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.
Like many societies, we went too far in our welfare-state ambitions," say
Borg (pronounced "Bor-ee").
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.
Borg's prescription for growth is simple: cut taxes. His government has slashed the tax rate on low incomes from 30.7% to 17.1%. The combined tax take (national and local; income and other) has fallen by 2.5 percentage points in three years to 46.6% of gross domestic product.