Is Sweden a perfect socialist utopia? My name is Henrik Jönsson, a Swedish independent libertarian entrepreneur – and today I am going to answer this question from a small business owners perspective. If you appreciate my videos, please feel free to contribute to my productions using one of the payment options to the left. Without your support, this channel would not be possible. Also don’t forget to hit the “Subscribe” button down below if you haven’t already done so, and make sure to click the “Bell icon” so that you might get notified – the YouTube gods be willing – when I release new videos – which I do with razor sharp precision every Saturday morning at 8am central european time. Today, I’m talking about “the Swedish model” – oh stop it! Today I’m talking about socialism, truth and the state of Sweden. Stay tuned! *INTRO MUSIC* Many people in the western world are now looking to Sweden expecting to find a brand of socialism to model their politics on. And by “a brand” I’m implying the ideological hope of finally finding a socialism that works – not the genocidal rule of Stalin, the terrors of the DDR or the terrifying implosion of Venezuela. The kingdom of Sweden, home of ABBA, IKEA and fermented herring, is shrouded in a legend of being a perfect socialist utopia. How does it actually work, brining the world statuesque blondes, world-class soccer players and… PewDiePie? ”Hey cameraguy, catch!” Let me start right off the bat by establishing that Sweden is neither perfect nor an utopia – and it is certainly not socialist even though an unsavoury aftertaste of the 1970’s and 1980’s still lingers. PewDiePie has moved to the UK, Zlatan lives in LA and most of the statuesque blondes went on to make DVD’s in San Fernando Valley. But they didn’t all leave for a lack of socialism. Sweden has rather become successful IN SPITE of socialism. In order to understand Swedish political economy, you need a quick overview of the history of Sweden. It is 1867, just over 150 years ago, and Sweden is an agrarian economy, with 70% of the population surviving on what their farmland can give them. The spring had been extremely cold, with collapsing harvests as a consequence. During the years 1868 – 1869 up to 10,000 Swedes were estimated having starved to death. Over the coming 40 years over 1,5 million Swedes escaped Sweden’s poverty and famine – and left for America. Fast forward 100 years: by the mid-1960:s, Sweden was considered the per capita richest country in the world. The average income had multiplied almost ten times, and life expectancy rose by a staggering average of 30 years. The government took credit for this massive improvement in living standards, and attributed the extraordinary growth to their homegrown ideology of “Democratic Socialism”. This is the picture many foreigners still hold of Sweden: a big-government triumph of solidarity and redistribution. An amazing ideological success story – except that it isn’t true. So, what really happened between the famine of the 1860:s and the record years of the 1960’s? Well, a whole number of things, and socialism, wasn’t one of them. First of all: the transition from an agricultural economy to an industrialized nation became possible because of a number of laissez-faire reforms championed by lieutenant Johan August Gripenstedt during the final decades of the 19th century. Gripenstedt brokered free-trade treaties with the super-powers of Europe, and abolished the guilds, who up until the end of the 19th century had controlled who got to work in what profession. Private ownership rights were strengthened, it was made easier to form companies, and citizens were allowed to keep the majority of the fruits of their own labour. Massive de-regulation saw the productivity of Sweden soar – and the country rapidly became a leading European industrial nation. However, it would not be until the aftermath of World War II that Sweden would be propelled from an industrial growth economy into the super-rich per-capita wealthiest nation on the planet. The reason for this was Sweden’s policy of “neutrality” – which provided Sweden with an excuse for collaborating with the Nazis rather than being occupied like Denmark and Norway. Sweden traded in granite, iron ore and leased train carts to Hitler’s Germany – profiting from the German war effort. After the end of the war, with the rest of Europe in ruins and in need of rebuilding, Swedish industrial exports soared and so did the wealth of Sweden during the 25 year period between 1945 and 1970. This period ALSO happens to be the “Golden Years of Social Democracy” during which Swedish politicians made a lot of noise about the superiority of the “Swedish model” – Not only was it untrue that “socialist big government” was the cause of Sweden’s increasing wealth – at the time there wasn’t much of a big government at all. In the 1950’s the total tax burden in Sweden hovered around 20%, less than the United States and most European countries. Sweden also had a much smaller public sector than the United States and most European nations had at the time. It wasn’t until the 1960’s, that the government, drunk on post-war capital flowing through the Swedish economy, started raising taxes and establishing large-scale benefit-programs for the redistribution of wealth. Wealth that had been generated through a combination free trade, entrepreneurship and a questionable relationship between the socialist government of Sweden – and the third Reich. Socialism never entered into the equation. In fact, as soon as socialist reforms started being implemented, the Swedish economy started to tank. The inflated post-war export revenues normalised during the 1970s. This, paired with a series of tax hikes which made Sweden less productive, quickly made the populistic welfare-reforms and generous government handouts underfinanced. In order to sustain the welfare systems, further tax increases were introduced – which lessened productivity further, and reduced individuals’ incentives to invest in their education and professional skills. At the same time, generous welfare benefits made it less and less attractive to work at all for low-skilled labourers. During this period, national