Will the U.S. and Sweden Eventually Meet in the Middle on the Size of Government?

How big should government get? That’s a question which never seems to have a final answer. For instance, Sweden has been one of the most extensive social democracies in the world, but since the early 90s Swedes have decided progress does not always mean more government. A piece published this week in the Local points out how the move to the right began as a necessity:

In the wake of a banking crisis in the early nineties, Stockholm
scrapped housing subsidies, reformed the pension system and slashed the
healthcare budget. A voucher-based system that allows publicly funded,
privately managed free schools to compete with state schools was
introduced, and has drawn attention from right-wing politicians
elsewhere, including Britain’s Conservative Party.

In 2006, conservative Prime Minister Fredrik Reinfeldt’s government
accelerated the pace of reform, tightening the criteria for unemployment
benefits and sick pay while lowering taxes. Income tax in Sweden is now
lower than in France, Belgium and Denmark, and public spending as a
share of GDP has declined from a record 71.0 percent in 1993 to 53.3
percent last year.

That 18 point drop is more than currently separates Sweden from the United States, where public spending as a share of GDP is around 39 percent. And most of that difference is a result of the fact that health care is publicly funded in Sweden but not in the U.S.

Even in the area of health care, the size and scope of government has been an open question. Swedish health care, which has received some positive marks recently, has been dinged for long waiting times to see a specialist or have an operation. As a result, roughly 10 percent of Swedes now have a private insurance plan which guarantees them timely access to doctors.

Even as Sweden has moved back in the direction of somewhat less government, progressives in the Unites States want to see the U.S. wind up closer to where Sweden is now. A recently published book “Social Democratic America” advances this precise comparison, recommending the U.S. raise taxes and spend an additional 10 percent of GDP on social programs to make our system more like Sweden’s.

Clearly the Obama era has seen the pendulum of government involvement swing toward more spending and more control. But Sweden shows that, even in heavily socialized countries, the pendulum swings both ways.


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