Socialism

Floor Speech

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Mr. GRASSLEY. Mr. President, paraphrasing a philosopher of his era, Winston Churchill once said: Those that fail to learn from history are doomed to repeat it.

And I doubt that Churchill was the only one that said that. I think we quote other people saying similar things.

Now, Churchill was himself a devoted student to history. The research for his multivolume biography of his ancestor, John Churchill, first Duke of Marlborough, likely informed his strategic military thinking as Prime Minister during World War II.

Churchill was also a fierce critic of socialism in his time, and that is the main point of my remarks today--talking about socialism.

Socialism, as we know it today, is based on a different view of history than what Churchill had, a history that says we are headed in a particular direction, and you just need to see where it is heading to ``be on the right side of history.''

Socialism was thought to be the wave of the future in Churchill's time, just as it was the wave of the future when Karl Marx was writing about it in the mid-1800s. In fact, a wave is an apt analogy for socialism. Enthusiasm for socialism has crested and then crashed down many, many times in the last couple of centuries.

Today, some enthusiasts are again riding high on this socialism wave. Some of them are too young to know better, while others simply refuse to learn the lessons from the previous crashes that socialism has shown us.

Given previous spectacular failures of full-fledged socialism in Eastern Europe, Latin America, Asia, and Africa, usually, as we learn, resulting in violence, in poverty, and, most importantly, suppression of individual rights that we value here in the United States, but also advocates of socialism find themselves on the defensive once again.

When asked why we should try a system that has repeatedly and spectacularly failed, a common fallback is to cite Sweden and other Nordic countries as examples that we should learn from.

It may surprise some of my colleagues here in the Senate that this is one point where I agree with the socialists. We should examine and learn from Sweden's experience. In fact, an excellent summary of Sweden's experience from the 1950s to this very day has been compiled by the Swedish economist Johan Norberg. His video, which goes by the title ``Sweden: Lessons for America,'' is available on YouTube as part of the Free to Choose Network. A short paper similarly titled, ``Sweden's Lesson for America,'' has been published by the Cato Institute.

So I would recommend to all of my colleagues on both sides of the aisle paying attention to either that video or that publication by Cato because we can learn a lot from Sweden, and it is not what people will be espousing here in the U.S. Senate based upon a lot of political speeches from those on the left.

As Norberg points out, by about 1950, Sweden was the fourth richest country in the world and had the fifth freest economy. In other words, Sweden became wealthy through economic freedom, like we have here in America. And then, you know what, Sweden started to adopt socialist policies.

At first, it was just a few welfare programs. But between 1960 and 1980, government spending in Sweden doubled from 31 percent of gross domestic product to 60 percent of gross domestic product, and, of course, that meant for all the people in Sweden to pay sky-high taxes.

This is the time period that older socialists remember so fondly and we see espoused here on the Senate floor. Sweden was surfing on top of the socialist wave and seemed to have it all: prosperity, massive government spending, and a highly regulated economy. However, even the best surfers cannot ride a wave forever. All waves eventually come crashing down. Sweden's socialist policies started to kill off the wealth creation that had made its economy the fourth richest in the world. That wealth economy was needed to fund all that government spending.

Norberg points out that Sweden was 10 percent richer than the G7 countries on a per-capita basis in 1970. But 25 years later, 1995, it was more than 10 percent poorer than those same G7 countries. During that time, not a single job was created in Sweden's private sector, and, more importantly, inflation took away almost all of the value of any wage increases during that period of time in Sweden--just as we see since the first of the year, inflation eating away so the workers today in America do not have a real wage increase.

As Margaret Thatcher famously said, ``The problem with socialism is that you eventually run out of other people's money.''

One of the most iconic Swedish companies is Ikea. Its stores all around the world are painted the color of the Swedish flag. During Sweden's experiment with socialism, Ikea moved to the Netherlands and is still headquartered there today. Things in Sweden had to change. And you know what? By the 1990s, Sweden realized its mistakes going the Big Government direction that they went and they reversed course.

Yes, it did elect a center-right government in the 1990s. But even more importantly, the leftwing Swedish socialist democrats also recognized their mistake.

Norberg quotes a Social Democrat Minister of Finance:

That whole thing with democratic socialism was absolutely impossible. It just didn't work. There was no . . . way to go than market reform.

So, yes, let us learn from Sweden here in the U.S. Senate, as we are considering a $4.2 trillion reconciliation package that builds more government programs and entitlement programs, that once you start them they never end--because we don't have to go down the socialism road. That road is a dead end.

Yes, Sweden still has much higher government spending and a more extensive welfare state than we have in the United States, but in order to generate the wealth to pay for it, Sweden now has very pro-growth economic policies. Sweden doesn't pretend that they can finance all that spending by taxing the rich, like you have constantly heard from the Democrat majority in both Houses of this Congress. In fact, Sweden's tax code is much less progressive than the Federal Government's Tax Code here in the United States. Most Swedish tax revenue comes from an income tax system flatter than ours and also from a consumption tax.

Norberg points out that the top 10 percent in Sweden pay less than 27 percent of the taxes; whereas, in the United States, the top 10 percent pay 45 percent of all the income in the Federal Government, and we are still hearing that they aren't paying enough. And yet, from the other side, I never hear how much more than that 45 percent that segment of our economy should pay because maybe there are some people who believe it ought to be 100 percent.

Moreover, taxes on employers and capital are modest in Sweden to attract investment and remain competitive on our global stage. The Trump tax cuts finally made our corporate income tax competitive with Sweden's. Now they want to make the American corporate tax rate yet the highest in the world, where it was for a long period of time until 4 years ago.

That is right; the Trump tax cuts made corporate tax more like Sweden, but now the Democrats want to make it less competitive once again. That is right. I am talking about today's Democrats and the Biden proposals. By doing so, they are making the mistake that Sweden made decades ago that they are now attempting to correct and has done so by restoring pro-growth policies.

As Norberg said, ``You can have a big government, or you can make the rich pay for it all. You can't have both.''

Everybody in Sweden--rich, middle class, and even lower income--pays high taxes. That is the deal the Swedes have made. If that is the deal Democrats are offering Americans, they should be honest instead of pretending it is possible to fund Swedish-style government here in the United States by spending through soaking the rich. They should explain that hard-working Americans will have to fork over close to half of their income to the government in return for the cradle-to-grave welfare state benefits. But I think they know that would be very, very unpopular here if that is where it ends up, like it did in Sweden between 1970 and 1995.

Now, the United States is not Sweden. Americans, who declared independence and fought our Revolutionary War over taxes, are, on the whole, much less tolerant of giving over their hard-earned dollars to the government to spend.

I would urge my colleagues across the aisle to learn the lessons from Sweden, including their counterparts on the center left in Sweden. Do not kill job creation. Do not kill wealth creation. Do not let soaring inflation steal the wages of American workers.

And if you want to look to Sweden, look to the Sweden of today, not the Sweden of 1980. Better yet, if you want a model in the region, look to Sweden's dynamic neighbor across the Black Sea, Estonia. Its history has led it to be even more resistant to the failed, outdated ideology of socialism. Estonia has the most competitive tax code in the OECD and a fast-growing economy. No wonder it is pushing back on Biden's administrative proposal for a global minimum tax. Our actions now will determine what kind of life our kids and grandkids will have in the future.

We ought to learn from history so we can shape a brighter future. History is clear that economic freedom is the ticket to broad prosperity and not socialism.

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