21 Oct '15     home | previous

Sweden, Sanders and Trump

In the Democratic Party presidential debate (13 October 2015) Bernie Sanders labeled himself a Democratic Socialist and said,

I think we should look to countries like Denmark, like Sweden and Norway, and learn from what they have accomplished for their working people.

The next day, Donald Trump said,

He [Bernie Sanders] is gonna tax you people at 90 percent. He's going to take everything. And nobody's heard the term 'communist.' But you know what? I call him a socialist-slash-communist. OK? Because that's what he is.

Trump ignores the difference between Europe's Social Democrats and Communist parties of the Leninist tradition. The Social Democrats were reformists. They were for compromise between labor and employers. The Bolshevik revolution in 1917 propelled Communist parties onto the world stage with their belief in demolishing capitalism and eliminating the bourgeoisie as a class. Communists dreamed about a classless stateless society. They pursued control over ideas, created one-party states and destroyed private entrepreneurship.

Sweden's Social Democratic Party was at its peak in 1940, when Hitler was on the march and blending Social Democrats, Communists as one and the same and with Jews as the world's great danger. In the 1950s, Sweden's Social Democratic Party was still doing well, holding on to around 45 percent of the electorate favoring their policies, and it neared 50 percent again in the 1960s. In the 1970s and 80's it was back in the mid and lower 40s. Then in the 1990s the Swedish experience and democracy brought to power a relatively conservative politician, as had the British experience in the 1980s with Margaret Thatcher. Sweden had a growth in private schooling and a proliferation of for-profit radio and television stations, a tax code that was substantially reformed and friendlier toward capital accumulation. Some Social Democrats also were critical of some of what their party wrought. It was not far from Britain's Labor Party leader, Tony Blair, famously declaring that "We are all Thatcherites now." Meanwhile, in Sweden, as in Thatcher's Britain, the conservatives kept a lot of the progressive policies, as in health care, that the Democratic Socialists had created.

So where is Sweden today? Is the continued high level of taxation and all the free stuff paid for by this taxation damaging Sweden's economy and entrepreneurial spirit? Is Bernie Sanders the misguided danger that Trump suggests he is?

Opinion expressed in Sweden general election in the year 2014 drove from power the center-right coalition – comprising the Moderate Party, Liberal People's Party, Centre Party and Christian Democrats. The Moderate Party, which had led the conservative government, dropped from 107 seats in parliament to 84. The Social DemocratIc Party won 113 seats (with 31 percent of the vote). A Social Democrat, Stefan Lofvent, formed a government, backed by the Green Party but not the Left Party. (The Left Party was founded in 1990 by those who had been members of Sweden's Communist Party, founded in 1917 shortly after the Bolshevik Revolution in 1917. The Social Democratic Party was founded in 1889 and not widely confused with the Communists.)

After the Swedes in 2014 voted the Social Democrats back into power, their country continued to be described as strong in economic innovation, strong in the digital market, with many big companies such as IKEA, Ericsson and Volvo and others. There are startups such as Spotify, Skype and Soundcloud. And Sweden has its billionaires, not as many as the US of course, Sweden being a smaller country. This was despite Swedes being highly taxed – and the progressive taxation appreciated by Sanders. The corporate tax rate in Sweden is down around 22 percent compared to around 39 percent for the US. It is individuals that are heavily taxed, including consumption Value Added Tax. The CIA's World Factbook has Sweden's taxes at 52.1 percent of GDP for the year 2014, compared to 17.4 percent for the US.

Critics of Sanders have pointed out that Sander's greater taxation would have to come from the middle classes to amount to anything significant. Meanwhile, wealth distribution in Sweden is much more equitable than in the US. The Factbook has Sweden leading the world wealth distribution (the GINI index) and the US somewhere between that of the Philippines and Uruguay.

The Factbook's per capital wealth comparisons has the US above Sweden's, but not by much. And US per capita GDP is below Norway's – Norway, another welfare state big on taxation (57.5 percent of GDP), heavily influenced by Social Democrats and looked to by Sanders. Norway's per capita wealth for 2014 stands at $65,900, the US at $54,800, and Sweden's at $44,700, the same as Germany's.

Bernie Sanders doesn't appear completely crazy in looking to the Swedish model. In the coming months we will see the degree to which Americans are willing to join the Swedes in experimenting in that direction. Meanwhile, Donald Trump, will probably give us more hyperbole.

Copyright © 2016 by Frank E. Smitha. All rights reserved.