The Swedish Century-Long Overnight-Success

How do you make a small fortune? You start with a bigger one. This is the model of the modern socialist system in Sweden. But many progressives and socialists will try to convince you that it is possible to create a successful country out of an economic model relying on high taxation and lots of welfare distributions.
Yet, the reality couldn't be further from the truth. If you think about it, it's mathematically impossible. Wealth depends on compounded accumulation rather than progressive redistribution.

Jacqueline Kennedy Onassis and Aristotle Onassis

Even Aristotle Onassis, once the richest man in the world, had to divorce his American queen, Jacquelyn Kennedy Onassis, She was spending more in a day than his complete maritime empire could profit in the same period. The lesson to the world was that spending will always have the advantage over income.
Progressives will point to the fact that Sweden, despite high taxes and a large welfare system, is a rich country and ignore that Scandinavians under a different system in the US are also rich. This is the problem with correlations. It is difficult to know which what causes what, if at all. In some cases, correlations have no bearing on what causes things. Still, this doesn't stop those on the left to make the claim and feel to be on the rational side of the argument. They are ignoring the fact that it may be Swedes that create wealth and not their system.

Mikhail Gorbachev

When Mikhail Gorbachev, the last USSR leader, was approached by his economic advisers to perhaps consider the Swedish economic model as a way to save mother Russia, Gorbachev is said to have asked "but where can we get all those Swedes?" Perhaps he knew better than modern socialists.
Meanwhile, the reality behind the apparent overnight success of the Swedish model is that it took close to a century to create. It started after the industrial revolution. It took a very trusting and homogeneous Lutheran society who shamed themselves for not working or for receiving social assistance. Their hard working ethic compounded with the most free of economic markets and the lowest collected taxes as a percentage of GDP. Here, it's important to highlight that we are not talking about tax rate but rather tax collections. As I previously discussed in this blog, US tax rates were highest during the second world war period while tax collections were lowest during the same period. That's the little dirty secret of the tax system. But we digress.
So, as Sweden grew personal wealth by openly trading with everyone, through low taxation, through exhaustive work and by not accepting any government assistance, things were ideal for the socialists to begin the process of wealth destruction during the 70's.

Vladimir Lenin

The socialist formula has never changed. First find a place where wealth was created. Since good living makes people lower their guard, start telling them that you are there to protect them. Make them believe you. Then start redistributing the money from the rich to the poor. If there are no poor, then import them. Later, when things start getting tough, blame free markets and businesses. Then repeat over and over again.
As Vladimir Lenin, the man who started the massacre of close to 100 million people in Russia used to say, "the truth about history is that it doesn't teach us anything".


For an additional look at the source that inspired this article, check this video by Johan Norberg where he discusses The Swedish model - myths and realities: