 Americans almost have this weird fixation on Scandinavia. On this topic, we want to use Sweden as the scapegoat. But then, in a bunch of other political contexts in the United States, we, despite not knowing very much and being pretty naive about Sweden, seem to want to emulate it. I think that the most interesting example of this, switching gears a little bit, is Bernie Sanders. So Bernie Sanders will so frequently call himself a democratic socialist and tout socialism as the model. He doesn't mean Venezuela-style socialism. He doesn't mean Cuban-style socialism. He means Swedish socialism. I think it's worth playing a bit of Bernie Sanders rhetoric just to really dig into a couple of the specific claims that he makes when he touts the Swedish DSA model. Let's roll that clip. And I'm curious to hear you react to some of the specifics that he draws. Is it really possible for someone who calls himself a socialist to be elected president of the United States? Well, so long as we know what democratic socialism is. And if we know that in countries in Scandinavia, like Denmark, Norway, Sweden, they are very democratic countries. Obviously, their voter turnout is a lot higher than it is in the United States. In those countries, healthcare is the right of all people. In those countries, college education, graduate school is free. In those countries, retirement benefits, child care are stronger than in the United States of America. And in those countries, buy and launch. Government works for ordinary people in the middle class rather than, as is the case right now in our country, for the billionaire. I can hear the Republican attack add right now. He wants America to look more like Scandinavia. That's right. That's right. So, and by the way, that was from ABC this week, in 2015, when Bernie was running for president. And some of the things he mentioned there, turnout, more generous social safety net, free college, more general equality. You mentioned some of the free market. Yes, yes. So, is that something that is crucial to Sweden's society and kind of cultural success? You know, this is why Sweden is not a libertarian paradise. We might have free markets, but we do have a very generous welfare state. And it's true that many of these things are handed out by the government. Not always, it's funded by the government at least, often they're private providers. But the thing is, we pay for these things ourselves. That's an incredibly important point to make. Because, you know, there's this pipe dream of Bernie Sanders and others that this will somehow be paid for by the rich. But Sweden learned in the 1970s that if you have, you can pick one, a big generous welfare state, or you can make the rich pay for it all. You can't have both. If you have a universal generous welfare state and make the rich pay for it all, they will stop being rich. They will move. They will stop starting those businesses and the ideas of the future will move. Again, instead, you have to get most of the taxes from low and middle income households. That's the dirty little secret of the Swedish welfare state that the socialists love the poor taxpayers because they are reliable, loyal taxpayers. They don't dodge. They don't move to Monaco. They don't have tax attorneys. So we have the bulk of our government revenue coming from regional, local income taxes, which are flat income taxes, not progressive. And even the sort of the national level kicks in among fairly, fairly, unfairly low incomes. Also things like a value added tax at 25% in general on most goods, which is obviously regressive, the poor pay as much as the rich when they buy food in taxes. And this means that when the OECD club of mostly rich countries look at different tax systems around the world, they say that the Swedish system is one of the least progressive tax systems of all, much less progressive than the United States because America's welfare state is so small. So you can rely more on the rich, whereas here we all have to pay for it. So the Swedish welfare state mostly just redistributes over an individual's life cycle. We get lots of stuff when we're young and in preschool and school, and then we work hard and pay for it all. And then we get much of it back in healthcare and retirement benefits, which mostly means that yes, we get lots of stuff, but we pay for it all. And it means that nothing much is different from paying it straight out of pocket than the fact that we only get it back when and if the government decides that this is a valuable thing. This is how you should spend your money. It's so interesting that socialists keep coming back to Sweden. And I think that's because all their favorite countries constantly fail. Every Cuban Venezuela end up with bread lines and millions trying to escape from that horror show. But they always have Sweden. It seems so friendly and successful and yet socialist. Well, the problem, of course, is that we have been socialists in Sweden and we have been successful, but never at the same time. That's what Sanders and the others fail to realize. We had that period in the 1970s and 1980s when Sweden was doubling the size of public consumption, raising taxes, regulating everything and price controls and what have you. And this is the moment when