How the Welfare State Promotes Violence: The Swedish Edition

One of the least expected places for social upheavals to occur is Sweden.

Image from the Guardian

Why is this happening? 

The prolific Simon Black of the Sovereign Man eloquently explains (bold mine)

Anytime a free market guy rails against central planning and socialism, there is always someone who stands up and says “what about Sweden?” 

Ah, Sweden… a socialist’s paradise… a place where taxes are among the highest in the world, few people are wealthy, and the government is involved in people’s lives from cradle to grave.

And in all of these government surveys on ‘happiness’, places like Sweden, Norway, and Denmark consistently rank among the happiest countries in the world.

Well… the veneer is cracking.

Though the coverage has been limited, there’s been rioting in Sweden over the past week, specifically in the immigrant-dense suburbs around Stockholm where 80% of the population are first or second-generation immigrants.

Dan West, my right hand man at Sovereign Man, is actually Swedish and on the ground right now in the country. He recently sent me a note describing the situation:

“Hundreds of cars are burning. Schools were set on fire. Police stations were set on fire. Businesses were vandalized. Rioters clashed with police. Hundreds of masked rioters ran wild in the streets.

Seeing photos and video of this you’d think it was a war zone in some unstable part of the world, not Stockholm.

Allegedly it started last week because the police fatally shot a 69-year-old man who wielded a machete in public. Now people are angry and destroying things.

Swedish politicians say the root causes of these riots are inequality of the immigrant minorities.

Bear in mind, this is a place so obsessed with equality that the words “him” and “her” have been blended into “hem”… and taxpayers fork over 70% of their income to ensure that everyone can live to an equal level.

But to those of us living outside of this statist bubble, the real problem is obvious: however well-intentioned they may be, welfare states almost always attract people who want to be taken care of at the expense of others.

And ultimately this engenders serious conflict… between those who are on the receiving end, and those on the paying end.

Occasionally this conflict becomes violent. And that’s exactly what’s been playing out.

The government has all sorts of propaganda to influence the way Swedes view the welfare state and convince us that we should pay huge taxes to support others.

In other words, we should not be economically free so that others can live for free. This is the definition of a welfare state.

And in addition to such ‘thought controls’, the Swedish government also rules with capital controls, people controls, and media controls.

The government here tries to churn citizens out as if we’re widgets coming off a factory line, influencing everything from what we think to how we spend our time.

Yet despite such a finely-tuned system, the capital suburbs practically turned into a war zones over the past week.

The politicians here claim it can all be fixed with more redistribution of wealth. It’s not enough that the average working Swede pays ~70% in taxes; if only they could extract 80% or 90% in taxes, they could solve everything!

If all you have is a hammer, everything looks like a nail.

People have the wrong idea of this place. It is not a well-functioning welfare state. Any system based on giving people something for nothing, and sticking hard-working, productive citizens with the bill, is doomed to fail. Sweden is no exception.

People in North America who are rapidly being dragged into a welfare state should pay very close attention… because this is the future that awaits.”

The Zero Hedge adds more to the Swedish Welfare dilemma:

The recent riots in Stockholm may highlight widening divisions within Swedish society generated by rising inequality, cuts in welfare spending and a failure to integrate immigrants. Inequality has increased the most in Sweden of any OECD member country over the past 25 years.

Inequality

Inequality has increased by one-third since 1985, according to the OECD. Sweden has dropped to 10th place from first in 1995 in the OECD’s ranking of income distribution after the nation’s Gini coefficient rose to 0.27 from 0.21.The average income of the top 10 percent of income earners was more than six times that of the bottom 10 percent in 2008. That compares with a ratio of about four to one during the 1990s.

Immigration

The incidence of child poverty is more than five times as common to people whose parents were born outside Sweden, a report from Save the Children Sweden shows. Those born outside the country account for 14.3 percent of the population of 9.1 million. Sweden ranked fourth in terms of the total number of asylum seekers and second in terms of the number of asylum seekers relative to the population, according to UN data comparing 44 countries.

Employment Gap

Sweden has one of the largest employment gaps between natives and foreign-born residents of any OECD country. Employment rates between local and immigrant workers differ by more than 30 percentage points in some areas, according to Statistics Sweden. The unemployment rate among immigrants from countries outside the EU was 16.5 percent in 2011, compared with 5.7 percent for native Swedes, Statistics Sweden says.

Redistribution

Sweden’s welfare state has been squeezed by about 140 billion kronor of tax cuts since 2006, Eurostat data show. That has contributed to tax revenue as a share of GDP falling to 44.3 percent, below Denmark’s figure of 47.7 percent in 2011. Income taxes and cash benefits play a greater role in redistributing income in Sweden, reducing inequality by about 30 percent, compared with an OECD average of 25 percent.

A society that depends heavily on welfare state produces both political and income inequality as revealed by the brewing frictions between natives and foreign born residents in Sweden.

Yet the welfare state has been enabled and facilitated by debt and inflation which are the pillars of the paper money system.

As the great Ludwig von Mises wrote in Liberty and Property:

The welfare state with its methods of easy money, credit expansion and undisguised inflation continually takes bites out of all claims payable in units of the nation’s legal tender. The self-styled champions of the common man are still guided by the obsolete idea that a policy that favors the debtors at the expense of the creditors is very beneficial to the majority of the people. Their inability to comprehend the essential characteristics of the market economy manifests itself also in their failure to see the obvious fact that those whom they feign to aid are creditors in their capacity as savers, policy holders, and owners of bonds.

Today’s global polices have clearly been designed to favor the debtors over creditors. Such been primarily meant to boost the insolvent welfare states, their clients, patrons (political agents, banking system) and other related interests (cronies).

Nonetheless when parasites dominate the hosts, as revealed by the immense and unsustainable accretion of government debts and by the intensifying use of financial repression (negative interest rates, QE) that ”bites out of all claims payable in units of the nation’s legal tender”, such are signs of desperation that exposes the growing fragility and vulnerability of the welfare state which has painted itself to a corner. 

The Santa Claus principle is in a self-liquidates mode

Events in Sweden is a harbinger of things to come.