Comment by adventured | Hacker News Reader

Comment by adventured | Hacker News Reader

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Sweden's recent good years are courtesy of substantial pro-market reforms they made after several lost decades in which their over-sized welfare state had caused stagnation.

Don't take my word for it, here's their recent finance minister explaining what they did and why:

"Like many societies, we went too far in our welfare-state ambitions" ... "If you’re working yourselves upwards in taxes and deficits, we’re working ourselves downwards"

http://www.forbes.com/forbes/2009/0803/international-invest-...

[2001] "By 1991 the voters had had enough. They threw out the Social Democrats for the first time since the war and installed Carl Bildt’s Conservative government. Bildt set about liberalizing important state-monopolized or dominated markets, notably telecommunications and banking. As competition in telecoms cut telephone and internet access charges, Sweden became a hotbed of technology experimentation, with some of the highest penetration rates for mobile phones and internet access."

"Bildt cut back Sweden’s confiscatory taxes. His 1991 tax reform package capped national taxes on personal income at about 50%; before 1991, rates could go above 90%. Bildt’s tax reform also established capital gains, dividend and net interest income as special income categories, taxable at 30%. Corporate income tax: 28%."

http://www.forbes.com/global/2001/0319/034.html

That said, I'm not aware of any free-wheeling Capitalist nations except perhaps Singapore. The US for example is a highly regulated welfare state with upper-mid tier taxation among nations.

Meanwhile, Finland is in a depression [1][2][3], with their economy shrinking year after year, while they refuse to cut their own stagnation-causing over-bearing welfare state.

[1] http://www.telegraph.co.uk/finance/12001895/Finlands-depress...

[2] http://www.ft.com/intl/cms/s/0/35c8560c-c62f-11e4-add0-00144...

[3] http://www.bloomberg.com/news/articles/2016-01-26/the-new-si...

> The US for example is a highly regulated welfare state

Compared to Sweden and the other Nordic countries, or even most of Europe, I'm not sure I'd consider the US a welfare state. You need (a lot of) money to fare well in the US. In Sweden education and healthcare is free(1). If you have good enough grades, no matter your background/wealth, you can go to the best universities in the country. The government will even pay you a little for doing so. We have 400 days of (combined) parental leave/child and putting your kids in kindergarten is heavily subsidized (for two kids the maximum amount is $150/month, if your combined salary is below a certain threshold you pay less). Besides you are never(2) expected to work more than 8hrs/day 5days/week and have a legal right to at least 5 weeks of vacation per year.

I think these are very important factors because it allows for both having a healthy work/family life as well as both parents working full-time(3).

(1) There is a minor fee for seeing a doctor but that's just to keep imaginary sick people from going every day.

(2) For reasonable companies, which if you want to be if you're gonna keep well-educated employees around.

(3) Or nearly so, if you have children under 8yrs you are legally allowed to work anywhere between 75%-100% which many parents do. Of course you can probably cut a deal with you employer even if you don't have kids, but then it's up to the goodwill of said employer.

> Meanwhile, Finland is in a depression [1][2][3], with their economy shrinking year after year, while they refuse to cut their own stagnation-causing over-bearing welfare state.

Finland and Sweden make the perfect natural experiment: one entered the Euro and can't set their own interest rates, the other did not.

I don't think Finlands welfare state is the cause of stagnation, but they will have to cut it none the less. Finlands slump grew into a depression mostly because they are tied to the same interest rates as a number of other countries, which is the great failure of the Euro experiment.

How do you then explain Denmark, which has had their currency locked to the Euro (and before that; DM)?

You're forgetting (ignoring?) Nokia.

I generally agree with you, montary policy dominates (I would argue that you take to narrow of a view calling it "setting interest rates" but thats a different subject).

However I think long term suppy side difficulties do have an impact. Finland is worse of then one would expect purly based on that.

> The US for example is a highly regulated welfare state with upper-mid tier taxation among nations.

IIRC the US is a freewheeling capitalist state among developed, non-tiny countries. I mean, there's still substantial social welfare, but it's significantly smaller than most of our compatriots.

What is your measure (e.g. spending as % of GDP) and what do you consider "our compatriots"?

The idea that Sweden flipped some magic growth switch with their early 90's reforms is frankly rubbish:

http://norden.statbank.dk/statbank5a/temp/gr28012016_1_dscha...

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