Move to Sweden?

Stephen Law has a post here about the Swedish economic model. His argument could be expressed in syllogistic form as follows.

Sweden has not suffered badly in the economic crisis
Sweden is a high taxing, high public spending, highly redistributive, bank-and-finance-regulating country
Not all high taxing, high public spending, highly redistributive, bank-and-finance-regulating countries have suffered badly in the economic crisis

Reading the proper name ‘Sweden’ as a universal term, this is a valid syllogism of the form EAO, Felapton. Thus disproving the proposition “All high taxing, high public spending, highly redistributive, bank-and-finance-regulating countries have suffered badly in the economic crisis”, which was what Stephen wanted to prove.

I don’t dispute the second premiss, but it is misleading, as it mixes together a number of different and logically independent subjects.

The first is ‘redistribution’. Redistribution and public spending are not the same, as a simple thought experiment proves.Calculate an average national gross income then substract all earnings above that and pay it proportionally to those earning under the average. This need involve no public sector, and no public debt. Think of Robin Hood. There was a survey years ago* asking economists whether this was a good model, and the consensus that it was not, because lower gross earners would not spend the surplus on worthy things like education and theatre and art but rather on cigarettes and beer and cars and TV’s etc. (Actually high-cost things like opera and ballet and art would be completely impossible on this model, but that's a different subject).

Then there is ‘public sector’. This is where people are forced to pay a certain amount in return for state-provided services. This need not have to involve redistribution – there could be the same flat fee paid by everyone. (Although it would be hard to provide high-cost services, as noted above). It certainly would not have to involve public debt.

Finally there is public debt. This is the state issuing debt, either to its citizens or (more usually in the case of the Western countries) to people and corporate or state entities outside the country. The current mess is complex, but essentially due to over-borrowing. On Sweden, this had a massive, and famous, debt crisis in the 1990s, caused by an out of control property boom and much over-borrowing. There is something about this here. (Yes, a Wikipedia article).

* Brittan, S. Is there an economic consensus?: an attitude survey. London: Macmillan, 1973.