ABSTRACT
Economic redistribution is an established principle in American politics. High taxes and generous redistributive entitlements with high marginal effects as in the Earned Income Tax Credit, together create an economic environment that discourages career development and entrepreneurship. Overall, the welfare state discourages reliance on one's own ability to provide a prosperous life for one's family. The Rehn-Meidner (RM) model developed a policy strategy that would produce a maximum of tax revenue while guaranteeing competitive businesses access to strong markets with unrelenting demand for their products. The RM model turned out to be exactly what the Swedish welfare state needed. The construction of the Swedish welfare state followed two tracks, faithfully putting the Myrdals' ideas to work. The first track, aimed at increasing, and perpetuating, economic growth, had three major components: education reform, housing construction policies and labor market policies. Education reforms can improve GDP growth if they improve the quality of the nation's workforce.
