Many Americans think that Sweden is a Socialist country, but could it actually be more free-market than the United States? Join Johan Norberg as he investigates the social and economic landscape of his native homeland in Sweden: Lessons for America?
Who was Anders Chydenius?
Norberg leads viewers through an examination of the historical events that led to Sweden’s current position of wealth, demonstrating how Sweden’s market-based system allowed the country to thrive despite its more statist policies. Norberg’s journey begins with a trip to a part of Finland which was once part of the vast Swedish Empire to introduce viewers to the story of Anders Chydenius, a preacher who dedicated his life to defending freedom of trade, industry, the press, and religion.
Although widely unknown today, Chydenius was a critic of the Swedish monarchy in the 18th century, calling for minimal state power, low taxes, and land rights for peasant farmers in a 1765 pamphlet called The National Gain. Among his accomplishments during his brief time as a member of parliament was his successful push for freedom of the press to be added into Sweden’s constitution, making the country the first in the world to provide such protections (and beating the American Bill of Rights by 25 years).
Chydenius’ victories not only helped strengthen the influence of the citizens but gave the state an obligation to protect the rights and freedoms of the people as well. For the first time in Swedish history, publications no longer had to cater to those in power and could publish work without prior permission. Norberg interviews Atlas Network’s Tom Palmer on Chydenius’ impact in Stockholm.
“Chydenius wanted freedom of the press and he also wanted freedom of labor — the right of people to offer their services on voluntary terms to other people to negotiate to move where they wanted to go to leave the country if they wanted — to live wherever they wanted to live and it was really quite striking the parallel between that and what the American founders did,” said Palmer. “Chydenius is sometimes called the precursor of Adam Smith. It’s an insult, he was an original thinker on his own who came up with the idea before Adam Smith — before the American revolutionaries — and I think he deserves to be recognized as a real innovator.”
Chydenius died in 1803, with his views remaining largely unincorporated at the national level — a nation that was among Europe’s poorest countries at the time. However, while Sweden’s economy lagged, its literacy rates excelled and allowed for the printed word to provide an avenue toward reform.
The next leg of the journey took Norberg to Stockholm where Aftonbladet, the largest and first Swedish newspaper, provided a bastion for laissez-faire liberalism. Regularly attacking abuses of power (and political power itself), it was shut down 26 separate times by the Swedish monarchy in its early history. The paper continues its mission today under its first female publisher.
A non-violent liberal revolution came in 1840s and 1850s, which acted on Chydenius’ ideas to open up Sweden’s economy, the first step that transformed the country into one of the world’s wealthiest.
Innovation, wealth, decline, and rebirth
From Stockholm, Norberg travels north to meet with Peter Lageson, CEO of the innovative Swedish company, SenseAir. Lageson’s father ran a manufacturing business in the 1970s and 1980s, a time under which cumbersome tax and labor policies pushed several notable people and businesses, such as IKEA and Ingmar Bergman to leave Sweden. The government-induced economic crisis of the 1970s culminated with 100,000 employers and laborers marching through the streets of Stockholm (out of a population of 8 million) in protest. The equivalent in America would have numbered 4 million.
Most people weren’t even aware of how much they were being charged for taxes until artists and famous authors started speaking out. Sweden was the birthplace of some of the best films, ideas, and businesses, but the nation turned its back on its entrepreneurs and creators — driving them to locate elsewhere.
“American society at that time was undergoing dramatic conflict and upheaval from the Vietnam War and the civil rights struggle, so it looked like anything anti-America was a utopia,” said Palmer, speaking about how the image of Sweden of the 1970s and 1980s has stuck in the minds of Americans. “Institutions were tried out in Sweden. Some turned out to not be very successful and were abandoned, but the perception has been pretty much frozen for lots of Americans, but it doesn't correspond to what Sweden is today.”
Sweden eventually shook off its economic malaise by instituting widespread market liberalization reforms, similar to the liberalization that led to the economic miracle of New Zealand. Sweden went from having half of the economic growth that developed countries experienced in the 1970s and 1980s to having 50 percent growth above the average developed country. Family incomes increased four-fold in that same timeframe.
“Sweden is not an exception to general economic laws,” said Norberg. “It's not the place where we showed that prosperity and big government go hand in hand. Sweden got rich when taxes and public spending was lower than in other places, including the U.S. Only then, in the 1970s did we start to tax and spend heavily. And that is when we began to lag behind. Only after reforms since the 1990s did we get back on track. So, one message is: don't get cocky, don't think you can do anything and break economic laws just because you're on top of the world for the moment.”
Norberg then bicycles through Malmoto the company of Hövding, which has produced the world’s first airbag bicycle helmet. The helmet’s innovative technology has actually made it considerably safer than hard helmets, but outdated Consumer Protection Act regulations prohibit the helmet from being sold in the United States.
One of the final stops on Norberg’s journey comes as he visits the public school he attended as a teenager, finding that it has since become a private school and now educates a socio-economically diverse student body. Sweden’s nationwide school voucher system gives parents access to any school in the country.
“There's been a lot of conversation in the United States about alternative models in schools and so on, but there are a lot of very strong special interests that have opposed school choice for example in the U.S.,” said Palmer. “Part of this national conversation that Sweden had was to say ‘Okay, we will provide state funding to make sure everyone gets an education, but it doesn't follow that the government is the best provider — that we shall assign students to where they have to go.’ And so they have voucherization in hospitals and schools and so many other areas where the government gives you the money and you can go and spend it the way that you want. So the market is delivering the service, and that is a very valuable lesson to somebody about how to do this more effectively.”
“Don't trust the old stereotypes,” Norberg urges American viewers. “You can't just walk around and talk about how we should import another country's model, if we don't understand how that country's culture and history made it possible. An attempt to import it without having the same preconditions could be disastrous.”
The documentary provides many important points for reflection for American viewers to take away from the film.
“I think it's very interesting to listen to Swedish Social Democrats saying that they overreached and made big mistakes that almost ruined Sweden,” said Norberg. “But a personal favourite of mine was meeting children who get to choose which school to go to, and talk about how important that is for their future.
Toward the end of the film Norberg and Palmer discuss how Sweden’s redistributive system depends on high levels of public trust.
“According to the latest Index of Economic Freedom, Sweden is more free-market than the U.S.,” continued Norberg. “To distribute wealth, you have to have a very hospitable climate for creating it. But also trust: to accept that your government redistributes wealth, you have to expect politicians not to waste it, and recipients to deserve it. If you live in a more corrupt place where people will just take as much as they can, a generous welfare state would not result in trust, it would result in ruin.”
Palmer notes how Sweden has had real, adult conversations about arithmetic — about the sustainability of its welfare state and what is affordable, what is feasible, and what will last — while the public conversation in the United States does not include such discussions. He also mentions how low-income earners in Sweden have a high tax burden — substantially higher than low-income earners in America. They bear the brunt of the country’s 25 percent value added tax.
“If the United States were to try to adopt the Swedish model, it would mean imposing very high taxes on poor and working-class people,” Palmer concluded.
