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Sweden's Public Downsizing
Think the answer to America's problems is bigger government? Swedish Finance Minister Anders Borg has seen the result up close and says it's not pretty for the economy or investors.

Anders Borg has a message for those who look to government to take over health care, rescue the financial system and run troubled corporations: I have seen the future--and it doesn't work.

As the finance minister of Sweden, Borg is the chief financial officer of a country long known as a walking billboard for a social welfare state. In Borg's view, the 1970s and 1980s were lost decades for Sweden. Left-leaning politicians pushed government spending, excluding investment outlays, from 22% of gross domestic product in 1970 to 30% in 1980. Real growth fell from an average of 4.4% annually in the 1960s to 2.4% in the 1970s and remained low for the next two decades....

...Borg, 41, doesn't look like a finance minister or fiscal conservative. The Stockholm native wears a long ponytail and gold loop earring. His hippie appearance hides a dyed-in-the-wool free marketeer who champions the idea of "making work pay." That is a revolutionary concept in a country where the penalty for working has historically been high taxes and the reward for staying home a comfortable welfare or unemployment check....

...Since sweeping to power in 2006, Reinfeldt's center-right Alliance has been shrinking Sweden's welfare state. The government is resisting calls to rescue its struggling auto industry. To hear Borg tell it, his government isn't inspired by coldhearted Darwinism but by cold, hard evidence that the easier the state makes life for people, the easier they take it....

...Among other tax cuts: Reinfeldt has done away with a wealth tax and cut corporate and property taxes. Those are on top of the Social Democrats' elimination of inheritance taxes before Borg came to power, as well as investment of a portion of the state's pension assets in the stock market--something reminiscent of George W. Bush's failed attempt to reform Social Security.

As the U.S. takes over some corporations outright, and offers others financial lifelines, Sweden is unloading scores of industries. It is selling state-owned pharmacies and plans to put its remaining 37% stake in telecom incumbent TeliaSonera ( TLSNF.PK - news - people ) on the block when market prices improve. Last spring it unloaded Absolut Vodka. A distillery, Borg notes drily, is not a core function for either a welfare state or a night watchman's state.

Swedish health care is getting a whiff of free marketeering, too. The government's abolition of the "Stop Law" is expected to give a green light to hospital privatization, and starting next year local authorities will have to offer private primary care options....