On neoliberal Scandinavia

Tim Worstall

They are classically liberal economies with lots of redistribution on top. So, if we want to be more like them we’ve got to be a classically liberal economy with lots of redistribution on top. We need the classically liberal economy in order to generate the moolah to be redistributed.

Scott Summers

The neoliberal revolution combines the free markets of classical liberalism with the income transfers of modern liberalism. Although this somewhat oversimplifies a complex reality, it broadly describes the policy changes that have transformed the world economy since 1975. Markets in almost every country are much freer than in 1980; the government owns a smaller share of industry; and the top MTRs on personal and corporate income are sharply lower. The United States, starting from a less-socialist position, has been affected less than some other countries. But even in the United States there have been neoliberal reforms in four major areas: deregulation of prices and market access, sharply lower MTRs on high-income people, freer trade, and welfare reform. Many other countries saw even greater neoliberal policy reforms, as once-numerous state-owned enterprises were mostly privatized.

There is an unfortunate tendency to associate the term “neoliberal” with right-wing political views. In fact, the quite liberal social democracies of northern Europe have been among the most aggressive neoliberal reformers. Indeed, according to the Heritage Foundation’s Index of Economic Freedom, Denmark is the freest economy in the world in the average of the eight categories unrelated to size of government. The Nordic countries have begun to privatize many activities that government still performs in the United States. These include passenger rail, airports, air-traffic control, highways, postal services, fire departments, water systems, and public schools, among many others. These countries do have much larger and more comprehensive income-transfer programs than the United States has, but are not otherwise particularly socialist.

So, we’re on the Road To Sweden then?

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  • Down South

    I got to hang out with a Swedish Politician from Helsingborg last week on a tour of Ireland talking about sustainability and how it is used as a driver of economic development in some unlikely places. In Sweden we discovered that local authorities take 70% of taxes and that only the top rate payers contribute to the central government. Power resides locally. They are also adept at creating entrepreneurial solutions to local issues, not seeing the distinction between private and public in stark terms. For instance a private company manages their waste management and achieves massive recycling rates. The municipality is a shareholder in an initiative to create bio gas from organic waste which is used to power 100 buses in the city and is now creating Liquid Bio Gas to run the trucks. As a result of this type of partnership they have reduced carbon emissions in Sweden to 12% below 1990 levels (far out performing Kyoto targets) and a staggering 44% in helsingborg. Pragmatic solutions to complex issues should allow for creativity. he also mentioned that despite many changes of governing party that they all agree the Swedish model of high transfers is untouchable so there is stability across the parties and that gives assurance to business and the public as to what to expect from each government. It works

  • JaneJeffers

    This will never wash in ireland / UK.

    We are too short-termist and greedy to pay the huge taxes that allow such a generous state.

    As a long term resident of Scandinavia the most obvious point is that the culture creates the mindset that allows for a social organization with such a huge amount of redistribution (which I belive is the best and fairest way of organising a society human has ever seen).

    But it’s not going to last anyway, global market forces are destroying the economic situation which allowed such societies to exist and we’re all being sucked down down down down down