Entrepreneurship in the Welfare State

In a recent opinion piece, Dalibor Rohac claims that we have much to learn from the Nordic welfare states in terms of wealth-creation and prosperity. Writes Rohac:

When Americans think of Scandinavia, what comes to mind is probably Ikea, breathtaking landscapes and maybe Ingmar Bergman’s movies.

Bergman may have been an innovator of sorts, but in terms of entrepreneurship Ikea is undoubtedly a success story in many ways; it is also one of the very few examples of globally successful Swedish firms in the recent several decades. Looking at the facts, a great many of the big players in the Swedish economy (and exports) were all founded in the latter half of the 19th century or in the first two decades of the 20th century. After that? In addition to Ikea — basically nothing.

As a matter of fact, the private sector of the Swedish economy saw basically no job creation at all 1950-2005.

So how can Rohac and the Legatum Institute claim that the Nordic countries have free economies and are at “the top of the prosperity league”? Naturally, it depends what statistics we focus on. However, where most would see a disturbing contradiction in Rohac’s statement that Sweden and the other countries “encourage and protect innovation and entrepreneurship better than any other countries” while Sweden has become known as a haven for intellectual property¬†piracy and the home of The Pirate Bay, others may claim that this is what signifies the Nordic free-market welfare states: contradictions.

And they are contradictory at first glance. The Swedish welfare state, as an example, has for a century systematically targeted taxes on individuals while keeping businesses rather untainted. It has proved to be an unsustainable model, but with obvious short term gains in terms of national prosperity.

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