Swedish Welfare: Sweden's Strong Cultural Values Have Temporarily Propped Up Its Celebrated Welfare State, but This Support Is Growing Steadily Weaker Due to the Nation's Socialist Policies

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Sweden is a prime example demonstrating that tax-and-spend welfare policies can work, correct? One hears enough about Sweden's near-miraculous feat of succeeding despite its high taxes and generous welfare benefits that one seldom questions whether Sweden's experiment in socialism has actually succeeded, but wonders instead how it has done so. The answer is that it has not succeeded--in the long term. Nor was it even possible to do so, since economic principles are inviolate.

Sweden is now having to face coming to grips with "the long term." The reason that the welfare state could work marginally well in the short term but not the long term is manifold, but one important reason is the long-term effect economic policies have on people's values. Norms associated with work and responsibility may support welfare states for a time, but those norms are eventually eroded by the welfare states they prop up, leading to the states' downfall. Sweden, often viewed as a role model for welfare societies, offers a good example of this phenomenon.

Swedish Economic History

Foreign intellectuals often view Sweden as a nation where high taxes and generous government handouts have been successfully instituted and maintained in a growing economy. This is, however, built upon a biased view of Swedish economic history. During the end of the 19th century, the Swedish economy was transformed through a series of free-market reforms that enabled the nation to experience rapid growth. The once-impoverished country had become one of the most affluent in the world by the middle of the 20th century.

Although the Social Democratic (socialist) Party had gained influence in Sweden, for a long time policymakers relied on growth- and work-friendly policies. In the '50s, for example, Sweden still had lower taxes than the United States. It was not until the '60s that the Social Democrats radicalized and attempted to shift the Swedish economy toward socialism. Then, as could be expected, government interference in the economy, high taxes, and generous handouts slowly, but surely, reduced the competitiveness of the nation's economy. Sweden would go from being one of the richest nations in the world to a mediocre industrialized country in terms of wealth. The country became poorer as a result of the tax-and-spend policies, but it did not face immediate catastrophe. The competitiveness and relative wealth of the country remained fairly strong until a welfare mentality had time to take hold of the Swedes.

How did the change to socialism also change the Swedish people and their value systems? At the end of the 19th century, Sweden was a nation dominated by small farmers who, contrary to many other countries at the time, often owned their own property. Swedes were quite poor, yet had very strong, justice-centered principles and work-related norms reflecting hard work as a value. Society was dominated by a strong Protestant work ethic.

This ethic, linked to their deeply held religious beliefs, motivated generations of Swedes to work hard to support themselves and their families and those truly in need. The work ethic was ingrained in the culture, and Swedes willingly accepted hard work as one's role in society.

When the Swedish welfare state slowly started to rise in the first half of the 20th century and then grow rapidly during the second half, socialism did not compromise the fabric of society as much as in other countries (though compromise it did)-and Sweden became famous as a system where socialism and capitalism worked together fairly well. Sweden benefited from the fact that it had a tradition of effective public service (less bureaucracy than other nations) and, most significantly, had citizens who were imprinted with strong norms not to cheat the system.

As Professor Assar Lindbeck, perhaps the most important Swedish economist, has written, traditional Swedish welfare could rely on a society where individuals shared strong values relating to not overusing the generous welfare system. …