Sweden: textbook case of why Obamanomics failed

[NYcarbineer]

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.

Our taxes are significantly lower than they were in January 2009.

 

[NYcarbineer]

Not that it is a measure..I am looking for a comment.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

U.S. GDP is 15,010,000,000 for 310 million people. (48.4 per person)

Sweden is 538, 237,000 for 9.3 million people. (57.8 per person)

Did I do that right ?

O.K. I need some help here.

I got the GDP from Wiki as linked above (this was 2011).

Then I looked up Sweden on Wiki and they show a GDP of 379,400,00. That is quite a difference.

Can anyone help me out here ? Am I looking at this wrong.

Also, I am trying to find Sweden's historical GDP.

Without finding a link, off the top of my head try TradingEconomics.com - Economic Data for 196 Countries

 

[Greenbeard]

What has better results ?

Robust free market institutions and smart, efficient regulation, coupled with strong social spending. I'm glad someone raised Sweden's example.

Uh, that has not been established...and please no conclusive statements without the backing.

The assertion is that certain changes that were more free market in nature improved Swedens situation. That is how I read the OP.

The OP clearly says:

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%.

If that isn't strong evidence that market mechanisms can exist alongside a robust safety net--with the associated countercyclical effects that help to mitigate economic downturns--to produce good results, I don't know what is.

The infrastructure of their welfare state is significantly more robust than our own, yet the right also sees fit to praise their regulatory and economic policy. Social investments to please the left paired with strong market institutions to please the right. A pragmatic paradise?

If left and right can agree that Sweden (of all places!) might have a model to emulate, than the gulf between left and right isn't nearly as large as I thought.

 

[Listening]

We are already far to the right of Sweden even if Sweden has moved towards the center. That does not translate into a valid argument that we should be moving even farther to the right.

If someone had made that claim, that might be valid.

However, what was brought up were incremental changes. Your claim about a sweet spot is one that is worth looking at.

As part of the larger discussion.

The OP included the 'failure' of Obamanomics in his thread, and claimed the model of Sweden is the proof of why it failed.

If I can't question the validity of the premise of the central theme of his thread title without having to listen to you tell me I'm off-topic,

what IS the topic?

I am only doing this once.....

You stated the thread was saying we should be using Sweden as a model. You then went right to they are left of center and let's start with health care.

I corrected you. The thread is about a country....regardless of economic philosphy that took on certain activities and slowed their economy. They then revered those (which look more free market) and saw an improvement.

The thread has an implied claim that there is relationship between the two and that is why Obama is failing us.

I am not supporting any of the claims. I think we should look at the data and discuss what may or may not have been a true cause and effect.

The OP is not suggesting we be more like Sweden in terms of our relative taxes, or social program output.

I am trying to get some historical information on Sweden. The claim was made that policies of the 70's and 80's hurt them in terms of growth, output, UE and debt. I'd like to get that information to confirm that really happened first.

 

[Listening]

Robust free market institutions and smart, efficient regulation, coupled with strong social spending. I'm glad someone raised Sweden's example.

Uh, that has not been established...and please no conclusive statements without the backing.

The assertion is that certain changes that were more free market in nature improved Swedens situation. That is how I read the OP.

The OP clearly says:

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%.

If that isn't strong evidence that market mechanisms can exist alongside a robust safety net--with the associated countercyclical effects that help to mitigate economic downturns--to produce good results, I don't know what is.

The infrastructure of their welfare state is significantly more robust than our own, yet the right also sees fit to praise their regulatory and economic policy. Social investments to please the left paired with strong market institutions to please the right. A pragmatic paradise?

If left and right can agree that Sweden (of all places!) might have a model to emulate, than the gulf between left and right isn't nearly as large as I thought.

I am willing to look at anything. The right, in general, is never going to look at this from a federal standpoint and agree to anything that looks like Sweden. Sweden is the size of Wisconsin. There is a great case to be made for setting up social safety nets at the state level.

But that is not the premise of this thread. It says that Sweden improved it's situation by taking on more Free Market activities. I'd simply like to get past that first by confirming the timeline with some measures instead of reading RDeans bulls**t.

 

[Listening]

Without finding a link, off the top of my head try TradingEconomics.com - Economic Data for 196 Countries

Thank you.

I looked it up. There is no dip in the 70's or 80's. It is pretty much a steady climb.

The rate looks constant.

Now, after the early 90's, it looks like a straight line but the upward slope is steeper.

I need to go, but I also need to learn how to import those pictures.

The OP claims they hit stagnation. The GDP per capita does not show it.

I am not all that versed in the details of economics....what are the best measures for this kind of thing ?

 

[Wiseacre]

Obamanomics is all about raising taxes, bigger gov't, more spending, more regulations, and more gov't intervention. It's their answer to every economic problem. But Sweden shows that such an approach is doomed to failure:

snippet:

Sweden’s social democrats and their union allies experimented with steroidal marginal tax rates to support an unbridled entitlement state from the late 1960s through the early 1980s. Sweden then reversed course when confronted with the disastrous consequences of its policies.

In 1970, Swedish high earners paid marginal tax rates of 70 percent, rising to 85 percent by 1980. Marginal tax rates on dividends and capital gains were only slightly lower, if at all. Sweden’s entitlement state featured universal benefits replacing 90 percent or more of lost income, a state monopoly of social services, and a union-inspired ‘solidarity wage” that featured (as the Swede’s scornfully put it) “equal pay for all work.” Sweden’s distribution of income was as equal as the communist countries of Eastern Europe. Government spending rose to 60-70 percent of GDP versus the 45 to 50 percent in the rest of Europe at the time. Fifty percent more Swedes were “tax financed” than worked in the private sector.

