On the welfare state – myths, lies and the left space

At the beginning of December, I traditionally groan under piles of final economic and philosophical tests and essays from my students at Northwood University in Michigan. This year, I decided to take a break by listening to a recording of an event organized by my friends at BLO – a debate between Petar Ganev from IME and comrade Volgin. I was shocked by the calmness with which the moderator Stoyan Panchev tolerated the fighter for “social justice” pouring inaccuracies, nonsense and outright lies on the heads of innocent listeners.

Since the era of Bai Tosho, I had not heard the dusty Marxist conclusions about how under capitalism everyone who became rich drags thousands of proletarians into poverty, but for the first time I understand that the Bulgarian transition was carried out according to the model of market “fundamentalism.” Either I have been sleeping through the last 25 years and Bulgaria has passed Hong Kong in terms of economic freedom, or Volgin has no idea what he is talking about. I was dizzy from the labeling of “right” populists like Berlusconi and “solidarity” on the violent seizure of private resources.

I won't even bother explaining the illiterate comment linking the 2008 crisis to libertarian ideas. Any high school student can read the Austrian Business Cycle Theory online and understand how decades of gross executive intervention in real estate markets and the manipulation of interest rates by the Federal Reserve in the United States caused the financial collapse. What I would advise Volgin is to go on an internship in Sweden and learn from the failure of the most vaunted social system in the world.

For generations, progressives have tried to tease my friends in America with jokes about the inhumane nature of “cowboy” capitalism and myths about social democracy in Scandinavia after World War II. When we point to the significantly lower unemployment rates in the United States, we are usually reminded that part of the explanation has to do with the consequences of the war on drugs – hiring hundreds of thousands of unnecessary police officers and locking up millions for drug-related crimes.

If you're wondering why Americans aren't rushing to try the Swedish model, the reason is simple: they've realized that economic freedom brings more opportunity and prosperity. Let's help Volgin by comparing Sweden's purchasing power to the 50 U.S. states. The Scandinavian "paradise" falls in the bottom 20% - about $1 a day better off than the residents of Montana. Unlike Montana, however, more than half of the wealth created by Swedes is seized and spent by the Swedish government.

It is said that a Swedish economist once tried to tease Milton Friedman with the following comment: “There is no poverty in Scandinavia.” To which Friedman replied: “Very interesting, there is no poverty among Scandinavians in America either.” Some might think that the trend toward income equality and increasing life expectancy in Sweden is due to the welfare state? However, the data show that these processes began long before the imposition of high tax and spending policies.

The reason for the success of the Swedes in Sweden (and the even more remarkable success of the Swedes in America) lies in their good work ethic, built in the era of free capitalism. Unfortunately, economic prosperity often leads to moral decay. In Sweden, this process brought the Social Democrats to power. They governed the country for decades with support between 40 and 50%. When the long-term consequences of left-wing policies became clear in the early 21st century, the party's electorate fell below 1/3.

If Bulgaria has to admire Sweden for anything, it is not for its leftist redistribution policies, but for its cultural characteristics. These traits of the Scandinavian character, which not only do not perish in the midst of freer markets in America, but also provide enormous advantages. As a result of the same, the vast majority of Scandinavians who emigrated to the American Midwest live wonderfully - if we were to separate them into a separate country, their gross domestic product per capita would exceed the average for the United States by $ 10,000.

Comrade Volgin seems intelligent enough to learn the lesson from my mini-lecture. The welfare state in the West is a cage in which one can live for a while at the expense of the accumulated benefits of earlier and freer eras. It cannot work in Bulgaria - even nominally the left parties there cannot really stand behind left-wing policies, because the economy is a bone gnawed by socialism. For prosperity we can only rely on the physical, human, entrepreneurial and social capital accumulated by people.

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