Monday, May 02, 2005

Swedish PM proud of very high ....

At a May Day rally the Swedish PM, Goran Persson, praised the "Swedish model" with the comment,

Swedes are equal, safe, environmentally conscious, and, I can add, pay very high taxes. All of the economists I've talked to through the years have said "This won't work." But it does. We've had better economic development in the past ten years than any other country in the European Union.

If an Australian PM were to admit to going against the advice of economists to proudly enact "very high taxes" he would go down in a landslide at the next election.

The Swedish political class, though, seems very determined to remain at the forefront of left-liberalism. Unlike right-liberals, who think that the free market is the best way to regulate competing wills, mainstream left-liberals (social democrats) believe that the state can do the job in a more equitable way.

That's why left-liberals can view a big, high-taxing state as a positive achievement, rather than as a destructive intrusion.

And what of Mr Persson's claim that the high-taxing Swedish model is economically successful? There are reasons to be sceptical. In 1970 Sweden had the fourth highest per capita income in the OECD. By 1998 the Swedish income level had fallen to a tied 18th position.

This decline prompted Swedish governments to make reforms which cut back some of the extremes of the Swedish model. For instance, in 1991 the corporate tax rate was cut in half to a relatively low 28%. There has also been an effort to lower public expenditure as a share of GDP, with the rate falling from a massive 67.3 percent in 1994, to about 54% in 2001.

So, if the Swedish economy has been performing relatively well in recent years (and I don't know whether it has or not) it might be just as easily attributed to a cutting back of the Swedish model than as a vindication of high rates of taxation.

(Note that conservatives don't see society as a collection of competing wills and so don't need to find a regulator of such wills in either the state or the free market. For us, the point is to defend the natural ties existing between people, including those of the family and the traditional nation. Where either the state or the free market undermines such ties we are willing to oppose or to seek to modify the operation of either.)

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