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Thursday, April 15, 2010

But It Works in Sweden…

The world is full of myths which, if followed, will do great harm. One such myth is the seeming success of socialist policies in the country of Sweden. This myth has been around a long time–in fact, it is the Cliché of Socialism Number 66.

Dean Russell tackled this cliché by discussing Sweden’s much acclaimed state housing projects. Russell admitted the system did indeed look good and upon his visit to the country, since he was “a reasonably honest person,” gave credit to the housing situation. But upon closer inspection things were not so dandy. The government control of housing created a shortage and those waiting for government housing could end up on a waiting list for ten years! And it got worse, since private housing was non-existent due to the incentives the system created. So Russell stuck with his original hypothesis that government cannot outperform the market.

Russell uses only this one example, but what about other areas? Today the health care issue is all the rage and Sweden (along with England and Canada, which all have different types of state-run systems) is counted as a rousing success. But again, a closer look into all the consequences, including the long-run effects, is necessary. Horror stories, like patients being forced to wait for months despite being in pain, abound.  The system also forces patients to attend extremely understaffed local clinics.  These are just a few of the problems.

Supporters of the recently passed Obamacare should seriously analyze the bill as Bastiat suggests all good economists should, by seeing the seen and the unseen effects. This means looking at all groups and in the long-run. It’s not that free market advocates are heartless in opposing free health care for all, it’s that we are “reasonably honest people” who analyze the issue by looking at all the consequences and find that state run health care will make us all worse off in the long-run, particularly those who will need it most. The US health care system has its problems, but they are due to too much regulation, not too little.

What long-run consequences do you see from Obamacare?

Download Clichés of Socialism 66 here.

  • Nicholas Snow is a Visiting Assistant Professor at Kenyon College in the Department of Economics, and previously a Senior Lecturer at The Ohio State University Economics Department. His research focuses on the political economy of prohibition.