The Swedish Treasury secretary, Anders Borg, has been in office now for seven years. He is one of the longest lasting masters of government funds in the free world. I’ve had a lot of criticism for him over the years, but I also want to acknowledge that he has done some things right, at least given the circumstances.
Mr. Borg came into office after the 2006 parliamentary election, and was very soon hurled into the Great Recession. I really don’t envy his job: Swedish law mandates that the government prioritizes a balanced budget, annually, above all other economic policy goals. This is an easy priority to comply with in good times, but once a recession strikes government revenue takes a nose dive. In the elaborate European welfare states, government spending increases precisely when revenue declines. In other words, government budgets are built to open major deficits in recessions.
Like all other Treasury secretaries in a similar situation, Mr. Borg chose to fight the deficit. Early on, his fiscal policy was clumsy and came with ill-conceived spending cuts. His budgets were poorly written, sometimes with outright embarrassing analytical flaws. Over time, though, things got better on the analytical side and Mr. Borg persisted in pushing for a Swedish version of the Earned Income Tax Credit. As I explain at length in a chapter in my book Ending the Welfare State, the EITC is an inefficient way of cutting people’s tax burdens, primarily because it creates very steep marginal tax effects for low-income families. That said, in a country that has a history of having the world’s highest taxes it is better to introduce an EITC of sorts than to do nothing.
In the last year or two Mr. Borg has taken yet another step toward a more comprehensive fiscal policy. He has cited Keynesian theory as the source of inspiration for his fiscal policy. Last year he emphasized, several times, the need for fiscal stimulus to get the Swedish economy going. He pointed to a further expansion of the Swedish EITC as an example.
Today Mr. Borg still abides by a crude, textbook version of the Keynesian-Neoclassical synthesis. He still wants to counter swings in the business cycle with active, stabilizing fiscal policy. There is nothing wrong in this, except for two things: Mr. Borg is still determined to defend the indefensible welfare state – and you would have to accept the fact that Sweden is now out of its recession and heading for some kind of macroeconomic over-heating.
Leaving the indefensibility of the welfare state aside for now, the notion that Sweden is in a growth period is of bigger interest than it might seem at first. In claiming that he sees a recovery in the economy, Mr. Borg echoes similar sentiments from Eurocrats in Brussels. But just as it is wrong to say that Greece is on a macroeconomic rebound, it is simply bizarre to say that Sweden is out of the recession.
Let us look at some data from Eurostat to see where Sweden really is today:
- The Swedish unemployment rate is currently reported by Swedish statistical agencies as 7.7 percent. According to Eurostat it has been at eight percent since 2010 with no real trend in either direction.
- Youth unemployment is also trendless. After topping out at 26.7 percent during the crisis it is now steady around 24 percent.
- GDP growth is equally unimpressive. In the third quarter of 2013 the Swedish economy grew by 0.7 percent over the same quarter in 2012. The average annual growth rate for the last four quarters is 0.8 percent.
These are not numbers that indicate any kind of over-heating in an economy. There is not even a hint of recovery here. Okun’s law says that an economy needs to grow at more than two percent per year to bring down unemployment; so far, the Swedish economy cannot even get to half that rate.
The only variable with any kind of positive trend is private consumption. In the third quarter of 2013 Swedish households increased their spending by 2.1 percent, adjusted for inflation, over the same quarter in 2012. This was the fifth quarter in a row with accelerating consumption growth, which could be taken as a sign of economic recovery. However, if we remove spending on housing from these numbers the average growth rate declines to approximately European average. The reason why we need to make this adjustment is that Swedish households are spending exceptional amounts on housing: there is practically no production of new homes, and population growth is among the highest in the industrialized world (due to large immigration from non-Western countries). As a result, Swedish households have been forced to basically mortgage the rest of their lives, with debt-to-disposable-income ratios in excess of 180 percent. By comparison, when the American housing bubble burst in 2008, the average U.S. household had a debt of 130 percent of their disposable income.
In short: what seems like a trend of recovery in Sweden’s private consumption is in reality a debt-driven housing spending spree. It cannot and will not bring the economy back to growth.
The saddest part of this is that Mr. Borg wants to quell an overheated economy that does not exist, by raising taxes. All that this will do is perpetuate the current situation with high unemployment, almost no growth – and dangerously indebted households. In fact, by raising taxes Mr. Borg could provoke an acute debt crisis: by taking more from the private sector he raises the likelihood that private disposable income will cease to grow in the next year or two. As this happens, the ratio of household debt to disposable income will rise again, but since it is now the denominator that is stagnating, the risk of bank panic is higher than if the numerator was accelerating.
In short: Mr. Borg could provoke a meltdown on the Swedish real estate market.
Again, I applaud Mr. Borg for wanting to build his fiscal policy on an analytical foundation. His problem is that he does not give himself enough time to do the analysis (and he certainly does not have access to adequate brainpower at the Treasury Department in Stockholm…). A growth period in need of any kind of fiscal-policy moderation would look more like the Swedish economy in the 1980s when unemployment was at two percent.
Yes, two percent.
In a way, the fact that Mr. Borg does not want to wait for full employment before he takes to growth-quelling policy measures is an indication of how the past couple of decades have changed people’s perception of the macroeconomic normal. This is not just the case in Sweden, but in Europe in general.
We have to watch out here in the United States so we don’t fall for the same illusion.
I recently got pulled into a debate on Facebook over health reform, and encountered yet another American liberal who still thinks Sweden is the perfect role model for the United States. I offered him to help him emigrate to Sweden, including setting up job interviews, contacting the embassy for a work visa and finding a place to live. He dropped out of the conversation somewhere between the job interview and the embassy.
Today’s article is a tribute to him and all the people around the world how believe that Sweden is the epitome of a happy society where all social and economic problems are solved. The Local reports on the state of the socialized Swedish single-payer health care system:
One in ten Swedes now has private health insurance, often through their employers, with some recipients stating it makes business sense to be seen quickly rather than languish in national health care queues. More than half a million Swedes now have private health insurance, showed a new review from industry organization Swedish Insurance (Svensk Försäkring). In eight out of ten cases, the person’s employer had offered them the private insurance deal. “It’s quicker to get a colleague back to work if you have an operation in two weeks’ time rather than having to wait for a year,” privately insured Anna Norlander told Sveriges Radio on Friday. “It’s terrible that I, as a young person, don’t feel I can trust the health care system to take care of me.”
