You Can Be “Progressive” and Economically Liberal

Misconceptions about Scandinavian social democracies are widely held but wrong, writes Viggo Terling.

To the uninformed “wet”, the Scandinavian social democracies are utopian ideals. In launching his 2016 presidential campaign, Bernie Sanders justified his attacks on the billionaire class by pointing to the Scandinavian model. In his telling, Scandinavia represents a humane alternative to “exploitative” American capitalism — a society where taxation functions as a social dividend.

This perception is commonly held, but wrong. Sweden, for example, has not been meaningfully socialist since the 1980s — coincidentally the period when Sanders was touring the globe in search of the utopia he so often invokes.

Instead, Sweden — the largest Scandinavian economy — is today ranked 11th on the Heritage Foundation’s Index of Economic Freedom, with Norway 8th and Denmark 7th. The economic freedom Swedes enjoy today is newfound and in stark contrast to the late 1970s and early 1980s, a period in which Sweden found itself in a profound economic hole. Its tax system became notoriously punitive. Inheritance and gift taxes reached top rates of 70 per cent, stifling capital formation and driving some of Sweden’s most successful entrepreneurs abroad. IKEA founder Ingvar Kamprad left Sweden in 1973, citing precisely this confiscatory environment, and remained in tax exile for decades.