Since 2006 Sweden has cut taxes and balanced its budget . The net result has been a growing economy and declining unemployment.
Sweden embraced socialism in the 1930’s. The nation prospered because its major trading partner was Nazi Germany until 1945. After World War II, Sweden was a major supplier of raw materials and goods for the rebuilding of Europe. This continued into the 1970’s. By that time, Europe had recovered from the devastation of the war and the European rebuilt nations became competitors in the global markets. Sweden’s economy slowed down and continued on that path into the 21st century.
The public sector dominated the economy with a multitude of entitlement programs that could be sustained only with the highest taxes in Europe. Sweden’s government dominated economy found it harder and harder to finance its operations because individual wealth declined.
In the 1990’s the nation started to turn conservative as a new party emerged – the Moderates. Despite the name, it was a conservative party which favored cutting taxes and gradually dismantling the public sectors hold on the economy. In the 1990’s, they made significant political gains.
It accelerated in 2006 when the Fredrik Reinfeldt became the new Moderates Prime Minister. In five years he repealed Sweden’s inheritance tax, labor tax and wealth tax. Reinfeldt pushed the idea that you should work for your benefits and not expect a handout. It is better for the individual and the nation. His message resonated throughout the nation.
Since 2009, this radical idea, radical for Swedes, of pushing growth in the private sector by reducing taxes has paid off handsomely. Sweden now has one of the fastest growing economies in Western Europe due to private sector growth. Jobs are multiplying at a record pace as the private sector prospers.
The bold swing to the conservative approach to the economy has paid off for the people of Sweden. With more money in their pockets, Swedes have become an impetus to the economy because they are consuming more and better goods and services. New businesses are emerging and larger corporations are expanding their operations.
So why is the United States headed in the opposite direction? Why are we headed for a Greek style of economy and not a Swedish style of economy?