So argues Nima Sanandaji in a new paper from Libera called ‘The Swedish Model Reassessed – Affluence Despite the Welfare State’ (PDF). Instead, the paper argues that Swedish affluence is
“…the result of cultural and demographic factors, as well as a favorable business environment throughout most of Sweden’s modern history.”
The evidence presented to support this hypothesis is threefold. Firstly, it is argued that Sweden displayed comparatively higher rates of growth and had a particularly vibrant society well before the start of the Social Democratic era in 1936. Secondly, descendants of Swedes who migrated to the United States in the nineteenth century are also today characterized by favorable social outcomes, such as a low poverty rate and high employment. The Nordic nations have, for hundreds of years, benefited from sound institutions, such as a strong Lutheran work ethic, a homogeneous population, and high levels of trust, civic participation and cooperation. Thirdly, starting in the 1990s, Sweden has dramatically scaled back the size and scope of government, which was followed by a recovery of the earlier strong growth rate. The period characterized by the most extensive welfare state policies, around 1970–1995, is associated with low growth rates.
Overall this is a really interesting report and well worth a read. It is available for order and/or free download from here.