Large economic disparities in America have always bothered leftist politicians. Those on the far left maintain a deep-seated confidence that much, if not all, poverty will disappear with the correct redistributive policies. Even so, socialistic politicians continue to struggle to persuade the electorate, and they teeter on the fringes of government.
In their effort to gain more converts for a heavily redistributive system, some point to countries such as Sweden. Sen. Bernie Sanders, I-Vt., and Rep. Alexandria Ocasio-Cortez, D-N.Y., have both referred to Scandinavian countries when asked about the kind of policies they favor. While these countries do have higher taxes and overall more generous public services, using Scandinavia as a model of socialism’s success can be misleading.
Sweden, for example, provides a better illustration of the limitations of redistribution than it does of the benefits. Very high taxes in Sweden between the 1970s and 1990s slowed its economic growth and created a new political will for lower taxes (although taxes are still significantly higher than in the United States), which ultimately curbed public services and benefits in the country.
Sweden Reveals Work Ethic and Trust Are Important
Yet the most important lesson from Sweden is the relationship between economic policies and work culture. Two factors stand out when assessing Sweden’s impressive economic growth throughout much of the 19th and 20th centuries: a strong work ethic and a high level of trust (and trustworthiness) among the population. For instance, business transactions are more reliable, thereby reducing transaction costs. These characteristics eroded during Sweden’s high-tax and spend policies between the 1970s and 1990s, but there is evidence they have bounced back.
In 1988, for example, Swedish workers claimed sick-leave benefits at the alarming rate of 1 in every 8 workdays. Since the introduction of the reforms that steered the country in a more economically conservative direction, sick-leave claims have gone down.
In a series of surveys conducted between 1981 and 2008, Swedes were asked if it is ever acceptable to claim government benefits to which one is not entitled. Up until the early 2000s, an increasing percentage of respondents said taking advantage of the system is acceptable. This trend reversed beginning in 2005; the number of people who justify abusing public benefits is diminishing. Cumulatively, these observations are evidence that Swedes found the high-tax and spend era to be alienating and that they are beginning to re-embrace their traditional morality with respect to work.
American politicians who favor the Scandinavian model can learn from Sweden’s experience. The U.S. government expansion those on the far-left advocate for necessitates increasing taxes on both the rich and on the middle class. Yet raising taxes on the middle class may weaken America’s work ethic.
Moreover, avoiding resentment and alienation among workers is even more challenging in the United States than in Sweden. Demographically, Sweden is one of the more uniform countries in the world, and the country’s work ethic is part of a cohesive, broader civic culture. The American ethos is comparatively much looser, or even fragmented, making it more fragile and easier to damage.
Identity Politics Is Antithetical to Social Trust
These comparisons between the United States and Sweden highlight the conflict between the economic rhetoric of many progressive politicians and their rhetoric regarding social issues. The focus of many on the far left, including Ocasio-Cortez, is on identity politics — on appealing to demographic categories such as ethnicity and sexual orientation with the aim of attracting voters and cultivating future political candidates. This strategy contrasts with using ideas, such as heavier taxation and increased social programs, as the chief organizing principle of the Democratic Party.
Emphasizing differences between people hinders the development of the social trust that was such an important aspect of Sweden’s economic success. While a strong sense of trust on the societal level does not require demographic homogeneity, it does require a sense that there is broad agreement on fundamental matters of fairness. This sense of national commonality can only emerge by recognizing and emphasizing what ethical beliefs Americans share.
In this regard, Ocasio-Cortez appears to have incompatible preferences. On the one hand, she favors socialistic changes to government. On the other hand, she places importance on political representation of different demographic groups. The Swedish example demonstrates socialist policies are only viable if social trust exists, while identity politics makes the emergence of a unifying American ethos more difficult. If this ethos is weak, then so is the social trust essential for a successful socialistic state.
Taxes and Social Services Won’t Eradicate the Wealth Gap
In contrast to Ocasio-Cortez, Sanders has clashed with the faction in his party that embraces identity politics by favoring ideas and a consistent policy platform over identity politics. By recognizing the importance of ideas, he is more likely to be receptive (if he were to be better informed) to the evidence from Sweden: Social trust is an important ingredient to a country’s economic health.
One other aspect to Sweden’s history can be edifying for Sanders. The unusually low level of income inequality in this Scandinavian country is traceable to a period before the rise of the welfare state. This suggests reducing the wealth gap between the rich and poor in America may best be achieved not by the heavy-handed approach of high taxes and broad expansion of social services. There is no complete agreement on the factors that led to a relatively equal income distribution in Sweden, and further study of Swedish society beyond its government’s economic policies is worthwhile for those concerned about inequality in the United States, including, of course, Sanders and Ocasio-Cortez.
It is ironic that left-wing politicians reference Sweden more often as evidence of the success of socialist policies than conservatives do to make the opposite argument, since conservative economic arguments can benefit more from the example of Sweden than can progressive positions. Americans would do well to be vigilant in evaluating the claims socialists make about countries like Sweden.