The World’s Most Surprising Capitalist Makeover Is Under Way in Sweden

The shake-up of cradle-to-grave care is lowering government spending, spurring innovation and stirring fears about those left behind

By Tom Fairless of The WSJ. Excerpts:

"nearly half of primary healthcare clinics are privately owned"

"One in three public high schools is privately run"

"The capitalist makeover has allowed Sweden to . . . shrink the size of the state. That has enabled the government to sharply lower taxes and . . . sparked a surge in entrepreneurship and economic growth."

"Its total public social spending bill . . . has fallen to 24% of gross domestic product, similar to the U.S. and well below the over 30% for nations like France and Italy."

"Sweden’s economy is expected to grow by around 2% a year through 2030, roughly the same pace as the U.S. and double the growth rates of France and Germany"

"Sweden didn’t always have a big public sector. The country climbed from being one of the poorest to the third-richest country in Europe over 100 years through 1970 without high levels of taxation. 

But starting in the 1960s, the center-left Social Democratic Party—which dominated the country’s postwar politics—sharply raised taxes and spending, ultimately taking government spending as high as 70% of GDP by the 1990s. 

The changes triggered a long period of weak growth, stagnant after-tax incomes and ballooning budget deficits and debt that culminated in a banking crisis in the early ’90s."

"the government instituted sweeping economic reforms over the next two decades. They included cuts to unemployment benefits and housing subsidies and the privatization of public services, as well as tax cuts and a reform of the pension system to make it more affordable. Strict limits were imposed on government debt. (Sweden’s debt to GDP is a meager 36%, compared with 129% for the U.S.) In the mid-2000s, the government eliminated wealth and inheritance taxes."

"Wealthy entrepreneurs who had fled Sweden’s high taxes have been returning"

"The country saw more than 500 initial public offerings over the 10 years through 2024, more than Germany, France, the Netherlands and Spain combined"

"It has now moved ahead of the U.S. in the number of billionaires per capita"

"healthcare spending per capita in Sweden grew around 1% a year on average between 2014 and 2024 after adjusting for inflation—roughly half the pace in the U.K. and a third of the pace in the U.S."

"Stefan Fölster, an economist and former Finance Ministry official, argues that the vast majority of Swedes have benefited from the reforms. Households’ inflation-adjusted incomes have doubled on average since the 1990s, after stagnating during the 1970s and ’80s under high taxation, Fölster noted."

"Sweden has recently fallen down international education rankings, a shift that proponents of free schools attribute to high levels of immigration."