That would be the tax-funded, government-run health care system, the performance of which I have chronicled in my book Remaking America.
Back to The Local:
The insurance plan guarantees that she can see a specialist within four working days, and get a time for surgery, if needed, within 15. In December, the queues in the Swedish health care system pushed the country down a European ranking of healthcare. “Why can Albania operate its healthcare services with practically zero waiting times, and Sweden cannot?” the report authors from the Health Consumer Powerhouse (HCP) organization in Brussels asked
Ironically, the Albanian health care system beats the Swedish system because the Albanian government has failed on the health care front even more than the Swedish government has. Here is one description of it, from a source that generally seems to be reliable but which I have not explored in depth yet:
All citizens are entitled by law to equal access to healthcare. Healthcare is funded by the state and private practice is limited to a small niche sector. The state system is supposed to be funded through insurance contributions from those employed and their employers, but poverty in Albania is rife and few can afford to pay. The net result is that many people fail to get much needed medicine and medical care to treat their ailments. The failure to collect a substantial amount of contributions means that healthcare system is strongly reliant on charitable aid for medical supplies and drugs.
If this is a correct assessment of the problems in the Albanian system, the charitable contributions are what make the system work. An increased penetration of private initiatives helps circumvent rigid, centralized bureaucracies. While, again, I am not entirely sure of the source, the explanation of how the Albanian system apparently works has many resemblances to how Polish health care worked in the early post-Communist days. Since the Albanian system originally is of the same nature as the one Poland used to have, it is reasonable to assume that europe-cities.com got this one right.
Given that Albania’s health care works as described, it is startling to see how the Swedes continue to maintain their rigid single-payer system. The Local again:
Sweden aims to make sure people can see their general practitioner within one week, which the organization said was a modest goal in and of itself. “The target for maximum wait in Sweden to see your primary care doctor (no more than seven days) is underachieved only by Portugal, where the corresponding figure is 15 days,” the report stated. Health system wait times in Sweden were deemed so lengthy that they pulled Sweden down the European ranking despite the country having technically advanced healthcare at its disposal. “The Swedish score for technically excellent healthcare services is, as ever, dragged down by the seemingly never-ending story of access/waiting time problems,” the reported noted, underlining that the national efforts to guarantee patient care had not helped to cut the delays significantly.
There is a very good reason for this. The “efforts” to reduce waiting lists have primarily been concentrated on passing bills in the national legislature that basically says “you have the right to health care, and if you don’t get health care before you die of your illness, then you really have the right to health care.” In addition to such decisive, world-changing legislative action, there has been a whisking-around of existing health care funding. One day more money is use to treat heart patients, another day it is removed from there and allocated to treat children with cancer. Etc.
This is the of one of the world’s most rigid, most socialized health care systems. Not only do cancer patients often have to wait more than 100 days for treatment, but nobody keeps track of all those who die waiting. There are indirect measures of the wait-list mortality rate, but so far I have not found any comprehensive, internationally established measurements. Regardless, when opportunity arises I will return to this issue even if it is concentrated to Sweden. A high mortality rate among patients waiting for treatment in a socialized system is a clear indicator of an ideological choice: the principle of single payer is put above the life and wellness of the individual patient.
The liberal welfare-state paradise is crumbling. My Fox New York has yet another glimpse of the destruction under way:
Swedish police detained 28 people Sunday after a group of neo-Nazis attacked an anti-Nazism demonstration in a Stockholm suburb by hurling bottles, torches and firecrackers. Two people were hospitalized and a policeman was injured in the back after being hit by a heavy object, police spokesman Sven-Erik Olsson said. Olsson said around 200 people participated in the planned, peaceful demonstration in the suburb of Karrtorp when they were attacked by a smaller group of about 40.
The “smaller group” consisted entirely of members of an openly Nazi group called Swedish Resistance Movement. It is a dangerous, militant organization that does not shy away from violence. On the contrary, they have demonstrated on many occasions that they are not only ready to use violence but also train for violence-based tactics. On previous occasions when they have resorted to violence, it has been at their own public rallies, in response to provocations from radical leftists, and their response has always been well coordinated and intimidating.
However, this is the first time they have actively sought out their opponents’ public event and launched an attack. My Fox NY again:
Those detained are suspected of rioting and various assault charges. The demonstration was organized by a local citizen group as a protest against increased neo-Nazi campaigning in the area. Video footage published by state broadcaster SVT showed families with baby carriages escaping the scene as firecrackers exploded in the middle of the crowd and people were heard screaming. Later, the crowd moved toward the attackers chanting anti-Nazism slogans and forcing them to retreat. A neo-Nazi group called the Swedish Resistance Movement claimed responsibility for the attack on its website.
Europe is, as we know, stuck in an economic crisis that is increasingly looking like a permanent crisis – a new normal. On top of that, there are more and more signs of deeper social disintegration, including rising tensions between Europeans and immigrants. Contrary to common sense, many political leaders in Europe are actively promoting high levels of immigration in the midst of a deep economic crisis. While there is a growing resistance to these policies in many countries, there is one place where immigration is basically spinning out of control, namely Sweden.
Over the past decade immigration levels in Sweden have hovered around 50-60,000 per year, and that counts only the inflow of people of workforce age. For most of the past ten years immigration has exceeded the number of new jobs created in the economy, leaving us with one important clue as to why Sweden currently has a youth unemployment rate of 26 percent (as reported by Eurostat). This is ten percentage points higher than, e.g., the United States.
As a libertarian I am strongly in favor of cross-border migration – it is an essential part of individual and economic freedom. However, when governments restrict, regulate and interfere with the economy to the extent they do in Europe, it becomes socially and economically problematic to allow people to move as they please. The most acute problem is the massive system of entitlements provided by welfare states in Europe: when there are no jobs to come look for (as evidenced by the high unemployment rates and paltry job-creation numbers from across the EU) immigrants come for entitlements.
From an economics viewpoint this is entirely rational: if you can live better on work-free income in country X than on income from work in country Y, then why would you choose to remain in country Y? However, this reasoning excludes the broader consequences of immigration based on entitlements. Since people do not have to work to live, their incentives to integrate and assimilate with the prevailing culture are weak. This paves the way for parallel-culture societies where the norm systems of minorities become just as established as the norm systems of the majority culture. It is inevitable that this leads to conflicts and clashes.
