In 1992, when the Swedish currency collapsed and the central bank had to raise its policy interest rate to 500%, I wrote an op-ed to a local newspaper where I predicted very tough economic times ahead. I went as far as to suggest that the Swedish government would resort to extreme fiscal measures that I dubbed ‘fiscal fascism.’
The op-ed was rejected, which is not surprising. It is a bit bold to connect fascism—a horrible totalitarian ideology—with a government’s budget practices, even during hard times.
Nevertheless, fiscal fascism is a real phenomenon. If anything, it is a convoluted way for a government to tear down limitations on its own power. What legal texts tell us about the limitations of government can be watered down, or even be made meaningless, by the practice of fiscal fascism. When authoritarianism is hidden in technically complex government appropriations, it is as different from its traditional forms as the suit-and-tie-wearing bureaucrat is from a 1930s Nazi SS officer.
For precisely this reason, it is essential that we understand the two forms of fiscal fascism—and how they can be fused into a formidable tool of peacetime tyranny.
One form of fiscal fascism is rapidly gaining popularity in the inner circles of the European Union. Its foremost architect is Eurocrat-in-chief Ursula von der Leyen, whose ambitions to subjugate EU member states to her ideological will were inspired by a formal proposal from the Swedish and Finnish governments. It is not surprising that this is where the proposal originated. Sweden has a history of fiscal fascism—sacrificing people’s freedom and prosperity to protect an ideology.
When an economic crisis broke out in the early 1990s, Sweden had the world’s most elaborate welfare state. Built by the social democrats from the late 1930s through the 1950s, it provided for every essential need that a citizen could have: health care, elderly care, child care, education, income security, retirement security, subsidized housing even for above-average earning families, and generous tax-paid leave from work for a host of reasons.
The Swedish government, like Ursula von der Leyen and her EU Commission, only wanted the best for its people, right?
Well, not exactly. The financial calamity of the early 1990s came as a shock to many governments, including Sweden’s. It was followed by a macroeconomic implosion, causing the Swedish economy to fall into the worst depression since the 1930s. When it slowly climbed out of the hole, the elaborate welfare state, along with all its promises to the citizenry, had suddenly become way too costly for the Swedish government.
Despite taxes that exceeded 50% of GDP—and even for a short while touched 60%—the entitlements of the welfare state far exceeded the tax revenue the smaller, depression-tarnished economy could generate.
This is where fiscal fascism enters the scene. In response, the government executed massive, brutal cuts to government spending. The dramatic budget cuts penetrated the lives of millions of Swedes who had hinged their very survival on the promises of the welfare state.
Families with children had no savings that they could use to buy health care when budget cuts closed their local health clinic. Senior citizens, who had entrusted the autumn of their lives to the government, were humiliated by unforgiving austerity. Many elderly care homes closed suddenly; those that remained open slashed meal rations, cleaning services, medical supplies, and staff time, leaving octogenarians in repulsive conditions.
Income security systems were cut to the point where low-wage-earning parents—the ones the welfare state was really supposed to assist—had to line up for charitable help. In a country with the world’s highest taxes and government officials who saw themselves as world champions in politicized compassion, people who worked one or two jobs were forced to rummage through the local Salvation Army stores to feed and clothe their children.
In short, the government wreaked havoc on almost every aspect of people’s lives.
None of the austerity was necessary. The Swedish government could easily have acknowledged that the welfare state had become unsustainable and liberated the private sector from the crushing grip of government control. But they didn’t. They ignored the economic wasteland that their atrocious austerity policies created, where 7% of the economy vanished and a whole generation was devalued into industrial poverty.
They held onto their welfare state—and the ideology upon which it was built. It did not matter that this pushed millions of Swedes to the brink of losing their livelihood; it mattered not that the welfare state could no longer deliver on its promises. The Swedish government pressed on, for one reason only: To prove that the socialist ideology behind the welfare state was better than any of its alternatives.
They sacrificed people’s freedom and prosperity in the name of an ideology. This is fascism, and this is why the Swedish economic and social disaster of the 1990s was a case of fiscal fascism.
It is not the only example. The most notorious one to date, at least in Europe, is Greece, where the economic and social destruction was far worse than in Sweden.
With this history lesson in mind, let us return to 2024 and to Brussels, where Ursula von der Leyen is now rolling out the black carpet for similarly totalitarian fiscal practices. She has not yet reached the doorstep of fiscal fascism, but unless something radical happens to change directions, that is where von der Leyen is taking the EU.
