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[music playing]

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-My country has made an effort
to make people’s lives more equal.

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We’ve relatively free
markets in business.

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It’s fairly easy to start
a company and compete

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without being stopped by licenses,
regulations and tariffs.

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But when people are allowed
to compete freely,

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some win and make a lot of money.

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Some lose and they lag behind.

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EQUALITY OF OUTCOME

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That’s when the Swedish
government steps in.

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[music playing]

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To reduce differences of outcome,

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we tax heavily and redistribute
wealth among our citizens.

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To many, this is
the best of both worlds

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since we don’t really have
equal chances in life.

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Some people have parents who give
them an interest in learning,

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ambition and opportunities.
Some don’t.

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Some are lucky in the genetic
lottery and some aren’t.

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Some have good health and some don’t.

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To reduce the gaps that
such differences might lead to,

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our government steps in.

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Sweden chose to make equality
a priority in the 1970s,

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when we were already one of
the richest countries in the world.

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Taxes were raised and benefit systems
were made more generous.

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Public spending almost doubled
between 1960 and 1980,

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from 31% to 60% of GDP.

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Some would say that this
has made our country better.

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But it has also reduced the rewards

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for working hard and taking risks.

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[music playing]

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This is a museum recreation

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of the original workshop of
Lars Magnus Ericsson.

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He was a very important person
in Swedish history

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because more than 130 years ago

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he produced cheap and reliable
versions of the telephones

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that he had seen
in the United States.

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And because of this, Stockholm became a global center
for telecommunication

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in the late 19th century
and it laid the groundwork

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for one of Sweden’s most successful
companies: Ericsson.

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And today, it still employs
more than 80,000 people

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in 150 countries.

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This should make me proud as a Swede,

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but in fact it makes me
a bit worried,

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because almost all big
Swedish businesses

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share Ericsson’s heritage.

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And they probably all had boardrooms
that looked a bit like this.

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The average big Swedish
company is 94 years old.

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We have apparently not had
the policies that encourage people

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to start the new businesses that
might become tomorrow’s Ericsson.

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Today, Swedish entrepreneurs
are the oldest in the world.

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This is the other side of the coin.

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The young people and the immigrants
who should be our future,

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are not starting the new Ericssons.

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In fact, we have many examples
of young Swedes

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and entrepreneurial immigrants

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who move from Sweden to Britain
or the United States

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because the rewards are much greater
there, where taxes are lower.

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[music playing]

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In many suburbs like this,
outside of Stockholm,

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the unemployment rate
is higher than 50%.

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Even in the midst
of the economic boom

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almost a quarter of the working-age
population in Sweden

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did not go to work in the morning,

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but got their checks
from the government.

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It does seem to support the view
that economic incentives matter.

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With a sickness benefit
of up to 80% of your income,

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perhaps it wasn’t
surprising that Swedes

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were off sick more than
any other people,

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even though we objectively
were healthier

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than almost any other population.

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In 2004, sickness benefits absorbed
16% of the government’s budget.

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These statistics have improved since

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but interestingly, only after
a determined effort by the government

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to reduce the equality of income
by lowering taxes

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and making benefit
systems less generous.

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So, it seems that these changes
increased the incentives to work.

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Friedman emphasized
something counter-intuitive.

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There’s a positive benefit to
inequality of outcome for everybody.

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Some people become millionaires,
and some become billionaires,

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but that is because
they were the ones

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who made their customers happy.

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-That’s the economic system
that has transformed our society

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in the past century and more.

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That’s what gave the Henry Fords,
the Thomas Alva Edisons

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the incentives to produce the miracles
that have benefited us all.

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They went in with their eyes open,

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they knew what they were doing,
and win or lose, we, society,

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benefited from their willingness
to take a chance.

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-If we did not allow a Lars Magnus
Ericsson, a Thomas Edison,

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or a Bill Gates to become incredibly
rich, we would be more equal.

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But Friedman would ask:
would we be better off?

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If entrepreneurs did not think
that a possible reward

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for all the sacrifices they make,

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all their hard work,
all the risk they take,

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is a lot of wealth, then they might
do something else instead.

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And in that case, we would not have
the goods and the services

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and technologies that
make our lives better.