Such conflicts would be manageable if immigration levels were reasonable. But it is virtually self evident that immigration levels such as Sweden is currently experiencing are exacerbating conflicts; imagine 50-60,000 workforce-aged immigrants coming to New Jersey each year, bringing just as many family members; imagine there were no jobs for them and that most of them ended up living on welfare. Imagine this going on year in and year out for a decade.
It would inevitably create socially explosive tensions between various groups of Jerseyites.
However, there is one more ingredient to the Swedish immigration problem. According to several leaks from the government agency responsible for immigration, up to 90 percent of immigrants have no papers as they get to the Swedish border.
Yes, up to 90 percent. Despite this, the vast majority are given residence status. Currently every Syrian – or, rather, every person who claims to be from Syria – who can make it to Sweden is given permanent residence status!
This unimaginably naive, not to say reckless, immigration policy is a recipe for enormous social tensions, conflicts and confrontations. The lack of background checks opens the Swedish borders to criminals, terrorists and people who are no longer wanted in their own countries. Needless to say, this builds up to a destructive situation that threatens the very survival of Sweden as a country. A recent report in Dispatch International offers a great insight into this enormous problem:
In 1975 the Swedish parliament unanimously decided to turn homogenous Sweden into a multicultural society. Thirty-eight years on the dramatic consequences have become apparent. Whereas the population has grown by 16.2 percent, violent crime has gone up by 320 percent.
A note of caution. The spike in crime began before the current levels of immigration. The deep, destructive economic crisis in the ’90s brought with it a surge in various types of crime. As immigration accelerated after the turn of the Millennium, there was yet another rise in crime rates.
In other words, not all of Sweden’s crime problem has to do with immigration, but the relation that DI points to is definitely present in the statistics. And the situation is getting worse as anonymous immigration continues from, e.g., war-torn Syria – yet Swedish authorities are doing their best to ignore or even deny the problem:
Every week we read in the mainstream media about murders, robberies, rapes and other serious crimes. Nevertheless criminologists insist that there is no increase in crime. In fact, they maintain that it is subsiding. But from the homepage of the Council for Crime Prevention (Brottsförebyggande Rådet, Brå) you can generate your own statistics on the number of reported crimes. Interestingly, the statistics start in 1975. If one looks at the whole period from 1975 to 2012, a completely different picture emerges than the one we are usually presented with. It turns out that the criminologists are lying and that the number of violent crimes has not only increased but completely exploded. But Brå doesn’t feel like discussing these figures.
You got this right. The government agency in charge of researching crime, the Council for Crime Prevention, is actively participating in a campaign to blur, sometimes outright distort, crime statistics. I have myself interacted with officials of the council, with the exact same experience as DI reports:
Statistician Anton Fernström tells Dispatch International that it is not enough to look at the statistics; they must be ”interpreted”. One must compare the number of reported crimes to what people answer when asked by the National Survey of [Safety] (Nationella Trygghetsundersökningen, NTU) what crimes they have been exposed to and in addition consider that people’s propensity for reporting crime has gone up.
The last point is actually a staple of the council’s “research”. Every time they get a chance to, they claim that the reason why crime rates are as high as they are in Sweden is that Swedes, for some reason, have started reporting crimes in droves over the past 6-8 years. Yet there is not a shred of evidence – not a single research paper or opinion poll or any other piece of information – that crime reporting has gone up in Sweden. On the contrary, with major cuts in police presence and interaction with the public, it is entirely plausible that crime reporting has fallen.
Anyone prone to rely on common sense would ask at this point why on God’s green Earth a government agency in a supposedly democratic country would resort to such recklessly deceptive behavior. The frustrating problem is that there is no other explanation than a long tradition of government culture, uniquely Swedish in many ways, that has been fostered by three generations of politicians and bureaucrats. In a way, you could think of it as Sweden trying to live up to an un-attainable self image.
But the fact remains that however one ”interprets” the figures, the number of reported crimes has increased dramatically. … If we assume that the statistic actually reflects a real increase, we must ask why. Have Swedes in general become extremely more violent and criminal or have immigrants brought with them a violent and criminal culture? The latest survey of crime among Swedes and immigrants (from 2005) shows a general overrepresentation of people born outside the country by 2.5. The number is even higher when one looks at serious crime: Concerning deadly violence, the overrepresentation was 4.2 and the same was true for attempted murder or manslaughter. For rape or attempted rape, it was as high as 5.0.
As troubling as these numbers are, there is no denying the grave message they convey. A country simply cannot permit more immigration than it can assimilate – and you certainly do not allow immigration levels that add 1-1.5 percent to your workforce every year when there are no jobs. It does not matter if you are a dedicated libertarian, as I am, and thus for the free mobility of people – your principles cannot change the fact that immigration that piles onto unemployment is socially and economically destructive.
The lack of jobs in Sweden, combined with unchecked identities allowing droves of criminals into the country, could explain the troubling trend of a rising share of immigrants:
These figures don’t tell us much about immigrants’ share of criminals. But numbers from Statistics Denmark for 2011 indicate that two-thirds of those arraigned in court were of foreign extraction – and that the percentage had been going up for the previous five years. For juvenile delinquents, 15-17 years, it was even worse. In this category three-quarters had a foreign background with a clear overrepresentation by second-generation immigrants from non-Western countries.
DI also mentions Sweden’s horrifying rape statistics, pointing to the internationally well established fact that Sweden is one of the world’s worst countries when it comes to sexual violence against women. The article concludes:
Based on Brå’s own statistics, one cannot avoid the conclusion that Sweden has become much more violent and dangerous than before parliament decided to transform us into a multicultural society.
Again, this trend started during the economic crisis of the ’90s, before the mass immigration that Dispatch International refers to. However, the large waves of immigrants correlate well with the second surge in crime in the 2000s; one statistic often mentioned at the time was that the number of violent crime victims at the ERs in big cities increased by 75-90 percent from 2000 to 2010. The geographic proliferation of no-go areas is also very disturbing – when I grew up in Sweden back in the ’70s the phenomenon was unknown. It slowly emerged during the ’90s: from 1991 to 1993 I lived in the housing project of Rinkeby in north-west Stockholm; only five years later the place was de facto a no-go zone for ethnic Swedes, especially those who did not live there. Today I would risk my life if I went there.
