Good piece on the Nordic countries in the Economist â€“ highlights how their economic model is working but interesting reasons why:
- Sweden has reduced public spending from 67% to 49% of GDP from 1993 to today
- Top marginal tax rate has been cut by 27% from 1983 and continuing to fall.
- Scrapped taxes such as property, gift, wealth and inheritance taxes
- Corporate tax rate cut to 22%
Before this Sweden had been demoted from 4thÂ richest in the world in the 70â€™s to 14thÂ in 1993.Â
The two decades from 1970 were a period of decline: the country was demoted from being the worldâ€™s fourth-richest in 1970 to 14th-richest in 1993, when the average Swede was poorer than the average Briton or Italian. The two decades from 1990 were a period of recovery: GDP growth between 1993 and 2010 averaged 2.7% a year and productivity 2.1% a year, compared with 1.9% and 1% respectively for the main 15 EU countries.
Denmark much the same – â€śThe welfare state we have is excellent in most ways â€“ we only have this little problem.Â We canâ€™t afford itâ€ť (Danish Historian Viby Mogensen)
Itâ€™s a very interesting piece. But especially the information about charter schools and health care:
[Sweden] has introduced a universal system of school vouchers and invited private schools to compete with public ones. Private companies also vie with each other to provide state-funded health services and care for the elderly. Anders Aslund, a Swedish economist who lives in America, hopes that Sweden is pioneering â€śa new conservative modelâ€ť; Brian Palmer, an American anthropologist who lives in Sweden, worries that it is turning into â€śthe United States of Swedeamericaâ€ť.
The Nordic countries are doing well, they have learned to cut their clothe according to their income.