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There's a pretty annoying meme that both Americans and Europeans have that goes something like this: "America is conservative and 'capitalist'; Europe is progressive and 'socialist.'" You might object to specific terms, but you know what I mean. The whole poltical spectrum believes it too.

American conservatives think that those Eurofags are a bunch of commie degenerates and American leftists think of Europe, especially the highly-acclaimed Nordic countries a progressive utopia with a glorious welfare state and generally a bunch of forward-thinking fart-smellers.

I'm not entirely sure where this dichotomy started, but it has nothing to do the reality of the actual political structure. I suspect the idea arose as a clash between pseudo-rugged individualist types in America and pseudo-cosmopolitans in Europe, but that's just a guess. You might believe in this meme, but if you actually start looking deeper and more analytically, it disappears.

An example

Let's make up a hypothetical example. I'll give you imaginary stats from two different hypothetical countries and you think about which is more "conservative" and which more "progressive/socialist." (You probably can smell where this is going.)

Metric Country A Country B
Inheritance tax None on the rich or poor Between 18% and 40% of excess
Healthcare No national healthcare system, although local governments levy taxes to pay for local service A national program for healthcare for the poor and additional subsidies for private insurance
Unemployment compensation No governmental unemployment benefits, although in practice private unions take voluntary payments and distribute them to newly unemployed laborers Federal insurance program that pays laid-off workers for a period which can be elongated during downturns
Social Security A partially privatized system where citizens partially pay into an investment portfolio of their choice, and partially a separate account No private or public funds, simply a payroll tax on current works which funds current retirees
Income tax No federal income tax, but larger taxes (30%) for local governments for social services Federal tax between 10 and 40% (25% for median income), many additional local taxes which vary
Education grants State pays students a $1,680 living stipend per semester and offers around $4,000 in loans State offers generous stipend for poorer students and all students may receive nearly any loan amount required. Some are federally subsidized (no interest) loans.

Well you may have already guessed, but the evil Friedmanite capitalist dystopia on the left is the real-world stats for Sweden and the glorious progressive welfare state on the right is the United States.

How did this happen?

The data isn't cherrypicked either. On pretty much every metric Sweden is more economically laissez faire than the US, although there are some ties (both nations have about the same capital gains tax, for example).

Check any organization that keeps tabs on "economic freedom" and you'll see that Sweden is universally more laissez faire than the US in pretty much every important degree, it has more lax financial regulation, more property rights, less trade regulation and fewer tarrifs, the whole deal.

The only ground Sweden ever loses compared to the States is on "freedom from taxation" and metrics of low government spending. Even there, it's important to remember that (1) taxation and spending in Sweden is entirely local and that (2) these metrics take into account the superficially large municipal income tax rate in Sweden, but tend to ignore other taxes (like the inheritance tax I mentioned, of which Sweden has none).

Sweden is (or at least was) a Libertarian Utopia

That's only slightly an exaggeration.

Libertarian autistes should already know that Iceland is a classic example of an emergent-order stateless society. Their mainland brothers in Scandinavia are no different. The interesting thing about the "welfare system" in Sweden is that (1) all of this "governmental control" isn't really a federal state, but governance at a local municipal level, where 290 municipalities divide the population into manageable chunks of usually little more than 10,000 people and (2) pretty much all of the "government programs" originated as private ones and were simply "renamed" to be part of the government in recent history.

The "welfare state" is a network of small country clubs

If you've ever watched CSPAN, you've probably heard Republican congressmen complaining about "one-size-fits-all solutions" and extolling the importance of local development of government programs, usually saying how we need "50 state laboratories of innovation." Sweden is a congressional Republican's dream. And if you want the US to be Sweden, you should follow the lead of congressional Republicans.

In Sweden, there's no Obamacare equivalent, or single-payer healthcare or enormous and contrived federal bureaucratic state. Municipal governments (equivalent to small American counties or parishes) exclusively run the welfare system, the late-life care and basically everything else you would think about when you hear "welfare state." Keep in mind that municipalities are puny (the largest is still less than 900,000 people, putting it an order of magnitude lower than the largest American county), and as I said before, most are around 10,000 people, a small suburban town in America.

Regional governments (equivalent to states) fund healthcare, although the municipalities deal with all the specifics. Again, most taxes go to municipal governments, but most of the rest go here.

The federal government, the actual government of Sweden, does, well, about nothing with respect to the welfare state. Again, they take nearly no taxes anyway, so they barely could if they wanted. The federal government does codify standards and runs some programs, but that mostly ends up being describing what's already going on at a local level.

The government that wasn't

Which brings us to the second point, the welfare system of Sweden is the direct descendent of the Church of Sweden's almshouses, which were locally maintained and came to be funded my municipal governments. All that happened was the Swedish state one day mandated and claimed them for their own.

Sweden has never worked like the US, where lawmakers sit around guessing at what might work, contriving one harebrained scheme or another to "solve" some kind of political problem. All of the Swedish "government" has been constructed gradually by trial and error from the bottom up.

That's also why attempts to to mimic Nordic democracies with LARPy American government programs have always failed. If anything, the American welfare state since the 1960's has actively eroded the position of church-based and voluntary charities since its expansion, while the Swedish system is just an extension of theirs.