Today, Sweden surpasses the United States in almost every violent crime category. The only reason why there seems to be a higher murder rate in the United States is prosecutorial: Swedish law enforcement authorities are much more prone to prosecute at a lower level – manslaughter or lower – or even drop charges, than their U.S. peers.
I would warn anyone considering a visit to Sweden to be cautious and careful where you go, and when, in the same way as people were in pre-Giuliani New York or in London, Sao Paulo or any other big city in the world that is or has been plagued by high crime rates. The difference is that in Sweden, this is no longer a trend isolated to the big cities. It is relentlessly spreading to all corners of the country.
Every time I bring up the decline of Sweden with my libertarian American friends, they smile and say that there are no problems in Sweden because they just visited the posh, upscale shopping malls in downtown Stockholm and everything was so nice and quiet and clean. And besides, they say, their American cell phone worked on the commuter train to the airport, so Sweden is very modern and advanced and sophisticated.
Little do they know – because they don’t want to know – that 4-5 subway stops away from the fancy-pants hotels, art galleries and restaurants in downtown Stockholm, cars are being burned, rescue workers are being stoned by rioting thugs, schools are set on fire, police stations firebombed and mass transit suspends service because bus drivers fear for their lives driving through those neighborhoods.
I don’t think anyone would judge New York, let alone America, by taking a walk from Battery Park to Fulton Street on Manhattan, yet that is basically how superficially America’s libertarian intellectual elite “analyzes” Sweden.
At the end of the day it really does not matter how America’s libertarian pundits view Sweden. What really matters is how politically influential people decide to use the terrifying experience of Sweden’s slow-progressing collapse to save their own countries from going down the same path. But it would help, of course, if all friends of freedom would open their eyes to reality as it unfolds around them. We need all hands on deck to restore individual and economic freedom.
I recently reported on the riots that for more than a week engulfed Stockholm’s rundown, over-crowded, crime-ridden housing projects. I have also reported on the escalating, politically motivated violence that is now becoming a credible threat to the very democratic form of government in Sweden. I have also explained how the large, costly Swedish welfare state attracts tens of thousands of welfare immigrants every year, immigrants who flock to the housing projects and raise their children in virtual isolation from the rest of Swedish society.
Not to mention that the Swedish state is de facto capitulating before an onslaught of serious organized crime.
Today I will let two other Swedish voices present their views of the terrifying decline of our native country. Unlike me, they still live there and are trying to do what they can to delay the inevitable. First, here is a report from the blogger Cavatus, whom I have known for a few years now as an astute yet often restrained observer of Swedish politics and public policy – when Cavatus speaks up, it is for very compelling reasons:
Sweden has disgraced itself internationally because of the riots last week. But don’t believe that it all has ceased by now. Every night there are cars on fire and other subversive mischief in the immigration suburbs. In the wake of the first riots, in all 70 [housing projects] have been struck so far by the consequences of Sweden’s downright failured immigration policy.
Please note what Cavatus is reporting. The week of eye-catching riots did not end. The destruction, which included but was not limited to attacks on shopping centers, police stations, child care institutions, schools and mass transit (including an arson attack on a commuter train station), did not end when media turned their cameras elsewhere. They scaled down but continued and have in fact spread to more cities than Stockholm, Gothenburg, Malmo, Uppsala, Linkoping and Orebro, those hit during the first week.
High-intensity social unrest has been replaced by a low-intensity outpour of anti-social behavior.
Where does this anti-social behavior come from? As I explained in my article on welfare immigration, it is never a good idea for a society to import large numbers of people from culturally, socially and economically very distant countries, put them on welfare and expect them to assimilate into your cultural and social traditions. When unemployment is high – as it has been in Sweden for a good two decades now – and welfare benefits are endless; when the immigrants rarely have more than a few years of elementary education (many who come to Sweden only report two years of Koran school) the stage is set for social disintegration rather than integration.
Despite this alarming problem unfolding under their very noses, the Swedish political establishment fail to see what is going on. Cavatus gives a very telling example:
A politician, member of one of the ruling parties (Olle Engström in Borås), had a letter to the editor published yesterday in the newspaper Borås Tidning, in which he rejected the uncontrolled immigration policy and dreaded that Sweden shortly would fall into a religious civil war if nothing is done, like Lebanon and such countries.
Here is what this long-time politically active, elected official said (my translation – click here for google translation):
In Sweden, we have since the 1950s and ’60s opened our country to hundreds of thousands of people from other countries who have fled from oppression, unemployment, war and starvation, who have been given a new homestead here.
Yes, this guy does put on equal footing escaping from war and “escaping” from unemployment. Typical Swede… But let’s continue to listen to him – it does get interesting:
Over the past week we have read in the papers about the ramifications of overly optimistic and unrestricted immigreation to Sweden. Society [referring to government] is losing control over the situation. Today, vandals and rioters are subjecting our entire social structure to enormous pressure which, over time, can have very serious consequences. As a citizen and politician I mourn today over what is happening. … Those who instigated and participated in these riots don’t understand what profound damage their so called pastime has done to the efforts to build bridges of understanding and empathy between people from different cultural backgrounds. … Where is Sweden heading? I see before me a Sweden that in 20-30 years has totally lost control over the situation, with frightening consequences.
Dear Mr. Engstrom – that is going to happen in much less time than that, perhaps as little as 2-3 years.
Terrorism, violence and crime will increase in Sweden. and maybe we might also, down the road, see a full-scale civil war between religious groups, similar to what has been and is happening in Lebanon, Iraq, Nigeria and other places.
A local elected official, long-time member of the ruling Moderate party, fear for the future of his country. The day after his letter to the editor was published, the former mayor of his hometown, Boras, wrote a rebuttal claiming that Mr. Engstrom was completely wrong on all accounts. Anyone familiar with Swedish political culture can immediately identify this rebuttal as an official declaration from the Moderate party that Mr. Engstrom is no longer a member. He was expelled for speaking up against mass immigration and for voicing his concern regarding the social and economic future of his country.
Today, he was excluded from his party, Moderaterna (“the Moderates”). A fellow party member had today a letter to the editor published in the same newspaper, where he maintained that “it is not the immigration that gives frightening consquences for the society; it is the blind criticism without nuances of it”. I mention this just to show you how completely impossible it is to talk about the quantity of immigrants that Sweden can embrace and the results of the quantities received so far. So despite nationwide riots, we are still not allowed or able to talk about it, unless we want to be labelled racists, foremost by the media and the journalists. This is, in fact, an indication of Sweden’s severe predicament.
