The policies of the welfare state can in the short term reduce the economic poverty of low income takers. But in the long run, the same policies tend to create a dependence on the state and reduce the capability of individuals, families and the civil society to take care of themselves. Also, left of center governments usually put the interest of labor unions before that of ordinary citizens, creating unemployment as a consequence of labor market regulations. Nowhere is this more evident than among immigrants in the Swedish welfare state.
During the 1950s and the 1960s, Sweden experienced strong economic growth. The combination of a relatively free economy and the fact that Sweden did not participate in the Second World War (due to a submissive policy towards the Nazis) allowed Swedish industry to rapidly expand. During this period, some 600,000 people came to Sweden as work force immigrants. Their absorption into the labor market was successful and the immigrants could contribute to the economic well-being of Sweden. Immigration is a complicated topic and it can be debated to which extent Sweden benefited from this immigration. It is, however, quite possible that immigration was a net plus for the Swedish economy, as immigrants paid more taxes compared to the public benefits they received. From the immigrants’ point of view, they were able to function and prosper in the society.
However, the labor unions became threatened by the competition from foreign labor and influenced the Social democratic government to change the immigration laws, forcing employers to supply foreign workers with 240 hours of lectures in Swedish. Since employers not only had to provide this education, but also pay full salaries during this period, it became uneconomical to hire workers from abroad. Under the false pretence that they were caring for the well-being of foreign workers, the unions managed to bring labor immigration to a halt.
During the following decades, Sweden experienced sizable refugee immigration. These immigrants usually came from non-European countries and had a relatively high degree of education. Still, they found it very difficult to find jobs in Sweden, as the political system was shifting evermore towards high taxes, “generous” welfare benefits and labor market regulations.
As the massive Swedish welfare state was taking form, Sweden experienced a drastic change in the labor market participation of immigrants. The percentage of the adult population active in the labor market for those with a foreign citizenship was 20 percent higher in 1950 compared to those with a Swedish citizenship. As more and more immigrants became dependent on welfare benefits, this figure gradually fell to 30 percent below that of those with a Swedish citizenship in 2000.
Since labor market participation in Swedish statistics can include involvement in government labor market programs, this figure actually underestimates the problematic development in Sweden. The average yearly income from labor for those with a foreign citizenship was 22 percent higher than those with a Swedish citizenship in 1968. In 1999 it was 45 percent lower. This drop more accurately shows the change from workforce to welfare.
The waves of immigrants that arrived to Sweden particularly during the 1980s and the 1990 systematically became dependent on various forms of government subsidies, rather than work, as a means of income. The role of families and civil society diminished and crime rates rose to high levels. As the entry into the labor market was difficult, many immigrants never got the chance of establishing themselves in the Swedish labor market. Groups that flourished in the UK or in the US due to a combination of good education and entrepreneurship, such as immigrants from Iran or Lebanon, remained dependent in the state in Sweden. In 2001 persons born outside of Sweden on average received seven times more social security than those born in Sweden.
Today, both first and second generation immigrants in Sweden are strongly dependent on various government handouts. Those growing up in immigrant dense neighborhoods come from environments where individual responsibility, respect for families and the rule of law are much less strongly rooted compared to the rest of society. Many young immigrants are disillusioned regarding the opportunities to make a living for themselves through hard work and education, while crime levels remain high.
The welfare state does help immigrants in the short run by supplying “generous” handouts. But in the long run, the effect of the policies is clear: the arguably strong social capital among many immigrant groups has diminished due to welfare dependence. These policies have been damaging both for the Swedish society and the immigrants arriving to it. It is a clear reminder that socialism might very well be the cause, rather than the cure, for poverty.
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