Update on Sweden

Excerpt:

Though there certainly are positive as well as negative lessons to be learned from Sweden, one should be wary of those who claim causal relationships between Sweden's welfare state and its historic economic achievements. The parts of the welfare state that work the best today are the parts that have been reformed, where competition and private alternatives are allowed.

School vouchers, for example, were introduced more than 15 years ago in Sweden. This reform has allowed children to choose a privately run school if they want to, paid for by taxes. Recent research shows not only that independent schools produce the best results but that school choice andthe existence of independent schools has improved overall efficiency and effectiveness in the entire school system.

American documentary filmmaker Michael Moore praises the Swedish healthcare system in his movie Sicko. But he is worried that the new Swedish Government will destroy this paragon of public health funding, as he sees it, by letting in private alternatives. In fact, Sweden has had private alternatives within the healthcare system for 15 to 20 years. That is no big deal for Swedes, at least not as long as the private alternatives don't constitute too large a share of the market. The debate is on the financial side. Should people be empowered to buy private insurance?

There is also a debate whether big emergency hospitals should be allowed to be run privately (still with funding from the government) and if private hospitals should be allowed to make a profit. Hardly anyone other than Moore is totally against privately run health care.

While the quality of healthcare services is pretty good in Sweden, productivity is extremely low because there is too little competition. In 1975 an average doctor met nine patients a day. Today it is down to four. People have to wait for months or years to get basic surgery, with huge human and economic costs as a result. What kind of welfare is that? ...

More than half of Sweden's 50 largest companies were founded before World War I; only two after 1970. Of five million working-age adults, one million remain outside the workforce, even though few are officially unemployed. The rest are either in various state-run job-training programs, on long-term sick leave, or receiving early retirement or disability pensions from the state...

Sweden is not rich because of the welfare state. On the contrary, it is rich despite the welfare state. Sweden has a proud tradition of free-market institutions, and it was market reforms in the late 19th century as well as in the last reform period in the 1990s that explain the country's economic development. In the late 19th century successive liberal governments introduced free establishment in different trades, abolished guilds and stripped the upper classes of economic privileges that bled the economy dry. It was during this time that free trade was a badge of honour, and immigration and emigration were free for all. Sweden's most prosperous companies were born during this era: SKF, Electrolux and Assa (later Assa Abloy). In 1970, Sweden was the world's fourth richest country; today it is No14.

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