Unlike the Swedish government, the EU does not have full control over the wants and needs of the peoples of Europe—yet. Therefore, it cannot exercise the type of power that the Swedish government could. Instead, the EU elites are developing a different approach—one that is based on the abolishment of the rule of law. Instead of governing the EU based on the principle that every member state is equal before EU law—a system that gives member states a position of power vs. the EU—von der Leyen is trying to shift the power balance squarely to the EU’s advantage.
At her disposal, she has two main tools. One of them is the funds that Brussels pays to member states every year. President von der Leyen is in the process of reshuffling control over these funds. Or, in the words of our news writer Tamás Orbán:
Besides being yet another obvious power grab from ‘Queen Ursula,’ the reshuffle also paves the way for introducing a so-called “cash-for-reforms” model for all tranches of the EU funds, including cohesion funding which countries and regions until now could access without any strings attached
Furthermore, Orbán explains:
Under von der Leyen’s new vision … each EU member state would have its own specific reform roadmap given to them, linking each payment to certain milestones along the way. These reform expectations could target any area from economy to administration, even the judiciary, and even the rule of law, and are expected to be published sometime in the second half of next year.
As Orbán reported back in September, the governments of Sweden and Finland went all-out ‘teacher’s pet’ with their suggestion that EU funds must be tied to ideologically charged ‘rule-of-law’ conditions. The goal behind these conditions is clear, especially when the EU is pulling the conditional strings:
either force countries to submit to its ideological blackmail, or better yet, increase pressure on the population to vote out the government that’s ‘responsible’ for getting less money.
Once this system of attaching strings to EU funds is fully developed, the power balance between Brussels and the member states will shift dramatically. The EU Commission will have considerably more power to force its ideology upon the member states.
It is important to note here that even with the merger of funding programs and the centralization of fiscal power that von der Leyen is striving for, Brussels will not have the fiscal muscle to achieve its ideological hegemony. It can push in that direction, but that is about as far as they can get today. Even though there is a considerable amount of money flowing in both directions between the EU and the member states, the impact on even the most vulnerable EU states is still too limited to function as a tool for political blackmail.
However, the main ambition at this point is not to reach the fiscal power that the Swedish government had over its people back in the 1990s. The ambition is to shift the power balance from the member states to Brussels. Once the predictable, equal-before-the-law system for EU funds is replaced with at-will EU control over the same money, an arbitrary structure is in place that lets the fiscal stormtroopers from Brussels decide at which point a member state has bowed its neck deeply enough to get money.
There is another reform process underway in the EU that will shift power from states to Brussels in a similar way. The EU is in the process of revising its Stability and Growth Pact with one major reform in focus: the Commission shall have the authority to treat individual member states differently—at its own discretion. Instead of applying the same rules to all member states, as in the original Stability and Growth Pact, the idea is now that a central office in Brussels will have the authority to discriminate between member states.
On what criteria would that discrimination take place? Very likely the same criteria that will govern the dispensation of EU funds in the future. Member states that comply with the ideological dictates out of Brussels will be shown leniency; those that stand up for their national sovereignty will be punished accordingly.
Once the EU has replaced the rule of law with the rule of the authoritarian, Commission President von der Leyen can start working to put more government spending under EU control. Imagine what powers she would have if the EU also controlled member-state spending on health care, childcare, retirement benefits, social services, and education.
Does this seem unthinkable? Let us keep in mind how the EU powers have expanded since the first cornerstone of the union was laid in Maastricht in 1992. For one, the common currency was not supposed to become a vehicle for monetization of budget deficits, yet that is precisely what happened in the Great Recession in 2008-2010.
As a direct result, the EU could dictate taxes, government spending, and even the configuration of governments in individual member states. In 1992, it was unthinkable that such invasive powers would ever be placed in—or usurped by—the hands of the Eurocracy. Likewise, only a decade ago, it was unthinkable that the EU would try to impose ideological principles upon its member states—let alone as conditions for paying out EU funds.
With all the formal powers already under the EU’s control, and with the totalitarian ambitions that apparently will now be attached to the payout of EU funds, it would be irresponsibly naive to assume that the EU Commission is not going to try to expand its fiscal control of the individual member states.
Over time, the instruments of centralized EU powers merge with the old-style Swedish fiscal fascism. The purpose: to neutralize democracy and political diversity in the member states, and to replace it with raw, unaccountable power and a superimposed ideological hegemony.
If that is not fascism, then what is it?
