In the midst of a global recession, Sweden has recorded a 6.9% year-on-year increase last quarter, and unemployment is falling. Unusual facts: the central bank has been raising rates and the government has been cutting taxes for all groups including the very rich.
… says Mises.org. From the Speccy we learn that the response of the conservative Swedish PM (yes, you read that right: Sweden has a conservative government) to the financial crisis …
… was to cut taxes, a move his critics said the country could not afford. The European Commission warned him it would end in tears. But instead, the lower taxes were a spur to growth and Sweden now has the fastest-growing economy in the Western world.
That shows what the European Commission knows, then.
The party fell 20 points behind in the polls, and braced itself for the ritualistic electoral ejection. It carried on regardless, with tax cuts for cleaners and baby-sitters (most home helpers were paid ‘black’, as the Swedes say, because the tax was so high). Tax on low-paid jobs fell sharpest. Nursing assistants, for example, saw their tax bill drop by a fifth. The aim was to make work compete more aggressively with Sweden’s famously generous welfare state.
Taxes for the rich also came down. Reinfeldt abolished the notorious wealth tax, which took 1.5 per cent a year from any Swede worth over about Skr1.5 million (£125,000). Anders Borg, the finance minister, faced predictable protests about a Bush-style tax cut for the rich. He replied: ‘The big winners are, in the long term, all Swedes, because we must create conditions for companies to match global competition.’ So while the Tories were endorsing Gordon Brown’s plan to increase the tax on the rich, the Swedes were cutting the tax rate – in order to collect more from the well-paid.
Hear that, George, you pillock?
Ask about the recession in Sweden now and you are met with a blank stare. Consumer confidence is at a ten-year high. Its recession was steep, but shorter than its downturn after 9/11. In fact, this had come to worry Reinfeldt. ‘Our medicine may have been just too effective,’ one of his state secretaries told me over the summer. ‘Voters don’t think about the economy now. The recession is becoming a distant memory.’
I assume he means that they won’t be grateful to him and might start thinking they can afford a spot of light socialism again (“Hey, it’s only a drop. I can give it up any time I like…”). Well, hard cheese, Fredrik. Life’s a bitch, ain’t it? But how about that, eh? The Swedish model, poster girl for a generation of British corporatists, has been given the heave-ho in her birthplace, to be replaced by something that works. Or works better, at any rate: their taxes are hardly low, the interest rate set by their People’s Financial Soviet still is, even if it’s gone up a bit, and as long as they still have fiat money there’s going to be fiddling, but they’re on the right track. We, needless to say, aren’t.
(Oh, and yes, I’m aware the Spectator piece isn’t new. The Mises.org one is.)