A Swedish (Economic) Lesson for President Obama in One Chart

Anthony B. Kim / Ryan Olson /

President Obama is making the first ever bilateral visit to Sweden by a sitting U.S. President. As The Heritage Foundation and Swedish think tank Timbro discussed in a recent Google Hangout, the President should learn from Sweden that advancing economic freedom, not big-government policies, is the driver of economic dynamism.

Sweden is no longer a typical European welfare state. Through deregulation, budget discipline, and an extensive overhaul of the welfare state over the past two decades, the country has transformed itself from a stagnant, benefit-based society to a vibrant modern economy.

As documented in the Index of Economic Freedom, Sweden has measurably advanced economic freedom over the past 20 years and dramatically narrowed the gap with America, whose economic freedom has been declining at an alarming rate. (continues below chart)


Since 1995, Sweden has reduced its government spending as a portion of gross domestic product by almost 20 percent while America’s has increased by close to 10 percent. Not content merely to downsize government, the country known for ABBA and IKEA has also engaged in the global tax-cutting race and reduced its corporate tax rate to 26.3 percent from 60 percent. Notably, Prime Minister Fredrik Reinfeldt has implemented a further reduction of the corporate tax rate to 22 percent, pointing out that corporate income tax is “probably the most harmful tax of all.”

It is not surprising that Sweden has shown enviable economic resilience during the global downturn, even as America’s entrepreneurial pulse is on virtual life support due to the big-government policies of the Obama Administration.

Opting for free-market solutions, Sweden has unmistakably moved to lower spending, lower taxes, and improve economic freedom. It’s time for the U.S. to follow suit.

Read more about Sweden Economy.
See more from the 2013 Index.