The European Social Model is being heavily discussed in Europe. Some still laud it, but its problems are obvious, with low economic growth, an aging population coupled with “pay-as-you go” pension systems, and widespread persisting unemployment. In Sweden we have already solved this problem; we discarded the social model and replaced it with a freemarket system.
The admired Swedish model was in fact abandoned in the 1970s, precisely when it gained its international fame and admiration. Then the world’s highest taxes rates were introduced, together with interventionism particularly in social policy and the labor market. An illfated attempt to introduce the radical “next step” towards Yugoslav-style trade-union-controlled socialism ended the decade. The expansion of government was an effect not the cause of the system’s previous success. The result of this expansion was the dismal crisis of the early 1990s, when the Swedish Central Bank vainly tried to link an overvalued krona to the European Exchange Rate Mechanism, and then protect it with 500 percent interest rates.
The rest of the decade consisted in the slaughtering of many of the Swedish model’s most sacred cows by the Social Democratic Party ....
Granted, it is an easy task to become a paragon of liberalization in today’s Europe. But it shows that what many Europeans favorably refer to the Swedish model is not applied any more in Sweden. The remnants of the old model—the high income taxation 60.3 percent on average), the high value-added tax of 25 percent, the regulated labor market, and the insufficiently reformed social-redistribution systems—are the problematic areas in the Swedish economy not its bold vanguard.
If someone had predicted in the 1980s that Sweden would follow the social-democratic model set by France or Germany, I as a libertarian would have agreed. Today I can say that Europe should embrace the Swedish model.
Leitura adicional: "Copy the Nordic Solutions – Not the Problems!"