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Key Facts

What Democratic Socialism Does to Economic Prosperity
Support for “Democratic Socialism”
Many Americans support “democratic socialism” and point to Sweden as a successful example.
Consequences of Socialistic Policies
Supporters often point to Sweden as a successful example, but in terms of economic growth, a closer look reveals that its experiment with socialist policies was disastrous.
Stagnation in Economic Growth

Sweden turned to socialism in the 1970s, raising taxes and spending, and imposing more regulation than most other Western European countries. As a result, its economic growth slowed to almost half as fast as the rest of Europe or the United States for two decades. By the early 1990s, its government was spending over seventy percent of everything earned in the economy.

Market-Based Reforms

To restore growth and prosperity, Sweden then undertook major marketbased reforms, cutting taxes and government spending. It deregulated its utilities industries, cut corporate taxes, and changed its social safety net to help those receiving assistance to find jobs.

The Lesson for the United States

The lesson for the United States is clear: “Democratic socialism” diminished Sweden’s prosperity and required significant market-based reforms to bounce back.