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-- Why Socialism Failed
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ah crap I got a trojan!

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Originally posted by Lilith Personally I wouldnt call them socialist at all, theyre very fiercely competitive and cunning on the international markets and have long, well entrenched and very efficient industry which is only equalled by the Japanese. What I did notice though, was that they where very selective about who they outsource anything too in other countries, especially when it comes to labour. Industrial outsourcing, well, thats something they keep an extremely tight rein on- they make damn sure that it will be long term profitable and make sure that profit is coming back into the country and not a continous source of loss.

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Originally posted by St_Andrew Again, Scanandianvia do have high taxes (which sucks, btw), but that doesn't mean they have less free markets than other western countries, I would say they have more free markets than any other western country except the anglo saxian ones (and in some cases more free markets than those)! Let me give you a few examples so you understand my thinking! Energy, telecom, etc - Scandinavia were waaaay before rest of Europe privatizing that! And although all healthcare, and education is paid for by the government (high taxes), more and more are run by companies or other non-governmental organizations (which for example wasn't the case in Canada, a supposedly more liberal country...). And even Sweden's previously socialist government was WAAAY more pro-free trade than any of the North American countries. The beuraucracy/regulation burden for companies are less, certainly than Europe and maybe even less so than North America. So that taxes are high doesn't mean that our markets are less free, it means labour is more expensive and that you have to pay for others' welfare. Really, the only reason why Scandinavia is fairly successive today is because of our great free-trade stance and de-regulations made 10-15 years ago.

So let me say this again. Scandinavia, much like most other successful economies, have free market economies. I'm not saying they're Marxist or Communist. I'm saying that they distinguish themselves from a few other likewise free market economies in the sense that they have more social welfare programs (Scandinavia generally has the world's highest taxes and most generous welfare benefits) ... hence they are more socialist. So the "socialist" label is a purely relative measure as opposed to an absolute characterization or a historical reference as to what you may perceive socialism to be.

Despite Scandinavian economic successes, they are not without some of the problems that plague typical socialist countries. Let's take Sweden for example. The official employment figures are actually much worse when one takes into account the methodology used to calculate the employment numbers. In particular, those in government make-work programs, those forced into early retirement, students who would prefer to be working, and the excorbitantly high number of workers on long term sick leave. A McKinsey Gobal Institute study recently calculated the "real" Swedish jobless rate at approximately 15%:

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'Real Swedish jobless rate 15%' By David Ibison in Stockholm Published: June 15 2006 02:00 | Last updated: June 15 2006 02:00 Sweden's unemployment rate is 15 per cent, three times the figure being used by the government, according to new research from McKinsey Global Institute, the think tank. The consultancy's calculations indicate unemployment is set to rise further, with between 100,000 and 200,000 jobs outsourced to cheaper countries over the next 10 years if no corrective action is taken. The numbers cast a pall over Sweden's international reputation as a thriving welfare state with low unemployment and will help focus attention on jobs ahead of September's national elections. McKinsey reached its conclusions by including those who want to work and those who could do so, meaning people on government programmes as well as those on prolonged sick leave. In its first assessment of the country's economy since 1995, it said: "Sweden's economy has reached a critical juncture. If nothing is done, the problems will become much more serious." It praised Sweden for achieving average GDP growth of 2.7 per cent a year since 1995, which it attibuted to deregulation and improvements in private sector productivity. But it said the country could not rely on future improvements in private-sector productivity, as the catch-up effect that had driven these developments would decline over time. The ageing population would put the public sector under "intolerable pressure" unless productivity improved, it added. "If nothing else changes, the resulting increase in welfare costs would become too large to finance through the current tax system in only 10 to 20 years," McKinsey said. It forecast municipal income tax rates would have to rise from about 30 per cent to about 50 per cent, arguing that these rises would not be accepted by the public as welfare and health services would decline. Last, it said that the real unemployment rate of 15 per cent could increase as the production of goods and services moved to lower-cost countries - such as the Baltic states, Poland and Russia. "Sweden needs to move quickly to introduce reforms that would create favourable conditions for sustained productivity growth in the private sector, better performance in the public sector and the creation of jobs in the private services sector," it said. It expressed confidence the country would be able to respond to these challenges, praising its productive industries, macroeconomic stability and good relations between politicians, companies and unions. But McKinsey said that Sweden had a lot of lost ground to regain. According to the Organisation for Economic Co-operation and Development, Sweden had dropped from fifth position in its welfare ranking to 112th in 2004. Copyright The Financial Times Limited 2006 http://www.ft.com/cms/s/c18430e6-fc...00779e2340.html

Compound this with indications that Sweden has what seems to be excessively large increases in employment in the government sector as opposed to private sector employemnt.



Sweden has the lowest rate of self-employment in the OECD. Something which may be attributed to the regulatory and tax climate that is obstructive to new businesses. After all welfare benefits that pay people as much as 80% of previous income for 3 years can discourage employees from working and small employeres from hiring. Perhaps this explains what can be considered Sweden's greatest failing, the failure of its public sector. Even compared to other relatively socialistic EU countries, Sweden performs quite poorly in public sector efficiency particularly since the public sector accounts for nearly 30% of total employment:



Yes Sweden is an economic success. Yes it is a free market economy. However, it does have socialistic tendencies (from a purely economic perspective) that do have an impact on its economy at the same time. So I don't feel out of line by labelling it as an economy with socialistic tendencies.

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