116. Sweden - Socialist Dream

http://observeanator.blogspot.co.za/2010/08/about-those-capitalist-scandinavians.html

Peter Voss "It began as a cautious policy. In 1950 Sweden was one of the richest countries in the world. The total tax burden was still just 19 percent of GDP—lower than in the United States and in other European countries. It did not surpass 30 percent until 1965. It was an open economy with a small government that produced these amazing results, with a little help from having stayed out of two world wars. In his history of economic policy in Sweden, economist Johan Myhrman concludes that despite a growth in government, these policies continued: Under this period (1950-70) Sweden had a liberal trade policy, which meant low tariffs and a benevolent attitude to business, for example with a tax policy that admitted very generous deductions for capital costs.9 Yes, Sweden today has another reputation. But that came later. In the 1970s, with coffers filled by big business and heads filled with ideas from the international turn to the left, the Social Democrats began to expand social assistance and regulate the labor market. Public spending almost doubled between 1960 and 1980, rising from 31 percent to 60 percent of GDP, and high taxes accompanied them. For a while Social Democrats could travel the world and talk about how they were able to have both big government and high incomes—but only for a time, because this was also the moment when the model began to run into problems. The average growth rate was halved to 2 percent in the 1970s, declining further in the 1980s, and that was before the big crisis in the 1990s. The currency had to be devalued five times to keep industry competitive, by a total of 45 percent. In 1990, the year before a serious economic crisis in Sweden, private enterprise had not created a single net job since 1950, but the public sector had increased by more than a million employees."