Why Sweden Works
The other day I was speaking to a friend of my dad's, who currently works at the World Bank, about an economic theory which takes credit for the prosperity in Northern European nations, namely in Sweden and Finland.
Sweden has the highest income tax rate in the world (51%) and Finland is not far behind. In fact, Finland appears to be so determined to redistribute the wealth that even speeding tickets are based on income. An incident in which an executive of Nokia was charged $98,000 for speeding on his Harley Davidson illustrates the fact (he later appealed and got it brought down to $5000).
However, these Scandanavians are far from anti-business socialists. Sweden has the lowest corporate tax rate in Europe (28%) and both countries pride themselves in the lack of regulation imposed on entrepreneurs.
"In some places, it takes thirty steps in six months to start a business, in others, it takes two steps in a day", said David, who has toyed with the idea of writing a book about the topic.
The Bad Hair Blog disagrees with me. The blogger, Fausta, earlier showed a graph that displayed recent job growth, and also indicated that Bush's tax cuts came right before the real rise in job creation began. However, Fausta ignores the fact that there have been two tax cuts during the Bush administration, one of which came right before the recession got worse.
Although it's plausible to assume that tax cuts cause some job growth, it's disingenious to give all the credit to tax cuts when the same congress that's giving them out is also spending oodles of money on pork-barrel public works projects.