Of course the point is not that Sweden is perfect, it’s the fact that it works and thrives despite high taxes and a strong welfare state — which isn’t supposed to be possible according to conservative dogma.So, does Sweden thrive BECAUSE OF high taxes and welfare, or IN SPITE of it? Both cannot be true. Is it a Freudian slip, or is he just creating a conservative straw man?
I have never been to Sweden, and right now I am the closest I ever have been to there, being in Riga, Latvia. Each day, two ferries run from Rita to Stockholm, and from what I can tell, Scandinavians seem to make up the largest contingent of tourists here in Old Riga, where we are staying. The reason that the Swedes like to come here is because Riga, while somewhat expensive by American standards, is much less expensive than Sweden. In my conversations with Swedes and Norwegians, I get the sense that they are not personally as wealthy as Progressive Americans want us to believe.
In other words, what Krugman (who is a multi-millionaire and really doesn't have to worry about what things cost) does not tell people is that Swedes pay much more for goods than do Americans, yet Swedish incomes are not as high, and their real incomes are substantially lower than ours. Now, this is not a slam on Sweden, which is a lovely country, but nonetheless is not quite the paradise Krugman wants to claim that it is.
Now, Sweden is not a hellhole, either, although I don't know of any practitioners of "conservative dogma" who make the claim that such a society cannot function. Furthermore, income tax and welfare policies are not the only thing affecting investment. Something tells me that the Swedish government is not nearly as hostile to new capital investment as is the current Regime in Washington. (While it will bug the Krugmanites who read this page, this editorial that appeared in the Wall Street Journal is spot on when it comes to dealing with the economic policies of the Obama administration.)
Krugman has one more statement that does strike me as interesting:
An anecdote here: Robin and I were talking yesterday with an eminent American financial economist, and said something about tax levels here. He said, “Well, that’s why all the young people are leaving.” Except, you know, they aren’t. But never mind — that’s what’s supposed to be happening, and it must be happening.Does that mentality apply to the stimulus? According to Krugman, a "stimulus" by definition always must have a positive economic effect, provided it is "large enough," so is the fact that the economy is in the tank -- despite trillions of dollars being spent to keep that from happening -- proof on its face that the government is following an "austerity" plan? Or, if "that’s what’s supposed to be happening, and it must be happening" only applies to other things, but not the "stimulus"?