According to Diamond and Saez, Sweden’s tax revenues should have grown faster than the rest of Europe as it raised its tax rates to unprecedented heights. In fact, Sweden’s growth of government revenues was one quarter less than the OECD average. We have plenty of anecdotes to explain why. More than half of Sweden’s billionaires live abroad according to Forbes. ABBA joined tennis star Bjorn Borg, film maker Ingmar Bergman, and many other Swedish notables abroad when the Swedish government took 85 percent of their earnings. The Swedes voted with their feet. We do not know how many, but each departure lowered tax revenues.

Diamond and Saez should note that Sweden’s high marginal tax rates (and the associated Swedish welfare system) had a disastrous effect on economic growth. From 1850 to 1950, Swedish productivity growth was the fastest in the world. Sweden’s stellar economic performance made it the fourth richest OECD economy in 1970. By 1995, Sweden had fallen to sixteenth place – the most dramatic relative decline of any affluent country in history. Notably, Swedish firms operating outside of Sweden remained competitive. They were not the problem. The Swedish model was.

Look To Sweden! Obama's High-Tax Gurus - Forbes

 

[Wiseacre]

Without finding a link, off the top of my head try TradingEconomics.com - Economic Data for 196 Countries

Thank you.

I looked it up. There is no dip in the 70's or 80's. It is pretty much a steady climb.

The rate looks constant.

Now, after the early 90's, it looks like a straight line but the upward slope is steeper.

I need to go, but I also need to learn how to import those pictures.

The OP claims they hit stagnation. The GDP per capita does not show it.

I am not all that versed in the details of economics....what are the best measures for this kind of thing ?

GDP per capita - did their population begin to slow down in numbers? Of course their GDP went up, they spent money like it was going out of style, that's why their debt problem got out of hand.

snippet:

During the 1970s and the 1980s, Sweden had a lower GDP growth rate than both the average growth of the EU as well as the average growth of the OECD area. The recession in Sweden in the beginning of the 1990s led to a low mark regarding economic growth as the GDP growth rate actually fell during three years. Between 1990 and 1993, the GDP fell by about 4 percent in terms of volume. After 1993, the growth rate in Sweden accelerated again and was comparable to the growth rate of the OECD. During 1998-2000, the volume growth rate was actually higher than in comparable countries, at just over 4 percent per year.
GDP - Gross Domestic Product | Economic growth | Economy | Facts and figures | Ekonomifakta.se

 

[Listening]

GDP per capita - did their population begin to slow down in numbers? Of course their GDP went up, they spent money like it was going out of style, that's why their debt problem got out of hand.

snippet:

During the 1970s and the 1980s, Sweden had a lower GDP growth rate than both the average growth of the EU as well as the average growth of the OECD area. The recession in Sweden in the beginning of the 1990s led to a low mark regarding economic growth as the GDP growth rate actually fell during three years. Between 1990 and 1993, the GDP fell by about 4 percent in terms of volume. After 1993, the growth rate in Sweden accelerated again and was comparable to the growth rate of the OECD. During 1998-2000, the volume growth rate was actually higher than in comparable countries, at just over 4 percent per year.
GDP - Gross Domestic Product | Economic growth | Economy | Facts and figures | Ekonomifakta.se

This is an important consideration. How were they doing relative to others.

 

[Listening]

In 1970, Swedish high earners paid marginal tax rates of 70 percent, rising to 85 percent by 1980. Marginal tax rates on dividends and capital gains were only slightly lower, if at all. Sweden’s entitlement state featured universal benefits replacing 90 percent or more of lost income, a state monopoly of social services, and a union-inspired ‘solidarity wage” that featured (as the Swede’s scornfully put it) “equal pay for all work.” Sweden’s distribution of income was as equal as the communist countries of Eastern Europe. Government spending rose to 60-70 percent of GDP versus the 45 to 50 percent in the rest of Europe at the time. Fifty percent more Swedes were “tax financed” than worked in the private sector.

Just some markers to make sure data fits what is being said...or the other way around.

 

[onecut39]

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

I enjoy folks who come upon an article they think strengthens their case but really don't know what the hell they are talking about.

We should be more like Sweden, right? Roger. Bring it on!

"The top income tax rate is 57 percent, and the top corporate tax rate is 26.3 percent. Other taxes include a value-added tax (VAT) and a capital gains tax, with the overall tax burden amounting to 46.4 percent of total domestic income. Government spending has risen to a level equivalent to 55.2 percent of GDP. The budget balance has recorded small deficits in recent years, and public debt amounts to a bit more than one-third of total domestic output."

 

[onecut39]

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

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

That's our path to success?

lol

How do you know that Sweden today has more socialism than the US under Hussein Obama?

The only answer to that question is a heartfelt.............DUH?

 

[Norman]

I absolutely agree US needs to be more like sweden.

So what needs to be done is to ABOLISH the federal government. Sweden is comparable to state and the european government is smaller than the measy 5% of gdp that US govt used to be in the 1900s.

So get the fed government out, let stated decide if they want obama care or not. That's what is freedom and it is exactly what USA is all about. People can then decide what kind of political climate they want to live in.

The huge expansion of federal government was where US went totally wrong.

 

[Euro]

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

Many swedes leave their country for the neighbour Norway. Norway has higher wages, lower taxes and lower unemployment.
The welfare is though better in Sweden than in Norway.