From an excellent essay by The Fjordman in Brussels Journal:
Let me first say that there are positive aspects to the welfare state model. It would be hypocritical of me to say anything else, as I have enjoyed some of its benefits by growing up in one. It is also not entirely incorrect to say that it has worked better in Scandinavia than anywhere else. Still, my view is that there are critical flaws to this model. Although they may not bring the system down right away, they will do so over time. My bet is that we are approaching the point where the Swedish welfare state will cease to function.
Even if you consider a national welfare state to be a totally closed system without migration in or out and without international competition – which isn’t possible, of course – there are internal flaws that will, over time, weaken the structure.
Judging from the experiences in Scandinavia, the welfare state worked to some extent because it was based in small and ethnically homogenous nations, with a strong cultural and religious (Protestant) work ethic which had just experienced several generations of a booming capitalist economy. These traits kept the system afloat for decades, but the work ethic and the sense of duty slowly got eroded and replaced by a sense of rights, while the high taxation and the passivity bred by the system eroded initiative and the will to take risks. Again, these flaws are inherent to the model. They make time to develop, but they will, eventually.
Whole thing here.