Sweden: textbook case of why Obamanomics failed

Discussion in 'Economy' started by Wiseacre, Jul 29, 2012.

  1. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    Sweden is today one of the world's economic success stories; but that wasn't always the case, in the 70s and 80s they doubled their overall tax burden, socialized a bunch of industries, increased regulations over it's markets, expanded it's public systems, and shuttered it's borders. The result? Economic stagnation, high UE, and a fast rising public debt; and by 1990 real wages only increased by 1% over those 20 years - bigger gov't did not turn out to be the answer. Remember ABBA, Bjorn Borg, Ingmar Berman? Famous and wealthy Swedes, they and others left home for more friendly financial climes.

    So, in the 90s they cut taxes, de-regulated their markets, and went to a sound money, low inflation monetary policy. They divested themselves of the aforementioned industries, granted independence to it's central bank, and introduced a school voucher system that improved choice and competition in education. They cut the public pension system and introduced private pension programs; UE benefits, sick leave, and early retirement benefits were all streamlined to encourage work. The result: fewer people on the public dole, which is a big reason for their sound financial situation today. Another reason: they partially privatized their Social Security system.

    In 2006, they cut property taxes, even for the rich guys. In 2005, they abolished inheritance taxes. Both policies were done to encourage entrepeneurs to come to Sweden to create new businesses or expand existing ones. Private providers were allowed to enter the healthcare market, thereby introducing competition into what was a very socialistic medical system (single payer). Same thing for the utilities and agriculture industries, prices are now determined by market forces without gov't intrusion.

    So, what happened? Sweden started running surpluses instead of deficits. Their gross public debt dropped from 78% in 1994 to 35% in 2010, and they weathered the Great Recession a lot better than we did, in 2010 their growth rate was 5.5% but ours was 2.7%.

    They still have an unemployment problem, pretty much like everyone else. Some say that is due at least in part to a high minimum wage imposed by the powerful Swedish unions; Sweden has not been able to do much to reform labor laws, as Germany did 10 years ago. There's no doubt the US is a far larger economy, and what worked for Sweden then may not work for us now. But IMHO, what we've been trying so far under Obama has not worked very well; it's time to change course and try some alternative approaches.
    The American Spectator : Free Market Sweden, Social Democratic America
     
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  2. Listening
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    Listening Gold Member

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    Could we put this in the economics forum ?

    I'd prefer to not have people like Franco litter it with his cat turds.
     
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  3. NYcarbineer
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    NYcarbineer Diamond Member

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    So your formula is to bring our country's level of socialism up to the Swedish level?

    That's our path to success?

    lol
     
  4. Joshuatree
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    Joshuatree VIP Member

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    How do you know that Sweden today has more socialism than the US under Hussein Obama?
     
  5. LoneLaugher
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    LoneLaugher Diamond Member

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    I agree. Textbook.

    Sweden Tax Rates
     
  6. buckeye45_73
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    buckeye45_73 Lakhota's my *****

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    Well well, so your admitting there are limits to socialism? That's a start.
     
  7. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    No, you idiot, what I'm saying is that we should try many if not all of the same policies that they followed to get themselves out of economic doldrums.
     
  8. Greenbeard
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    Greenbeard Gold Member

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    What is this supposed to be a comparison to? If it's the United States, then this doesn't make any sense. A nation with a 30%+ payroll tax, 25% VAT, and individual marginal income tax rates that get above 50% is the role model for a lower tax U.S.? A nation in which 97 percent of medical costs are financed publicly is the key to avoiding single payer in the U.S.?

    I just don't get it. I assume, given the source, that the lesson we're supposed to take away is not that more social democracy would've helped us weather the Great Recession a lot better than we did. But then it seems the subtext is "be more like Sweden," which is the same thing.
     
  9. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    What we have here is a concerted attempt to change the subject. Deflection and diversion, typical democrat responses. Either that or a reading comprehension problem.

    Short version: Sweden raised taxes too high and overspent. 20 years ago they got wise and cut taxes and spending. It worked. Moral of the story: cut taxes and spending instead of raising them.
     
  10. Listening
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    Listening Gold Member

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    I feel for you.

    It is quite clear that what you've done is pointed out that Sweden...and here we should step aside...

    Sweden is a country. It has specific system of taxes and government activity that have been part of their fabric for a long time (the basics). I view that as basic....an engine.

    What was then done in the 80's was to surround that engine with certain circumstances.

    They shifted.

    The doubled the tax burden (not for grins I am sure).
    The socialized some industries
    Increased government systems (some examples would be good)
    Shuttered their borders (who was coming in ?).

    There was a result.

    Stagnation
    High UE
    Increasing public debt.

    What is not clear is how these impacted things...the relationship.

    Sweden then reverses the shifts and things get better (except for UE).

    So the conclusion is that we should do the same.

    I would suggest we need to explore it further.

    Just to look at some questions....

    What caused them to make the changes in the first place. I am sure they didn't try to fix something that was broken.

    Next, what were the internal cause and effects of the changes. I see your point.

    Greenbeard is being obtuse and stupid when he asks questions he knows the answers to.

    But I think we do need more information.

    I like discussing this kind of thing in detail in these forums because it keeps the turds like Christ (Obama had done a great job) and Franco (dupes...dupes...uh, well, dupes) out of it.

    Thanks for posting this.

    Looking forward to learning more.

    Now, as to why Obamanomics failed.....we'll have to see what is parallel and what isn't.
     
    Last edited: Jul 29, 2012

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