Bernie Sanders and all those who are sort of stuck in the 1970s, this is what they still remember. Look at Sweden, they are socialists, but they're also one of the richest countries on the planet. It seems to be working in Sweden. The problem, of course, is that it's like that old joke. How do you end up with a small fortune? Well, you start with a large fortune and then you waste most of it. And that's what Sweden did in the 70s and 80s. We were one of the richest countries on the planet before this experiment. And that was based on a 100-year period of limited government, free markets, free trade. As late as 1960, we had lower taxes than the United States and most European countries. This brought us all the wealth and all those successful international companies, the Ikea's and stuff, that brought us so much wealth that politicians thought that they could redistribute everything and begin to just jack up spending and taxes. Well, they couldn't because the 70s and 80s, that's the one period in modern Swedish economic history when we lagged behind other countries. This is the moment when we didn't create a single net job in the private sector. And when entrepreneurs and businesses left Sweden, Ikea left Sweden, Tetra Pak left Sweden, most successful entrepreneurs left because it was impossible to do business in Sweden. And this all ended in a terrible financial crash in the early 1990s. So that was a brief period of time. And it's one that we don't want to go back to in Sweden, not even Swedish socialists. Even they say that, okay, we went too far. And the Social Democratic Finance Minister at the time said it was actually absurd and perverse in many ways what we were trying to do. And since then Sweden has again become successful, but that's based on a new period of liberalization and of economic reform. So today, if Bernie Sanders wanted to imitate Sweden, he would have to reform Social Security, partially privatize it. He would have to open up and privatize much of product markets, deregulate, abolish occupational licensing, reduce many taxes, reduce corporate taxes from the US level, abolish property taxes and inheritance taxes and stuff like that, implementing national school vouchers systems of private schools get the same funding as public ones. So Sweden today is not what he remembers from the 1970s. It's a much better and freer place than it was back then. In a lot of ways, this almost feels a little bit like a libertarian paradise, not on every level. But I certainly look at, obviously Sweden has some areas that absolutely fly in the face of that. Like I know homeschooling is banned in Sweden, which is very sad. But school choice is massive in Sweden. And then when you look at, yes, there's a whole bunch of public sector jobs, a whole bunch of government jobs programs. But one thing that's actually really interesting that I know you've commented on a fair bit is the fact that union relations in Sweden are a lot less fraught than in the United States. So in the United States, you so frequently see teachers unions and cop unions, essentially allowing some of the worst, lowest performing employees to fester in these roles, to never be fired, to have perpetual constant eternal job security completely shielded from the consequences of their laziness or their bad actions. You see a ton of political power exercised by unions in the United States. Is this different in Sweden? It seems like it's a little bit less toxic. You know, relations in workplaces aren't as confrontational in Sweden as it is in most other places. And I would say the trade unions are more respected in Sweden broadly than in other places. But as one, there was this great conversation between two trade unionists, an American and a Swede, when the Americans said, oh, we would love to have the kind of respect and attention and power as you do in Sweden. And the Swedish trade unionists said, in that case, you have to deserve it. And that's one major difference. This shocks Americans. The Swedish trade unions, one of their most important goals is to make sure that wage increases aren't too high, aren't too, that they don't get too high wages, because that will make their businesses less competitive. So the sort of the trade union federation is traveling around the country and trying to sort of get the local trade unions to relax, don't try to get everything at once, because we're a small open economy, we have to stay competitive and make sure that wages don't increase faster than productivity. And that's obviously not the same trade unions as you see in other places. Some explain this with the fact that we have much higher trade union membership rates in Sweden than in other places, 70, 80% even in white collar professions. And some economists like Manko Olsen has pointed out, if your trade unions are represent such a large part of the population, then you can't just get everything on everybody else's expense. In that case, you have to think about the competitiveness of the whole economy. You're also a consumer, so it doesn't make sense to lobby for tariffs, for example. So many things are different in Sweden than in the US. Thank you for watching our conversation with Johan Norberg. For the full conversation, go here. For more clips, go here.