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the old new model for socialism

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Swedish snapshot A: Shows a taxed-to-the-eyeballs welfare state where the government grabs more than 52% of the country's GDP—the highest percentage of any industrial country. A Swedish businessman who earns Euro200,000 a year gets to keep just 49% of his paycheck. Of OECD countries, only France comes close to Sweden in taxing its most successful businesspeople (for complete tax data on 33 countries, see "The tax grab 2001," Forbes Global, Feb. 5).

Swedish snapshot B: Shows a booming economy bubbling with entrepreneurial activity. Growth is predicted to be 3.5% for 2001; inflation, 1.7%; unemployment, 4% (less than half the European average). In 1999, according to the European Information Technology Observatory, Sweden ranked first in the world in investment in information technology and telecommunications. Venture capital is pouring into Sweden, and labor productivity is rocketing: From 1990 to 1999 productivity climbed 47% in Sweden, against 39% in the U.S. and 31% (on average) in the EU. Last year, Sweden topped the global standings in R&D spending as a percentage of GDP with 3.7% (in the U.S. it was 3.1%), according to the OECD.

How to reconcile snapshots A and B? Is Sweden a bloated welfare state? Or a People's Republic of Entrepreneurs?


The answer is that it's a mixture of both. But the entrepreneurial part of the mix is rapidly gaining ascendancy. One yardstick is the number of business startups. They averaged 29,000 a year between 1984 and 1989 and 36,000 between 1994 and 1999, an increase of nearly 25%




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