Why America Should Be More Like Sweden

America is like the kid who got straight As in elementary school, a brilliant mind who dedicated time to studies and academic excellence; then middle school hit. America started hanging out with the wrong crowd and started to change its views on life and by high school it went from top of its class to the middle. Sweden, on the other hand, who also did well in elementary school, had a middle school slump, but came back strong by the start of high school and is now headed in the right direction.

Unnecessarily drawn-out analogy aside, I do believe Sweden and the United States are heading in opposite directions. Before everyone jumps this gun on this one, we must recognize that sweden has enormous government spending (almost 50% of economic output according to Dan Mitchell), and a large tax-rate of 56.6 percent for the wealthiest Swedes. However, prior to their status as all-star of the welfare-world, Sweden had low tax-rates, limited government, deregulated industries, and free-market policies in other areas for much of the 20th century allowing them to grow to become a very prosperous nation (Sweden also avoided costly wars, such as World War II, allowing them to retain some spending). Then the downfall (middle school) occurred during the 1970s through 1980s when Sweden started to regulate and raise taxes to feed a public sector and welfare state that grew dramatically. In 1991 through 1993 Sweden suffered both a banking and real estate crash. However, sometime after this, Sweden grew wise, cutting the top marginal tax rate from almost 90 percent to just under 57 percent today, eliminating both the inheritance and death taxes, and a corporate tax rate reduced to 26.3 percent (compared to United States which boasts a 38 percent federal corporate tax rate, not to mention additional state taxes as well).  Sweden enjoys pro-market policies, such as a partially privatized social security system, and a nationwide school voucher program with for-profit schools.

Bottom line: The United States has lost its way in the world, and, although Sweden is by no means the poster-child for limited government and low tax rates, they are at least heading in the right direction, something that I cannot say about us.