Monday, April 09, 2012

The Swedish Disaster – America’s Future?

Sven Larson grew up in Sweden, so he should know.

To me, this is the key sentence:

"Adding insult to injury, the welfare state itself de-incentivizes work: when government promises all sorts of perks to people, one big reason to work hard is gone. "

And without hard work, we won't see prosperity, but rather, like Obama is giving us with his trickle down tyranny, next there comes trickle up poverty.

I prefer the opposite win-win scenario that Reagan gave us where we all see prosperity because the size of government is small (its taxes, regulations and bureaucracies) -- this lets the free market take over and do what it does best, pull everyone who is willing to work up by their bootstraps.

The Swedish Disaster – America's Future?
By Sven R Larson on Apr 09, 2012 in 2012 Election News, Opinion, Politics

If Obama gets re-elected, and if the Democrats gain any more power in Congress than they already have, it is almost certain that America will quickly turn into a full-fledged European welfare state.

Obama's America is not the America you grew up in. It is not the America you want your children to grow up in.

I know, because I actually grew up in Obama's America. It's called Sweden.

For decades, the American left has touted Sweden as a role model for America: its income security system, its universal, tax-paid child care, and of course its government-run, single-payer health care system. From college professors to politicians, liberals have done everything in their power to convince America that they should entrust their and their children's future to a Swedish-style social democratic welfare state.

God help America if they succeed.

Before I share the true story about Sweden, let me explain how close we are to fulfilling this wet Swedish dream of the left. The federal government only needs to add three more features to the already large American welfare state: single-payer health care, universal child care and general income security.

As I explained in my column last week, the road to a single-payer system is already paved. Proposals for federal, universal child care have been floating around in liberal circles for many years. Thankfully the idea has not yet gotten serious traction here in America, but don't hold your breath on that. As recently as in 2008 Hillary Clinton made it one of her major issues.

The second biggest trophy for welfare statists, after single-payer health care, is a general income security system. It means, plain and simple, that government taxes us to hand out income replacement checks when we are home from work for a variety of reasons, such as caring for a sick child.

Sweden's general income security programs are very elaborate. Predictably, they have also eroded workforce participation and raised government dependency to alarming levels.

In 2009 Congresswoman Lynn Woolsey (D-CA) introduced a bill to create a general income security program. It was called the FIRST Act, "Family Income to Respond to Significant Transitions", and gained two dozen sponsors. Thankfully, it never made it out of committee.

That does not mean it won't come back. Keep in mind how relentless the liberals were in getting a government-expanding health reform done. Behold Obamacare. The idea of a general income security program has strong support by the influential Center for American Progress, whose senior economist Heather Boushey has testified before Congress in ardent support of the act.

One of the most serious problems with the welfare state is that it is socially and economically deceitful. It comes front-loaded with benefits – you get your entitlements from day one – but the true cost does not appear until much later. And when the cost comes, it hits others than those who cashed in on the benefits.

Let me use my own background to illustrate. My grandparents were born in the 1910s into a country that had no welfare state whatsoever. They got married and had children in the late '30s and '40s, still without a welfare state to take care of them. They lived by the old-fashioned work ethics that has underpinned Western Civilization for centuries: work hard, be virtuous and charitable, and take care of your family. They were poor, but they were still able to feed, clothe, house and educate their children. And they were proud of it.

My mother once said of her upbringing: "We never had time to complain about how poor we were. We were too busy doing our homework."

As my parents grew up during the '50s, the Swedish welfare state started growing. The socialists who ruled Sweden uninterruptedly for 44 years expanded government in all thinkable and unthinkable directions. There was universal child care, and all kids were supposed to be in it. There was socialized health care. Public housing was expanded to such a degree that only families with very high incomes could afford a house.

Private landlords were reduced to a curiosity.

Even when you rented from public housing you got a tax-paid subsidy check toward your lease. You got an annual child benefits check (as opposed to the American tax credit version).

