Fareed Zakaria: Bernie Sanders’ Scandinavian ideal is a fantasy


Back in 2018 the Washington Post published an opinion piece by Elizabeth Bruenig with the amusing title, “It’s time to give socialism a try.” It’s amusing because it plays into the oft-heard observation that no matter how many times socialism has been tried, there are always socialist around who will claim real socialism has never been tried.

What is real socialism? It’s usually clarified that this means “Democratic Socialism” as opposed to the non-Democratic type that exists in places like China, Cuba and Venezuela. Indeed, Bruenig makes this distinction in her piece. So no matter how many times socialism is tried, there’s always some socialist out there saying, ‘Hey, maybe it’s time to give socialism a try.’ That, in essence, is the pitch Bernie Sanders is making to the Democratic Party.

Today, Fareed Zakaria points out that socialism, the real Democratic kind Sanders says he supports, has been tried. It was tried in Scandinavia in the 1970s and 80s and it was a disaster [emphasis added]:

Sanders’s vision of Scandinavian countries, as with much of his ideology, seems to be stuck in the 1960s and 1970s, a period when these countries were indeed pioneers in creating a social market economy. In Sweden, government spending as a percentage of gross domestic product doubled from 1960 to 1980, going from approximately 30 percent to 60 percent. But as Swedish commentator Johan Norberg points out, this experiment in Sanders-style democratic socialism tanked the Swedish economy. Between 1970 and 1995, he notes, Sweden did not create a single net new job in the private sector. In 1991, a free-market prime minister, Carl Bildt, initiated a series of reforms to kick-start the economy. By the mid-2000s, Sweden had cut the size of its government by a third and emerged from its long economic slump.

Zakaria points out that having abandoned this kind of socialism, Scandinavia today is in some ways considerably to the right of Bernie Sanders’ regular stump speech:

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Take billionaires. Sanders has been clear on the topic: “Billionaires should not exist.” But Sweden and Norway both have more billionaires per capita than the United States — Sweden almost twice as many. Not only that, these billionaires are able to pass on their wealth to their children tax-free. Inheritance taxes in Sweden and Norway are zero, and in Denmark 15 percent. The United States, by contrast, has the fourth-highest estate taxes in the industrialized world at 40 percent.

Another difference Zakaria doesn’t mention: About 40 percent of Sweden’s electric power comes from nuclear plants. In the US the figure is closer to 20 percent and Sanders has said he wants to phase that out even as we get rid of all fossil fuel power plants.

Sanders routinely makes it sound as if taxes on billionaires and corporations will fund his $50 to $100 trillion in new spending on things like free tuition and Medicare for All. But that’s not how it works in Scandinavia. In fact, on a percentage basis the poor and middle class in Scandinavia pay far more of the tab (and rich pay far less) than they do here:

It is true that these countries have a generous safety net and, in order to fund it, high taxes. What is not often pointed out, however, is that in order to raise enough revenue, these taxes fall disproportionately on the poor, middle and upper middle class. Denmark has one of the highest top income tax rates in the Organization for Economic Cooperation and Development, 55.9 percent, but that rate is applied to anyone making 1.3 times the average national income. In the United States, this would mean that any income above $65,000 would be taxed at the rate of 55.9 percent. In fact, the highest tax rate in the United States, 43 percent, applies to income that is 9.3 times the national average, which means that only those with incomes over approximately $500,000 pay this rate…

A 2008 OECD report found that the top 10 percent in the United States pay 45 percent of all income taxes, while the top 10 percent in Denmark pay 26 percent and in Sweden 27 percent. Among wealthy countries, the average is 32 percent. The basic point is worth underlining because the American left seems largely unaware of it, and it has only become more true over the past decade: The United States has a significantly more progressive tax code than Europe, and its top 10 percent pays a vastly greater share of the country’s taxes than their European counterparts.

Sanders’ vision of socialism is one that has been tried and failed. If he wants to argue the US should be more like Norway or Sweden then he ought to offer proposals that accord with what Scandinavia is, not what it used to be 40 years ago. Can you even imagine Sanders embracing lower tax rates on the rich, higher tax rates on the poor, more nuclear power and the existence of billionaires? Neither can I.

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