icons Ingvar Kamprad of IKEA fame, and the world-renowned film director Ingmar Bergman both left Sweden due to its unsustainable taxation policies – and globally loved author of Pippi Longstocking, Astrid Lindgren, wrote a scathing story on how her tax rate now had reached 102% – meaning she was actually *losing* money for each new book she sold. During 1980s the Swedish welfare systems were so underfunded that the government in desperation started borrowing against the Swedish pension funds, in a futile attempt to sustain the socialist utopia that never had existed. By the early 90’s the Swedish economy finally crashed, and the currency of Sweden imploded with a brief stint of interest rates at 500%. Austerity reforms were introduced by a crisis commission with broad support in parliament. As the dust settled, the Swedes had lost nearly 30% of all their wealth – and had fallen from being one of the per capita richest countries in the world in 1970 – to 14th place in the year 2000. This was the result of Sweden’s experiment with socialism. This – or much worse – is anyone’s result of experimenting with socialism. RUNNING A SWEDISH STARTUP IN THE 90’S It was during this socialist apocalypse, that I started my first company in Sweden. I had no contacts and no experience in running a business – but I was strong willed and had an idea that I wanted to realize. As I was sixteen years old at the time, I took my business idea to the career coach at my school in order to get advice on how to best go about forming my company. I remember distinctly how she tilted her head and gave me a worried gaze before continuing: “To run a company is really, really hard, Henrik. Why don’t you just to try get a job somewhere?” Her words are forever etched in fire upon my soul as the most deeply immoral thing you can tell a young individual who earnestly is expressing their first entrepreneurial impulse. To kill ambition under the pretext of something being difficult?! Between the lines, I was being told by this publicly employed career coach to fall in line, to be a good citizen and not to think too much of myself. I started my company anyway. A year later I had 4 employees and great growth figures. We were designing multimedia CD-ROMs, and were just managing a transition into early-stage web development when we ran into Sweden’s infamous LAS-system – the Law On Employment Security. This law stipulates that an employer can only legally fire the last person hired, under the premise “last in, first out.” The LAS-law, first introduced in 1974, was designed with the 20th century large-scale industrial companies in mind whose enormous workforces were increasingly controlled by the unions. Utterly incompatible with the recruitment needs of the flexible, small-scale IT-startups of the 90’s God knows how many great ideas were thwarted, how many companies it never allowed to form, how many opportunities were lost. Like tears in rain. ”Time to die.” Sweden certainly lost me, as I ended up closing the company and moving abroad once I realized that I could not control my own workforce. It would be over 10 years before I returned – to a very different Sweden. REPAIRING SWEDEN During the 1990’s and the early 2000’s massive structural and financial reforms were passed through parliament, step by step mending the damage socialism had done to Sweden. Taxes were slashed, creating a boom of new, digital startup companies like Skype, Spotify and Klarna. The healthcare system was supplemented with allowing private surgeries and clinics, and by allowing citizens to carry private healthcare insurance if they desired additional health services. The pension system was reformed to allow greater individual flexibility in how to invest your money. The School system opened up for private schools to operate along the municipal schools, and gave the Swedes the opportunity to choose what schools they wanted their children to go to. The utility providers were privatised. The TV- and radio state monopoly was dismantled allowing private companies to operate TV- and radio channels for the first time in Swedish history. The government run telecommunication giant “Televerket” was turned into a publicly traded company with other commercial companies competing for the customers. It is almost impossible for Swedes born in the 1990’s to understand how the country I, and many other entrepreneurs, had to escape from have changed. When I was growing up, you could not own a telephone in Sweden. It was lent to you by the government – and it was a criminal offense to connect a phone bought abroad to the Swedish telephone lines. You could not choose what radio or TV stations you wanted to watch. Well. You could choose between two different government run TV-stations. All foreign films were screened and re-cut by the Swedish Film Censorship agency, to protect the people from violence and foreign immorality. To make these transitions were very painful for Sweden, but they were the right thing to do: since the 1990s the Swedish growth rate has risen 50%. And although Sweden is now facing a swathe of new and alarming social and financial challenges, the jury’s verdict is unanimous: Sweden’s experiment with socialism was a disaster – and if you look to Sweden for a role model, remember that everything good and decent that has come out of Sweden is because of laissez-faire policies and because we are a decent, hard-working people. A decent, hard-working people who sometimes suffer under questionable governments. Nothing else. Did you appreciate this personal mini-lecture on Swedish economic history? Please let me know in the comment section down below. I have a great deal to tell about the inner workings of Sweden if anyone cares to listen. If you know people who’re dabbling in socialism – ”Americans are so used to demonizing socialism that most don’t really know what it is.” please feel free to share this video, and subscribe to my YouTube channel. I consider every single mind won over from socialism and collectivism to be a duty for any lover of freedom and growth. My name is Henrik Jönsson. I succeeded as an entrepreneur in spite of socialism, not because of it. Thank you very much for watching this video.