Cavatus is absolutely right. In Sweden today it is akin to political suicide to speak up about the riots and their relation to the very large immigration that has taken place, especially during the past decade. But it is in fact worse than that: as my article on political violence explained, critics of immigration are targeted by violent political mobs, their homes and other property being attacked and they themselves being victims of harassment and even assault.
This video gives a glimpse of what is happening (the man interviewed is chairman of the National Democrats, a party with a nationalist agenda that I do not support – nevertheless, the commentary of the interview is worth taking seriously):
For a more in-depth commentary and an interview with brave journalist Ingrid Carlqvist, take a look at this video.
As the Lebanization of Sweden progresses, we will hear more from there. Stay tuned.
For those of you who speak Swedish, please go to page 7 on this blog for my political analysis of the riots.
For everyone else, here is a good report from Russia Today:
A chilling wave of political violence is sweeping across Sweden. None of this makes it in to European or American mainstream media. This is a shame because the situation in Sweden is destabilizing rapidly. Here are some examples of what is going on right now.
On March 29 Dispatch International reported (with the website’s own rugged translation from Swedish):
It is 1 PM on Saturday 23 March, still a full hour yet until the Swedish Defence League (SDL) is to hold its support rally for a democratic and secular society with free expression. The leftist political partyVänsterpartiet stands perched at the statue of Swedish king Karl X, encouraging those assembled to give the demonstrators from nearby Möllevångstorget a warm welcome. They have barely unfolded their banner with the slogan ”No Breivik soldiers in our streets” before all hell breaks loose in Stortorget. As if on cue, one firecracker after another goes off, and the city squared is drowned in red/green Bengal flames, while the counter-demonstrators attack the riot fence, and with a deafening sound carry it 20-30 meters backwards. It is like being in a war zone, where one becomes worried about surviving it. Although hundreds of police officers are in the streets in order to ensure safety during the SDL rally, they seem taken by surprise. They have permitted the counter-demonstrators to walk up to the outer riot fence, and seem not to have imagined that the counter-demonstrators would turn violent a full hour before the object of their hate, the SDL, was to appear.
The SDL members allegedly had to be transported out of the area under heavy police protection. It was only a matter of good luck that the rioters did not use anything more powerful than large, noisy and smoke-generating fireworks. That said, such devices can be dangerous as they are, and it is impossible to understand that the Swedish police tolerate their use in public, especially in situations like this one.
Barely a month later, Dispatch International reporter Ingrid Carlqvist – one of Sweden’s most experienced investigative journalists and co-founder of Dispatch International – had a terrifying experience while trying to cover a political event in the southern university city of Lund:
For more than 30 years, I have been a tough reporter who never hesitated to go on an assignment, no matter what was. I take journalism very seriously and know that when the media no longer write about what goes on in society, no longer scrutinize those in power, then democracy is on the skids. This past Monday I encountered the end of my courage. Right in front of several police officers and ordinary citizens, I was hounded away from the gravel area in front of AF-Borgen in the Swedish city of Lund. Furious, masked and hateful “anti-racists” threatened me, pushed me around and forced me to leave the place. As photographer Roger Sahlström saw what was happening and caught one of the craziest attackers by his neck, two police officers finally reacted and came to our corner of the gravel area. But as soon as Roger let go of the demonstrator, they left again – leaving us to our fate. With a whole gang of spitting and extremely hateful gangsters in front of us, we were forced to give up. For the first time in my life, I left an assignment before it was complete. … The hatred, in particular the white hot unreasonable hatred, is what scares me. What kind of people are these? Where do they come from? What has happened to these young people who claim to be good ”anti-racists”, but behave as at any time they would throw themselves at me and tear me to shreds? Without hesitating. In spite of the presence of the police 20-30 meters away. But they do not see me. Or do they not care?
On May 1 the nationalist Party of the Swedes, with roots in Nazi movements, marched through the city of Jönköping. They were confronted by very aggressive activists, who made several serious attempts at penetrating police lines. Just like at the event in Malmö in March the activists threw fireworks and other objects at the participants in the march. The activists also set to cars on fire, one of which belonged to a high-ranking official of the Party of the Swedes. The following video gives a glimpse of what went on (go here for the original news report in Swedish). At about 0:35-0:40 two minor fireworks explosions can be heard, and at 0:52 a larger piece of fireworks can be seen burning on a side street. None of the fireworks reached the march, thanks only to aggressive barricading by riot police. However, in other news reports the police admit that their abilities to keep the activists from attaching the marchers were stretched to the limit:
Scenes like the ones in this video are now so common in Sweden that they don’t make national headlines unless a number of people are hospitalized as a result of the violence.
The violent events in the streets only scratch the surface of the political violence currently plaguing Swedish politics. Recently a former member of parliament for the Swedish Democrats, Mr. Erik Almqvist, decided to leave Sweden for fear of his own safety. Reports the Swedish website Avpixlat:
Former member of parliament for the Swedish Democrats, Erik Almqvist, announces that he is moving to Hungary. A main reason is that Almqvist is the subject of serious threats from hateful, violent leftist movements but is no longer eligible for personal protection from the parliamentary security service that he had while he was a member of parliament.
Mr. Almqvist’s party, the Swedish Democrats, is a patriotic party of the same brand as UKIP in Britain or FPÖ in Austria. It has nothing in common with the Nazi-rooted Party of the Swedes, except a skepticism toward immigration. However, while the Party of the Swedes are calling for ethnic cleansing in Sweden, the Swedish Democrats want to preserve Swedish culture and have a sensible level of immigration, tuned to what the country’s cultural, social and economic stability can absorb.
Ever since the Swedish Democrats made national headlines in 2006 by capturing many seats on city and county councils, their leading officials have been targeted by serious, politically driven and often very violent attacks. Officials of the Swedish Democrats have been assaulted in the public and at events organized by the party. National chairman Jimmie Åkesson admits to sleeping with a baseball bat next to his bed – despite the fact that he and many other party officials have bodyguards provided for them by the parliamentary security detail.
