Mark Perry of the Carpe Diem Economics blog and AEI visiting scholar profiles the Swedish Finance Minister and the solution that his party implemented during the financial crisis.
Sweden implemented permanant tax cuts (not the temporary tax cuts that Bush, and now Obama, favored) combined with a paring back of some of Sweden's massive welfare state. Surprise, Surprise - Sweden was the fastest growing economy in Europe last year. Anders Borg, the Finance Minister in question, is shocked that anyone would expect a return to the loose monetary and fiscal policies of the 1970's to produce anything other than the stagflation that reigned during the 70's and early 80's.
It is pretty fascinating to see changes on the margin lead to improved, or in the case of much of the world, worsening performance. Sweden still has an economy dominated by the government, but paring back just a bit over 2% of the governments share of the economy has lead to 5% average growth rates the past two years.
Sweden implemented permanant tax cuts (not the temporary tax cuts that Bush, and now Obama, favored) combined with a paring back of some of Sweden's massive welfare state. Surprise, Surprise - Sweden was the fastest growing economy in Europe last year. Anders Borg, the Finance Minister in question, is shocked that anyone would expect a return to the loose monetary and fiscal policies of the 1970's to produce anything other than the stagflation that reigned during the 70's and early 80's.
It is pretty fascinating to see changes on the margin lead to improved, or in the case of much of the world, worsening performance. Sweden still has an economy dominated by the government, but paring back just a bit over 2% of the governments share of the economy has lead to 5% average growth rates the past two years.
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