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End of a Swedish fairy tale?
Socialists May Be Out After Ruling For 61 Of Last 70 Years
B N Uniyal
Stockholm: A fairy tale is about to end in Sweden ââ¬â the envy of the worldââ¬â¢s capitalists and socialists alike. All opinion polls on the parliamentary election slated for September 17 talk of a conservative victory, even if marginal, over the socialists who have ruled the country for as many as 61 of the last 70 years. The irony is that the socialists have fallen out of votersââ¬â¢ favour not because they have failed to deliver but because they have largely delivered what they had promised, and are now at the end of their tether.
Sweden ranks among the top five or ten in the world on all economic and social parameters. The Swedish Model is unique and has been envied by all, though duplicated by none, because it is a capitalist haven and socialist paradise woven in one large utopian social welfare system. Yet nowhere else in the world has private enterprise grown so robust or social welfare as vigorous as here.
ââ¬ÅSweden is the largest and the most costly welfare state,ââ¬Â says Maurico Roajas, MP and a professor of economics, ââ¬ÅNo democratic country has in times of peace matched its level of public spending, high tax rates, income transfers, state monopoly of social security and basic services such as education, health care, child care, care of the unemployed and the elderly, and social assistance of every other sort.ââ¬Â
What is interesting about the welfare system is that while nothing is for free ââ¬â not even daycare schools or routine medical advice ââ¬â there is nothing thatââ¬â¢s beyond the reach of anyone. That means even a child has to pay at least some money towards his or her largely subsidised school lunch or medicine. It is, however, a different matter that the money that the child has to pay also comes from the state as childrenââ¬â¢s allowance ââ¬â which also is taxed to build a pension fund for his or her adult years. Sweden is widely acknowledged in political and academic circles as presenting an intellectual challenge to those who argue that high tax rates and extensive state intervention are an obstacle to growth. Between 1870 and 1950 Sweden had the highest growth rate in the western world. Growth slid thereafter a bit, but only a bit. Except during the 1970s and 1980s, the economy has since kept growing at 4.5 to 5.5% on an already high base.
This year the growth is estimated to be the third highest in the world after the US and Norway. This yearââ¬â¢s GDP is estimated to be $360 billion compared to Indiaââ¬â¢s $800 billion and per capita income as high as over $30,000 compared to our abysmally low figure of $750. Nearly 60% of GDP will be collected in taxes that will go to meet public welfare spending of about 50%.
So, why have the Swedes become disgruntled with the very party that has made all of this possible? Probably because the socialists have virtually run the race and actually messed up the things towards the end. Taxes are high enough. Any further increase can mean flight of companies to low tax countries. State pension and other welfare costs are rising with average life expectancy increasing to 80 years and beyond, and the large influx of emigrant workers. Also while big companies have grown, so has unemployment, 5.4% today according to the government and 10% according to the opposition. This is because big companies create hardly any new employment at the bottom level.
Socialists May Be Out After Ruling For 61 Of Last 70 Years
B N Uniyal
Stockholm: A fairy tale is about to end in Sweden ââ¬â the envy of the worldââ¬â¢s capitalists and socialists alike. All opinion polls on the parliamentary election slated for September 17 talk of a conservative victory, even if marginal, over the socialists who have ruled the country for as many as 61 of the last 70 years. The irony is that the socialists have fallen out of votersââ¬â¢ favour not because they have failed to deliver but because they have largely delivered what they had promised, and are now at the end of their tether.
Sweden ranks among the top five or ten in the world on all economic and social parameters. The Swedish Model is unique and has been envied by all, though duplicated by none, because it is a capitalist haven and socialist paradise woven in one large utopian social welfare system. Yet nowhere else in the world has private enterprise grown so robust or social welfare as vigorous as here.
ââ¬ÅSweden is the largest and the most costly welfare state,ââ¬Â says Maurico Roajas, MP and a professor of economics, ââ¬ÅNo democratic country has in times of peace matched its level of public spending, high tax rates, income transfers, state monopoly of social security and basic services such as education, health care, child care, care of the unemployed and the elderly, and social assistance of every other sort.ââ¬Â
What is interesting about the welfare system is that while nothing is for free ââ¬â not even daycare schools or routine medical advice ââ¬â there is nothing thatââ¬â¢s beyond the reach of anyone. That means even a child has to pay at least some money towards his or her largely subsidised school lunch or medicine. It is, however, a different matter that the money that the child has to pay also comes from the state as childrenââ¬â¢s allowance ââ¬â which also is taxed to build a pension fund for his or her adult years. Sweden is widely acknowledged in political and academic circles as presenting an intellectual challenge to those who argue that high tax rates and extensive state intervention are an obstacle to growth. Between 1870 and 1950 Sweden had the highest growth rate in the western world. Growth slid thereafter a bit, but only a bit. Except during the 1970s and 1980s, the economy has since kept growing at 4.5 to 5.5% on an already high base.
This year the growth is estimated to be the third highest in the world after the US and Norway. This yearââ¬â¢s GDP is estimated to be $360 billion compared to Indiaââ¬â¢s $800 billion and per capita income as high as over $30,000 compared to our abysmally low figure of $750. Nearly 60% of GDP will be collected in taxes that will go to meet public welfare spending of about 50%.
So, why have the Swedes become disgruntled with the very party that has made all of this possible? Probably because the socialists have virtually run the race and actually messed up the things towards the end. Taxes are high enough. Any further increase can mean flight of companies to low tax countries. State pension and other welfare costs are rising with average life expectancy increasing to 80 years and beyond, and the large influx of emigrant workers. Also while big companies have grown, so has unemployment, 5.4% today according to the government and 10% according to the opposition. This is because big companies create hardly any new employment at the bottom level.