Wealthy Swedes were among the first to warn that the pandemic would bring invincible social and economic costs. When Covid-19 struck, industrialist Jacob Wallenberg staunchly opposed draconian lockdowns, fearing devastating unemployment and social unrest.
That chimed with the Swedish government’s relatively hands-off approach to social distancing. The economy and civil liberties were protected, though ultimately at the cost of a higher death toll than neighboring countries, drawing anger from voters and the royal family. The country’s image of being a “moral superpower” was broken.
Today the economy is racing back to pre-pandemic levels, but a new socioeconomic challenge is arising: inequality.
Rich Swedes are now richer, with financial markets juiced by central bank liquidity and a vaccine-led rebound. Five of the country’s top billionaires added a combined $18 billion to their total wealth over the past year, according to data compiled by Bloomberg.
A property boom is helping mint new millionaires, with prime Stockholm real-estate prices up 7.7 percent year-on-year, according to Knight Frank. (That’s better than San Francisco and London.) A rich seam of tech talent and soaring valuations for start-ups like Klarna Bank are stoking excitement among bankers.
At the same time, Sweden’s services sector has shed jobs and its immigrant population has struggled to find work. Inequality as measured by household disposable income is higher than it was in the 1980s, according to the central bank.
The stark contrast is leading to a now-familiar refrain: a possible wealth tax. Finance Minister Magdalena Andersson, keenly aware of the damage to Sweden’s brand as a strongly egalitarian market with a cradle-to-grave welfare state, is dangling the idea of a levy on millionaires.
Sweden has historically been a more equal place than most of the rich world, but there’s new anxiety after Covid-19. It’s rare to see such a widening gap between those who own property and shares and those who don’t, according to Bloomberg Intelligence analyst Johanna Jeansson.
In this case, however, a broad wealth tax just isn’t the best way to address burgeoning inequality, no matter how politically attractive the theory.
For Swedes, the disappointing reality of wealth taxes is still within living memory.