13th richest nation in the world.
Many analyses of Scandinavian countries conflate correlation with causality. It is very clear that many of the desirable features of Scandinavian societies, such as low income inequality, low levels of poverty and high levels of economic growth, predated the development of the welfare state. It is equally clear that high levels of trust also predated the era of high government spending and taxation. All these indicators began to deteriorate after the expansion of the Scandinavian welfare states and the increase in taxes necessary to fund it.
Dr. Nima Sanandaji holds a PhD from the Royal Institute of Technology in Stockholm and is the author of “Scandinavian Unexceptionalism: Culture, Markets and the Failure of Third Way Socialism” which is available for free online via the Institute of Economic Affairs: http://www.iea.org.uk/publications/research/scandinavian-unexceptionalism-culture-markets-and-the-failure-of-third-way-soc
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