Sweden is the country in the world where people give up the largest share of their income to the government. And it has been so for decades. But the Swedish public is not too displeased with taxes. Rather the contrary. It has given the leftist parties -- largely responsible for and the symbol of the big government system -- a majority in election after election. "After all, the high taxes have given us the best welfare services and the best income security in the world." That is what the Swedish people believe after having been told so by their leaders for many years. A recent survey showed that 77 percent of all Swedes believe that their country has a better welfare system than the rest of Europe. The country also ranks high in many international comparisons of quality of life, so there is little reason to doubt the supremacy of the Swedish cradle-to-grave model.
The question that naturally comes to mind, then, is whether this is actually true. Does the Swedish government spend the most euros per person on welfare? For purposes of clarity, let me just explain what I mean by public social expenditure, or welfare spending: cash transfers to families or individuals for social purposes as well as social services such as health, child and elderly care. Education spending is not included.
Let me also say that I think that the welfare state is immoral. Public redistribution of money in Sweden is largely (82 percent) redistribution from one individual to the same individual over time. But in this piece I ignore all the moral aspects of the welfare state as well as the devastating effects of government monopolies and the rationing of welfare services such as health care. Instead I take the utilitarian perspective of a welfare state lover, assuming that as big government spending as possible on welfare is desirable. Therefore, let us look at what the Swedish system actually produces in resources devoted to welfare, compared with six other West European countries: Finland, Denmark, the Netherlands, Germany, Austria and Ireland.
Swedish tax pressure, i.e. fiscal revenue as percentage of GDP, is the highest in the world, and therefore also higher than in the other six countries.
Table 1
Fiscal revenue as share of GDP, 2000 (%)
Source: OECD
Also, as
expected,
Table 2
Public social expenditure as share of GDP (%), 2000
Source: Eurostat
However, an
unemployment benefit or a surgery is not paid for with percentages of GDP, but
with real money. Even if
As we can see
in Table 3 below, the Swedish government, despite the highest taxes, does not
have most euros to spend on welfare. Instead,
Table 3
Public social
expenditure per year and capita, 2000 (euro)
Source: Eurostat
The other
countries have 86 percent of
Table 4
The Swedish
welfare gap, 2000 (%)
(taxes and
welfare in other countries,
Source: OECD and Eurostat
This has not
always been the case. In 1980, the Swedish government had far more resources to
devote to social spending than in other countries. In 1998, despite the fact
that
Table 5
The Swedish
welfare loss
(public
social expenditure in the other countries as percentage of
Source: OECD
The
conclusion is obvious. It is not sustainable to rely on raising taxes to ensure
enough revenue for an expensive and extensive welfare system. Good welfare
states depend on a growing economy. And high taxes impede growth. Welfare
states are therefore a contradiction in themselves.
Ok, many
readers will probably say, this is nothing new. Well, it is. In many other
countries, leftists still refer to
