Bernie Sanders’s ‘Wealth Fund’ Scheme Has Already Been Tried

By John Gustavsson

Monday, June 08, 2026

 

Bernie Sanders announced last week that he will be introducing legislation aimed at creating an artificial intelligence sovereign wealth fund. Sanders proposes confiscating 50 percent of AI equity and putting it into a public fund, having the government act as an active shareholder. Sanders falsely implies that this is a mainstream practice around the world. It is quite telling that Sanders does not understand how Norway’s sovereign wealth fund, built from oil revenue and currently buying small stakes in a number of AI firms at the market price, differs from his own proposed state confiscation. In fact, only Sweden provides a real historical precedent — and that experiment ended in a disaster that forever changed the country’s political environment.

 

In 1976, the Swedish Trade Union Confederation proposed the creation of löntagarfonder, or employee funds. The issue had been debated since 1971, when the Confederation funded a study to lay out how such funds might work. This study was released to a warm reception in 1975 and officially was endorsed by the government the following year. Under the original plan, any corporation with more than about 50 employees would be required each year to issue new shares equivalent to 20 percent of its profits. Control of these shares would go to the individual unions that made up the Confederation. Gradually, these unions would gain a majority stake, effectively socializing the economy.

 

This was a radical deviation from traditional Swedish social democracy. The Social Democrats party, while proudly left-wing, had prided itself on its rejection of Bolshevism, even going so far as to round up communists into concentration camps during World War II. The party’s long streak in government was the result not just of good outcomes, but of pragmatism: The monarchy was left in place, and while tax levels rose, these taxes — beyond a mostly symbolic wealth tax — did not chiefly target the aristocracy.

 

In the late 1960s, this began change, as radical left-wing trends sweeping the world reached Sweden. Taxes began to rise sharply. The 1938 agreement between unions and the employers’ confederation that guaranteed no government interference in the labor market — the reason Sweden to this day does not have a legal minimum wage — was violated by the government for the first time in 1974, in the unions’ favor.

 

Soon after, the Confederation, flush with confidence, proposed the employee funds. The Social Democrats, a party that had once founded the Confederation and was bankrolled largely by union contributions, found themselves unable to disown the idea.

 

The timing could not have been worse. After enjoying a post-war boom even stronger than the United States’, the Swedish economy had already stalled under the weight of high oil prices and increased international competition. The mere prospect of the employee funds greatly contributed to families behind iconic Swedish firms like IKEA and Tetra Pak leaving the country.

 

In 1976, after an election campaign dominated by the employee-funds issue and Sweden’s infamous above-100 percent marginal tax rates, the Social Democrats were defeated, ending a 44-year streak in power. Despite this, the party, still in the unions’ headlock, officially endorsed and ran on establishing employee funds ahead of the next election in 1979. They were again defeated.

 

Finally, after returning to power in 1982, the employee funds became a reality, albeit in a watered-down form. The minister of finance at the time, Kjell-Olof Feldt, was caught on camera furiously writing a poem in the plenary on the very day the funds legislation was passed. In the poem, he cursed the funds that he — despite publicly endorsing them — knew would hurt Sweden’s economy and cursed the union bosses who forced him, an old-school social democrat, to implement them. Outside the Riksdag, over 75,000 people gathered to protest the funds, in what was (and continues to be) the largest right-wing demonstration in Sweden’s history.

 

Almost one-sixth of Sweden’s business dynasties had left the country by 1988. This number conceals a far greater capital flight: 67 percent of the wealth held by the 50 wealthiest Swedes was by the early 1990s held by those living abroad.

 

After the victory of the right in the 1991 election, abolishing the funds became the very first act of the new coalition government. To discourage the unions from ever trying again, the center-right government refused to let the unions keep the money already in the funds, instead using it to fund a number of research foundations and two venture capital firms.

 

The government spent its one term in office cleaning up the fallout from both from the capital flight and a collapsed real-estate bubble, which had been caused by a credit boom stemming from the Social Democrats’ decision to abolish liquidity ratios. That boom had also drastically increased money supply, but as the Social Democrats had refused adjust the krona’s fixed exchange rate, this left the currency overvalued and vulnerable to speculators.

 

This problem, too, was left to the center-right government, which reluctantly agreed to abolish the fixed exchange rate regime altogether after a massive speculative attack by none other than George Soros, with the aid of current U.S. Treasury Secretary Scott Bessent.

 

Subsequent changes to the Social Democrats’ statutes drastically reduced the unions’ influence, as the party chose to rededicate itself to pragmatism and its two core ideological principles: to take power, and to keep it. Feeling secure enough that the era of socialization was over, some — but not all — of the entrepreneurs who had left Sweden went on to return beginning in the 1990s. Today, not even the Swedish Left Party, which during the Cold War was bankrolled by the Soviet Union, seeks the reestablishment of the employee funds.

 

Yet the mark it left on Swedish politics remains. After trusting and accommodating the Social Democrats for over 40 years, Swedish businesses began to organize politically, funding not just political campaigns but also still-active think tanks to fight back against the left-wing consensus and educate the next generation of right-wing leaders (including current Prime Minister Ulf Kristersson).

 

Rest assured that even in Europe, Sanders’s unique blend of Luddite Bolshevism is a no-sell, and the mere prospect of such an idea being implemented would surely cause capital flight from the U.S., just as happened in Sweden. Those short-lived employee funds live on today only as a cautionary tale against socialization. If America goes down Sanders’s path, it will no doubt find itself writing the next chapter of that tale.