American Elephants

The Socialist Scandinavian Paradise Is Turning Away From The Welfare State — Unaffordable! by The Elephant's Child


Trends. It’s always hard to decide what is a trend and what is just a temporary aberration, but the Nordic countries are increasingly turning away from the welfare state. Swedes in the supposed socialist paradise are  turning to private health insurance to reduce long wait times and rationed health care services. The country started cutting government spending as a percentage of GDP in the 1990s, and that has continued.

Throughout the Nordic countries the size and scope of government are being cut back as nations find themselves strapped for cash. In Denmark, when Prime Minister Helle Thorning-Schmidt’s government took power in 2011, there was little to suggest that she would make any dramatic changes to the country’s welfare state which is funded by the world’s highest tax burden.

However, the center-right government raised the retirement age and reduced the period for unemployment benefits from four years to two years. Corporate taxes were cut to 22 percent from 25 percent. Young people on  benefits are required to undertake training and student aid is withdrawn from those taking too long to finish their studies.

Finland is moving to trim similar sorts of programs. Only Norway is unlikely to tackle serious reform because of its vast oil wealth and ironically, it has a conservative government. The new center-right Prime Minister Erna Solberg has pledged to preserve the welfare state.

About one in ten Swedes now has private health insurance, and the numbers are increasing. “It’s quicker to get a colleague back to work if you have an operation in two week’s time rather than having to wait for a year” privately insured Anna Norlander told  Sveriges Radio on Friday. “It’s terrible that I, as a young person, don’t feel I can trust the health care system to take care of me.”

The Local noted that “visitors are sometimes surprised to learn about year-long waiting times for cancer patients.” Is that before or after they decide how aggressive the particular cancer is?

The welfare-state period may be regarded as a brief interlude. Until the 1970s, Sweden had strong market-oriented policies in place that increased wealth and standards of living, because of reforms introduced at the end of the 19th century. Light regulation and property rights were enforced, government was limited, and a private banking sector flourished. The cradle to grave socialist services implemented in the 1970s proved to be unaffordable.

Sweden has deregulated whole industries and encouraged the privatization of public services. Income tax in Sweden is lower than France, Belgium and Denmark, though that’s not saying much. Public spending as a share of GDP has declined from 71.0 percent in 1993 to 53.3 percent last year.

It is important to keep in mind that the Nordic States are all small homogeneous countries, though they have had significant Muslim immigration. Sweden is the largest with just over 9 million population, followed by Denmark  5.5 million, Finland 5.2 million and Iceland 308,000. Sweden’s population is roughly the same size as North Carolina, and Denmark is similar to Minnesota, if that helps to put things in perspective.


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