And then of course there was general income security.

In Sweden, the general income security was set up to pay the paycheck for pregnant women, for women who had just had a baby, for women who wanted to stay home with their baby, for anyone who wanted to stay home and take care of a sick child or a relative in need of assistance.

In 20 years' time, from 1960 to 1980, the size of government as share of GDP went from 18 percent to 40 percent. For my parents' generation, it looked like Sweden had found The Ultimate Solution to all social and economic problems. They voted passionately to keep the welfare state in place, even when systemic problems began showing up in the early '80s.

To pay for its enormous spending, government needed tax revenues. Lots and lots of tax revenues. Local income taxes doubled from 1960 to 1980. The top bracket of the national income tax reached 80 percent and in some absurd cases even topped 100 percent! The value added tax (a complicated European replacement for the sales tax) climbed to 25 percent.

To pay for the general income security system the Swedish government raised the payroll tax year after year. It is now twice as high as the American payroll tax.

Inevitably, this max-tax policy started affecting the free part of the economy. Economic growth slowed to a crawl, private consumption virtually stagnated, and after the recession in the early '90s Sweden never recovered from its huge private-sector job loss. Today Sweden has as many private-sector jobs as the country had 20 years ago.

This stagnation in the private sector also shows itself in sharp increases in the actual tax burden. For every $100 a taxpayer paid in taxes in 1990, he paid $143 in 2000.

Again, under the world's highest taxes the private sector has stagnated. Tax revenues have stagnated as well – but demand for services and entitlements from the welfare state have skyrocketed. This is the work of a combination of reckless generosity from the welfare state and rising poverty due to a poorly performing economy.

In response, Sweden's lawmakers have instituted perpetual austerity programs. They cut services, reduce entitlements and try to change eligibility rules to lock more and more people out of the welfare state. But they don't cut taxes to compensate; if they did, they would admit that the welfare state is no longer working.

The price for this perpetual austerity policy is high. Health care services have been cut to bare bones, with, literally, deadly consequences. Patients die of curable conditions at rates that would cause a revolution in America.

When my grandfather got heart problems in the 1990s, after a long life of hard work and putting his faith in the welfare state to be there for him when he needed it, he was admitted to a government-run hospital, courtesy of the Swedish single-payer system. His experience was so terrible that he begged my grandmother: "If I get ill again, please do not send for an ambulance. I'd rather die at home than go back there."

He passed away peacefully at home. My grandmother, on the other hand, ended up in the harsh, budget-starved hands of a government-paid elderly "care" home. After a traumatic period of neglect, malnourishment and carelessness she died alone, humiliated and abandoned by a welfare state she had put her faith and money into all her life.

Her experience is shared by vast numbers of Sweden's elderly today. Despite the world's highest taxes the Swedish welfare state still cannot care for the most vulnerable. Elderly care homes are cutting costs to the point where they impose severe rationing of food, coffee and personal hygiene for their residents/patients.

The rest of the welfare state is in equally bad shape. The general income security system orders cancer patients back to work in the name of cost cutting. What was once created as a compassionate government institution to allow people to get well without the pressure of having to rush back to work, is now a bureaucracy with one single goal: to cut its costs and terminate entitlement payments to individuals as quickly as possible.

All this is systemic and inherent to the welfare state. It brings this destructive ausiterity upon itself. Its confiscatory taxes crush the private sector. Adding insult to injury, the welfare state itself de-incentivizes work: when government promises peall sorts of perks to people, one big reason to work hard is gone.

My parents grew up to enjoy all the perks the welfare state provided for them; my generation, born in the '60s, pays the price in the form of low income, perpetually high unemployment, low and stagnant standard of living and a grim outlook on the future.

I left Sweden in the late '90s. I have never looked back. The last thing I want is for America to become another Sweden.

There is still time for America to turn the tide on the welfare state. But not much. Only a strongly conservative Congress and a freedom-minded president can safeguard us against being transformed into another Sweden.


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