The American left apparently hopes to make headway this year with the worn-out but catchy slogan, “Tax the rich!”
You hear it in New York City, where newly elected Mayor Zohran Mamdani wants to impose a “pied-à-terre” tax on second homes worth more than $5 million. You hear it now in Utah’s newly designed 1st Congressional District, where Democrats have a newfound voice and are using it to say words like “wealth tax.”
Where you don’t hear it, oddly, is in Sweden, which once was touted as an example of a nation that successfully combined democratic principles with socialist cradle-to-grave government programs.
Today it is a country that, as The Wall Street Journal reported this week, is learning to love capitalism.
Privatization
The Journal said half the nation’s primary healthcare clinics now are privately owned. And for those closely watching Utah’s foray into the private-school voucher-like Utah Fits All scholarship program, it’s worth noting that a third of Sweden’s high schools are privately run, and that the companies operating these schools are listed on the stock exchange.
“The capitalist makeover has allowed Sweden to do what few industrialized countries have managed in recent years: shrink the size of the state,” the Journal’s global economics correspondent Tom Fairless wrote. “That has enabled the government to sharply lower taxes and, economists say, sparked a surge in entrepreneurship and economic growth.”
Allowing people to keep more of their own money spurs investment, innovation and entrepreneurship. That’s hardly news, but sometimes nations have to learn it the hard way.
In the interest of total disclosure, I have to note my deep ties to Sweden. Years ago, I served a church mission there, and my wife, who was born there, shares inheritance rights to a family home in a small Swedish town. We visit often.
Through the years, I’ve experienced the best and worst of Sweden. I’ve spoken with hard-working immigrants who long to leave (the government, once welcoming to outsiders, now offers grants worth roughly $35,000 for those willing to go back to where they came from). I’ve talked to people willing to share reasons why the nation’s socialized healthcare system doesn’t work. But I’ve also seen how that system provided life-saving round-the-clock home care for an elderly relative in exchange for very little out-of-pocket expense, and I’ve seen how many people there voluntarily sort their trash into various bins for specialized recycling purposes because they believe in doing their civic duty.
It’s a friendly, beautiful country whose culture frowns upon ostentatious wealth and self-promotion, and yet the desire for financial success apparently exists there as it does here.
Big government’s failures
Swedes know all about taxing the rich and expanding government control because they did that from 1970 to 1990.
“This was not the golden era of socialist nostalgia, but more like an Atlas Shrugged moment,” the Cato Institute’s Johan Norberg wrote a few years ago, referencing a well-known Ayn Rand novel championing objectivism. “Swedish companies like Ikea and Tetra Pak and lots of successful entrepreneurs left Sweden and not a single net job was created in the private sector.
“It was the one moment in Sweden’s modern history that we lagged behind other countries.”
This led to a financial crisis in the ’90s, after which “politicians from both the left and right agreed to end this experiment. Instead, they reduced public spending, taxes and regulation to get back to the growth model that made Sweden successful. Sweden started to outperform its neighbors again,” Norberg wrote.
Nations with only 11 million people apparently can be more nimble than the United States, changing course with much less upheaval.
Less money for the poor
Still, as Fairless wrote for The Wall Street Journal, the drop in public spending has resulted in fewer services for people on the low end of the income scale. Income taxes have dropped for three years straight. No longer are the rich being taxed at 90%, as they were in the ’80s. As a result, public funds no longer go as far.
“Gang violence has surged in dozens of immigrant-heavy suburbs, creating areas where local criminal networks challenge state authority and hinder policing,” Fairless wrote. “A public debate is raging over for-profit schools, which critics say make money by skimping on playgrounds, libraries and staff.”
Those social problems and debates may be a natural outgrowth of any serious move toward fiscal responsibility. They are far less disruptive than what may happen in the United States if lawmakers and the White House can’t get control over government overspending.
Overall, Sweden’s new course, which generated more than 500 initial public offerings in the decade ending in 2024, holds the best lessons for politicians, whether in Utah or any other state, anxious to embrace a larger role for government.