Sweden, Spending Restraint, and the Benefits of Obeying Fiscal Policy’s Golden Rule

It’s really kind of embarrassing to admit the world’s most successful capitalist nation in history could learn a thing or two about sound public fiscal policy from what was once the poster-child nation of Social Democracy. But useful, like many such humblings. One hopes our leaders in DC will learn it well.

International Liberty

When I first started working on fiscal policy in the 1980s, I never thought I would consider Sweden any sort of role model.

It was the quintessential cradle-to-grave welfare state, much loved on the left as an example for America to follow.

But Sweden suffered a severe economic shock in the early 1990s and policy makers were forced to rethink big government.

They’ve since implemented some positive reforms in the area of fiscal policy, along with other changes to liberalize the economy.

I even, much to my surprise, wrote a column in 2012 stating that it’s “Time to Follow Sweden’s Lead on Fiscal Policy.”

More specifically, I’m impressed that Swedish leaders have imposed some genuine fiscal restraint.

Here’s a chart, based on IMF data, showing that the country enjoyed a nine-year period where the burden of government spending grew by an average of 1.9 percent…

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