Nearly half of millennials say they prefer socialism to capitalism, but what do they mean? Generally is stated as what we see in the U.K., in Norway, in Finland and in Sweden.
To take a look at Sweden we find they are moving away from the socialism once championed. Sweden’s experiment with socialist policies was disastrous, and its economic success in recent decades is a result of free market-based reforms.
Bear with me as we look as some shocking numbers…until the mid-20th century, Sweden pursued highly competitive market-based policies. By 1970 Sweden achieved the world’s fourth-highest per capita income. Then increasingly radical Social Democratic governments raised taxes, spending and regulation much more than any other Western European country. Economic performance sputtered. By the early 1990s, Sweden’s per capita income ranking had dropped to 14th. Economic growth from 1970 to the early 1990s was roughly 1 percentage point lower than in Europe and 2 points lower than in the U.S. In actuality these socialist, command-and-control economic policies undermined Sweden’s prosperity.
In 1991 a market-oriented government came to power and undertook far-reaching reforms. Policy makers privatized parts of the health-care system, introduced for-profit schools along with school vouchers, and reduced welfare benefits. To increase incentives to work, Sweden reduced unemployment benefits and introduced an earned-income tax credit in 2007. The electricity and transportation industries were deregulated in the 1990s, and even the Swedish postal system was opened up to competition in 1993. The corporate tax rate was cut from its 2009 level of 28% to 22% today, and is scheduled to decline to 20.4% in 2021.
The result? Since 1995, Swedish economic growth has exceeded that of its European Union peers by about 1 point a year. Sweden is now richer than all of the major EU countries and is within 15% of U.S. per capita GDP.
What is happening in Brazil?
A few weeks ago Jair Bolsonaro became Brazil’s 36th president. The new president made promises to shrink a monster, centrally governing state that devours the dreams of people. Mr. Bolsonaro won because he promised to abandon socialism. It goes to the heart of what Austrian economist Ludwig von Mises called “human action.” Brazilians are demanding their basic rights to property and life. The new president pledged reforms to open the economy, privatize and deregulate, and rein in government spending.
Brazil has let go a primal scream for freedom. One person said, ‘Socialism just didn’t work out around here.’ A nation wants to try something new and to enjoy freedom for economic opportunity.
Sweden and Brazil are moving away from socialism to a more Biblical approach to their economic development.
How Sweden Overcame Socialism. Jesús Fernández-Villaverde and Lee E. Ohanian. Wall Street Journal. Jan. 9, 2019 7:06 p.m. ET. Mr. Fernández-Villaverde is a professor of economics at the University of Pennsylvania. Mr. Ohanian is a senior fellow at the Hoover Institution and professor of economics at UCLA.
Brazil’s Primal Scream…‘Socialism just didn’t work out around here.’ A nation wants to try something new.Mary Anastasia O’Grady. Wall Street Journal. Jan. 6, 2019.