Many Swedish Democrat officials have also been attacked in their homes, including window smashing and arson attacks. One example is Mr. Ulf Prytz, precinct captain of the Swedish Democrats in the city of Ängelholm. On March 1 he was attacked in his own home. He was badly beaten, but recovers from the incident without permanent physical harm. However, in the weeks both before and after the assault Mr. Prytz has been the subject of various forms of threats and harassment. On May 1, two months after the assault in his home, Mr. Prytz once again finds himself on the receiving end of vicious violence, clearly related to his political activities:
A cabin belonging to Swedish Democrat official Ulf Prytz burned to the ground on Wednesday – one in a series of incidents directed against the Ängelholm politician this year. ‘It is terrifying and I am considering quitting politics altogether’ Ulf Prytz said the day after the fire. … There have been a lot of incidents, worse than what happened [on May 1]. Twelve difference incidents.
Due to the ongoing police investigation Mr. Prytz does not want to elaborate. We will, however, return to his case and other examples of political violence in Sweden. The situation is spinning out of control and it is no longer entirely certain that the country will be able to hold an entirely impartial national election in September next year. For the first time since parliamentary democracy came to Sweden there is a distinct possibility that political violence will compromise the integrity of the election.
The other day I reported on the crumbling retirement system in Sweden, where the national legislature may soon pass a reform to force everyone to work longer. The superficial motivation is that every other newborn is expected to reach the respectable age of 100, a statement that is quite a bit of demographic trickery in itself. The rise in life span in the Western world is actually flattening, which means that the most reasonable prediction is that there will be very small changes over the next century.
On top of that, the retirement system, which is based in part on a pay-as-you-go model and partly a tightly regulated private-accounts system, is performing poorly for two reasons: the high taxes in Sweden is stifling private-sector economic activity, which erodes revenues for the pay-go part; and decades of fiscal-policy mistakes and labor market regulations have effectively halted the rejuvenation of the Swedish business landscape. The corporate performance that lays the groundwork for the stock market is decreasingly profitable, as big, bureaucratic and rather low-productive manufacturing corporations dominate the Swedish stock market.
As a result, retired Swedes are seeing their standard of living decline over time, where their parents saw a decent, steady stream of retirement income.
Today we can report on another downtrodden side of the Swedish welfare state. From the Swedish daily newspaper Svenska Dagbladet (my translation; click link for google translation):
In its assessment of what medical drugs to subsidize, the Swedish government takes into account that retired citizens contribute less to the economy. The National Board of Dental and Medical Drug Subsidies claims that they are only following the law, but the National Organization of Retired People intends to look at a lawsuit over age discrimination.
Readers familiar with QALY can already now see what is coming.
Mr. Calle Waller, 75, from [the town of] Knivsta, says… ‘My first reaction was that I could not wrap my head around it. I paused and thought about it and got a distinct feeling that there was something wrong, they just can’t say this’. … Since nine years he is suffering from prostate cancer, and since the summer of 2012 in his capacity as the vice president of the Organization of Prostate Cancer Patients he has been trying to find out how [The National Board of Dental and Medical Drug Subsidies] reached its decision not to subsidize the drug Zytiga, which gives men beyond treatment more time.
In late 2012 The National Board of Dental and Medical Drug Subsidies notified the socialized Swedish health care system that it was going to subsidize a cheaper alternative, which has significantly more side effects and requires intravenous provision. A main reason for this decision is of course that the Swedish health care system is badly starved for resources and is under serious, constant cost-cutting pressure.
However, there is another important reason:
As part of the reasons for its decisions … the National Board states that the drug does not produce enough of an elevation in the quality of life and extended life span for the patients, compared to how much each Zytiga treatment costs taxpayers. But what really caught Mr. Waller’s attention was a statement hidden away toward the end of the report, explaining that a subsidy would be more expensive because the average patient, in this case 69 years old, cannot start working afterward. … ‘Indirect costs are added for this patient age group since production less consumption results in a deficit. As a result, extension of the life span for this age group results in higher costs to society.’
Translated into plain English, this means that the patients will be paying so little in taxes over the remaining years of their lives that they will never be able to repay government for the cost of their treatment.
What the Swedish National Board of Dental and Medical Drug Subsidies is doing may be entirely immoral, but it is definitely nothing new. The methodology they are applying is called Quality Adjusted Life Years, or QALY. It is an instrument that in the hands of health care bureaucrats becomes a sorting mechanism where the strong win and the weak lose. (For an in-depth explanation of QALY, click here.) Its practice, which every week kills scores of treatable patients in countries with socialized health care, fits with chilling logic into the principle of fiscal eugenics that is increasingly accepted and widely practiced in Europe’s welfare states.
Back to the Svenska Dagbladet story, where we now get to hear from the government:
Mr. Niklas Hedberg, director of the division of new medical drugs at the National Board of Dental and Medical Drug Subsidies, contends that this is a case of unfortunate wording, but that the Board is complying with existing law that requires them to take into consideration every consequence of a subsidy. ‘This is a very complex issue … our nation’s resources are limited and we are charged with making subsidy priorities. Existing law mandates that we shall consider all principles, and put medical drugs in the context of society as a whole.
A nice way of saying exactly what Mr. Waller above quoted the Board as saying, but in words that make everyone feel a lot better about discarding older patients on the grounds of their inability to pay enough taxes.
The newspaper reported on the consequences of subsidy cuts already in September (again my translation; click link for google translation):
At the Karolinska university hospital [in Stockholm] prostate cancer patients are forced to pay out of pocket for a medical drug costing SEK 30,000 per month [$4,500]. If not, they will get an alternative [drug] with more side effects, that must be distributed intravenously. … Patients get on average an extra four months when all other treatment methods have been exhausted. ‘The improvement does not last forever, but at least the patients get an extension of life without any noticeable side effects’ says Ms. Anna Laurell, senior physician at the Akademiska hospital in Uppsala.
It is this extension of life that bothers the government Board. If the patients would be able to back to work and pay a lot of taxes, it would be worth treating them. But in a welfare state in general, and a socialized health care system in particular, a taxpayer’s life is worth more than anyone else’s. Those who are unable to feed government by paying taxes will be discarded.
Fiscal eugenics, for short.
