I’m pretty excited about today’s posts.
When I speak about freedom and Austrian Economics and the evils inherent in Socialism, people often tell me they are not speaking of Socialism as was manifest in the Soviet Union, they are speaking of socialist democracies like Sweden. In other words, they don’t believe in big crimes, but think little crimes are okay.
I believe that in socialist democracies it’s not the socialist (ie. coercive) institutions which are working, it’s the pockets of freedom that exist around them. Encroaching socialism can appear very benign in a prosperous country, because it’s proponents claim credit for the wealth and opportunities created by the remaining pockets of freedom.
Today, I excerpt from three outstanding essays I found at the Ludwig Von Mises Institute.
Sweden: Poorer Than You Think by William L. Anderson
One of the enduring myths of the ‘Third Way’ welfare state is that a nation as a whole can have a high standard of living–even if no one really has to work–as long as government transfers massive amounts of wealth from those who are well off to those who are less well off. For the past four decades, we have been inundated with news stories, books, and public commentary, all of which have exhorted us to be like Sweden.
The Swedes, we have been told, enjoy free medical care, generous welfare benefits, time off from work, and subsidies for just about everything. When one counters that Swedes pay enormously high taxes, the standard reply is, ‘That is true, but look at what they receive for their payments.’
According to a recent study, however, the cat is out of the bag. Relative to household in the United States, Swedish family income is considerably less. In fact, the study concludes, average income in Sweden is less than average income for black Americans, which comprise the lowest-income socioeconomic group in this country.
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In defense of the Swedes, let me first say that simple comparisons of income can be deceiving. While I have never been to Sweden (even though I have relatives there), I would think that even the poorest sections of Stockholm and other Swedish cities are more livable and attractive than what one finds in many U.S. cities. Even with the high taxes, I think I would rather live in downtown Stockholm than in downtown Detroit or Newark.
However, the study alerts us to something that is much more important, and that is that the European welfare states are not making their citizens wealthier. Over time, the cracks in these relatively wealthy nations are growing larger, and if the disease is not arrested, much of Europe will tumble off into real poverty in the not-so-distant future. Europeans–and, most likely, Americans–seem destined to learn the hard way that large, seemingly intractable welfare systems have their way of destroying the Goose that Laid the Golden Eggs.
While people can debate the present condition of Swedes in Stockholm versus blacks in Harlem, there is a deep issue here that people seem to forget when it comes to welfare states: they are destructive at their roots. Advocates of welfarism concentrate only upon distribution while vilifying production. Such a state of affairs cannot go on forever as governments are forced to cannibalize their own capital structure over time in order to make the system to continue to work.
. . . .
The Swedes and other northern Europeans are somewhat lucky in that they have had a relatively high standard of living. People in southern European nations like Italy and Spain–where high taxes and vast regulatory agencies abound–find themselves to be much poorer and with no prospects of real improvement.
Unfortunately, many Europeans (like our Canadian neighbors) believe that a vast welfare apparatus makes them morally superior to nations that do not have the same scope of benefits. (While one can point out that the United States has a huge welfare bureaucracy itself, it does not offer the same ‘generous,’ long-term benefits of the European states.) While they prattle on about their moral superiority and their egalitarianism, however, something else is happening. They are slowly becoming poorer and poorer, and the welfare state cannot save them. It can only accelerate their downward slide. (Read more from mises.org)