Good piece on the Nordic countries in the Economist – 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 4th richest in the world in the 70’s to 14th in 1993.
The two decades from 1970 were a period of decline: the country was demoted from being the world’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 – “The welfare state we have is excellent in most ways – we only have this little problem. We can’t afford it” (Danish Historian Viby Mogensen)
It’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 “a new conservative model”; Brian Palmer, an American anthropologist who lives in Sweden, worries that it is turning into “the United States of Swedeamerica”.
The Nordic countries are doing well, they have learned to cut their clothe according to their income.