There is a mysterious obsession with Sweden among American libertarians. They superficially glance at some isolated piece of legislation and suggest America follow the Swedish example. Having grown up in Sweden, and having escaped its oppressive tax system, its depressing social collectivism and cultural mediocrity, I am baffled by these Swedeophiles. The country I left for good 14 years ago had deteriorated pretty badly already then, and things have not gotten better.
If anything, Sweden is a prime example of what happens when you go out of your way to try and save a welfare state that is sucking the life out of its host organism, the private sector. From deteriorating schools to a health care system in real crisis, Sweden serves only one meaningful role: as a scarecrow in the cornfields of big government, deterring the sane, common-sensical observer from ever setting his foot there.
In previous articles I have explained how Sweden’s “successful” welfare state, recently praised by The Economist, is little more than an attempt at selling welfare-state snake oil; I explained that young Swedes are not only unemployed by the masses, leaving the country in desperate pursuit of a life, but those who stay are stuck living with their parents at alarming rates; I have pointed to the explosive problem with mass immigration of welfare-dependent illiterates from the poorest corners of the Third World; how the Swedish police is literally capitulating before the onslaught of organized crime; I have asked why such friends of liberty as Freedom Works are so appreciative of the grotesquely big Swedish welfare state, and I dispelled the myth that the Swedish treasury secretary, Anders Borg, is some kind of low-tax crusader.
In fact, On February 13 Mr. Borg explained in a tax policy debate in the Swedish parliament that he opposed flat income taxes and favors a steeply marginal, multi-bracket income tax code because, he said, it is an important income redistribution instrument.
In other words, Sweden is still the full-fledged, “democratic” socialist welfare state it has been since the 1970s. The fact that the treasury secretary has a pony tail and knows folksy-talk does not make a tangible difference.
What does make a difference, but for the worse, is that yet another hallmark of the Swedish welfare state is now crumbling. The retirement system, overhauled 20 years ago in a reform praised as “free market based”, is under such severe pressure that the parliament may have to raise the retirement age to 75. Euractiv reports:
Swedes should be prepared to work until they are 75 and to change careers in the middle of their work life if they are to keep the welfare standards they expect, Swedish Prime Minister Fredrik Reinfeldt said. The retirement age is being debated in the Swedish parliament ahead of an expected pension reform package in April. In its proposal, the government wants to give people the right to remain at work until 69 instead of the current 67 cut-off age.
Let’s just make a brief stop here and notice something. The government in Sweden bans you from working when you turn 67. It is illegal for you to seek employment above that age. People get around that by starting small consulting businesses, but the law is still a good example of how the big, Swedish nanny state operates: anything that is not explicitly permitted is forbidden by default.
Back to Euractiv:
Meanwhile, the right to early retirement would be delayed by two years, to 63. However, Reinfeldt said in several interviews over the weekend that Sweden must consider taking the step even further by raising the retirement age to 75. “This is a time of changes in the global world economy. The nations we meet in open competitions don’t have our welfare ambitions. They don’t put taxes on production to finance the pension system or welfare solutions. Therefore the question remains, is our equation correct?”
The man is delusional. This has nothing to do with saving the export industry. The big corporations that have characterized the Swedish private sector since at least the 1950s are either dead (SAAB Automobile), gone abroad (ABB; Pharmacia), gobbled up by foreign corporations (Ericsson; Volvo Cars; Scania) or in the process of leaving Sweden (Volvo Heavy Trucks). This is part of a natural industrial cycle, where big, mature corporations lose out to new, more dynamic business models. Just look at how the Japanese car manufacturers capitalized on the stale, bureaucratic inefficiency that characterized the Big Three in Detroit back in the ’80s.
Mr. Reinfeldt’s problem is instead that his welfare state has suppressed private-sector activity outside of the big, old manufacturers. Up until a few years ago the corporate landscape in Sweden looked almost exactly the same as it did half a century earlier. Since about 2007, the big old dinosaurs have been in an increasingly ailing condition, unable to function as the “engines” of the private sector. But since Swedish tax policies, labor market laws and other regulations have been tailored to the needs of those big corporations, they have made it very difficult for small, new, dynamic businesses to grow.
Therefore, what Mr. Reinfeldt is really seeing is that his country’s private sector can no longer feed the welfare state because it is dominated by over-subsidized, under-challenged industrial behemoths with bureaucratic arthritis. And he is utterly incapable of dealing with the situation, because he wants to protect the welfare state at all cost.
Including this ridiculous retirement reform, of which Euractiv has more to say:
Reinfeldt, who leads a centre-right government, also said half of today’s children in Sweden can expect to become 100 years old and there has to be a change in the way the Swedes view their work life. “Therefore, Sweden must as a society ask ourselves the question: are we ready to meet these changes? The changes are basically positive. But if we want good pensions and welfare then we need to start discussing what our work lives should look like,” the prime minister said in a radio interview.
To begin with, I would seriously question the suggestion that half of Sweden’s children will live to be 100. Given how their health care system has deteriorated over the past 15 years, and such socially destructive factors as widespread depression and serious levels of alcohol consumption among the young, I would question if the average life expectancy will in fact stay where it is today. It is more likely that it will actually decline over the next couple of decades.
More importantly, though, is the fact that Mr. Reinfeldt – an alleged conservative – adamantly believes that it is the business of government to dictate when people are allowed to retire, and when they are allowed to work. All this shows is that Mr. Reinfeldt is just another statist European social democrat.
A far better approach would be to say that “we see such dramatic changes in the ability of the economy to support today’s retirement system that we will allow everyone to keep their own money and invest for retirement as they see fit”.
Some would rightly point out that Sweden already has a system of private retirement accounts within the government-run model. This is correct, but the ability of that system to fund future retirement is entirely dependent on an ailing economy. The pay-as-you-go part suffers from the same problems as our American Social Security system, while the private account part can only give good returns on investments if the Swedish economy is doing well.
Which it is not. More on that later. For now, back to Euractiv:
To be able to work until the age of 75, the Swedish prime minister says he envisions at least one career change during a person’s work life as the job one may have as a young person could become too tough or stressful later on. Reinfeldt acknowledges that this will require a huge change of mindset among the Swedish population. “It’s a very challenging idea. Our whole life is affected by the fact that we speak to a career counselor, make a decision, and then think we will work with the same things for the rest of our lives,” the prime minister stated.
The real issue here is that Sweden has a serious under-employment problem already as things are today. Youth unemployment is among the highest in Europe, and laid-off 40-somethings have enormous problems landing a new job. The work force is being expanded by up to 100,000 immigrants each year, yet the labor market can only add a net of 60-70,000 new jobs annually (and that is in a strong growth year).
On top of that, Sweden has very rigid labor market laws compared to other “free” economies. Unions are exceptionally strong, with all the negative consequences that follow. Firing workers is a significant undertaking, which makes employers balk at hiring people for full-time positions. Labor-based taxes put a steep price on new jobs, as do the responsibilities that employers have for income replacement when workers are home sick.
The bottom line is that the Swedish economy does not suffer from a shortage of labor. It suffers from a shortage of jobs. To force people to stay in the work force up to the age of 75 under such circumstances is – forgive my repetitive use of the term – delusional. I can only see one logical motive: to try to cut the cost of the retirement system while keeping it in place.
In other words: the purpose of the reform is to make people pay taxes in to the retirement system for several more years and take benefits out of it over a shorter period of time. But there will be no attempt to give people a chance to opt out entirely.
A classic example of how a government applies austerity measures to save a welfare state it does not want to let go of, come Scylla or Charybdis.
And they will come. Sweden is on a downbound path that sooner or later will hurl the country into social chaos. The fact that this has not happened yet is entirely due to Swedes still believing that their country is a stable, functional welfare state.
They are like the famous bumble bee, which can’t fly but does not know it can’t, so it does it anyway. And just like the bumble bee, once the truth dawns on them, the Swedes will fall flat to the ground. From a cynical viewpoint, it will offer us an opportunity to study the last stages of the deterioration of a welfare state in a full-scale laboratory.
From a human viewpoint, though, it is going to be one big tragedy, brought upon an entire people by simple-minded socialist politicians, determined to shove their ideological construct down people’s throats.
I can only thank my lucky star I left that place 14 years ago.
In a time when it is becoming glaringly obvious that the European welfare state is on critical life support, there seems to be a bit of an existential debate emerging in the West. Europe has been so invested in the welfare state over the past 75 years that no one alive can remember what life was like without it. In America, the liberal elite envies Europeans who have the privilege of paying a lot more in taxes without getting anything more back. As the welfare state crisis unfolds, the political and self-appointed intellectual leaders of the West are forced to re-examine the very premises of their own existence in the public arena.
So far, this has not led to any major mea-culpa confessions of economic and social mistakes. The European Union, led by an unelected class of Eurocrats, has almost wiped Greece of the macroeconomic map in order to protect the welfare state (and the common currency). They have practically stamped Spain into a wet spot between fiscal annihilation and political humiliation. Italy, Portugal, even larger countries like France, are waiting for their turn.
On the American side of the Atlantic, Canada has thus far preserved its welfare state by shaving off “inefficiencies” and leveling out its taxes. But their high dependency on welfare has created plenty of drug and crime problems, and they still cannot afford to give their citizens decent health care under their socialized system. Canadians with money still come in droves to the United States to get treatment – and then they go home and vote for politicians who want to keep that socialized system alive.
There is a fair amount of debate over the welfare state in Canada. It remains to be seen if the country that has always tried to strike a “prudent” balance between Europe and the United States can come to grips with what foot they want to stand on.
In the United States, the battle between the European welfare-state ideology and liberty rages on. The former camp is represented by president Obama and his entourage of arrogant statists; the latter has the support of the majority of the American people. In 2012 the president and his leftist cohorts lost two big states, North Carolina and Indiana, and almost ten million voters who had previously backed Obama decided to stay home. What kept Romney from winning was a similar decision by three million Conservative and Libertarian voters, some of whom chose to vote for Gary Johnson out of principle.
In that same election, friends of freedom reinforced their positions in state legislatures and gubernatorial mansions. The Tea Party movement is now producing a new generation of electable candidates.
The resiliency of the Tea Party movement despite resistance even from Republican leaders is a strong indication that support for the European welfare-state ideology may have reached its peak in American politics. It will take time for liberty to regain the upper hand, and the outcome of that battle is far from certain. But there is also a new sense of determination emerging among Republicans in Congress, and rising support for traditional Conservatism across America. A recent study by Gallup reveals a notable slant in the Conservative direction among Americans in general: the most conservative states are more conservative than the most liberal states are liberal. This means, in short, that liberalism is diluted even where on its own home territory.
It is also encouraging to see the strong popularity of Republican governors such as John Kasich in Ohio, Scott Walker in Wisconsin and Chris Christie in New Jersey. They are all more or less fiscally conservative and represent a defense line against the invasion of the European welfare state. (And don’t forget the Republican takeover of Michigan, quite an accomplishment.)
There are, in other words, many reasons to be optimistic about the future of America. Once the European welfare-state ideology has been driven off our shores we can focus on rebuilding an economy based on free enterprise and a society based on faith, charity, individual responsibility and self determination.
Before we get there, though, we have to keep up the fight in every corner of the public policy arena. Many disillusioned supporters of the welfare state are still scrambling to market their warped vision of a benevolent government as palatable, even desirable, for America. The latest example comes out of The Economist, in the form of a panegyric Festschrift to the Nordic welfare state:
Smallish countries are often in the vanguard when it comes to reforming government. In the 1980s Britain was out in the lead, thanks to Thatcherism and privatisation. Tiny Singapore has long been a role model for many reformers. Now the Nordic countries are likely to assume a similar role.
They forgot to mention Switzerland and Luxembourg, both of whom have kept their welfare states to an absolute minimum by European standards.
That is partly because the four main Nordics—Sweden, Denmark, Norway and Finland—are doing rather well.
A stretch of facts to the point of breaking. Sweden has one of the highest rates of youth unemployment in Europe. The Norwegian economy is as big as the Swedish, with half the population. Sweden has a violent crime rate per capita that is higher than its three neighbors – combined.
Denmark has a personal income tax rate that begins above 40 percent. Finland’s employment numbers are trending negatively, as its economy has become frightfully dependent on exports; the flip side of spending all your political capital on boosting exports is that you have to suppress domestic demand. When exports go bust, there is no domestic spending to make up for it.
More on these mechanisms in a moment. For now, back to The Economist.
If you had to be reborn anywhere in the world as a person with average talents and income, you would want to be a Viking. The Nordics cluster at the top of league tables of everything from economic competitiveness to social health to happiness. They have avoided both southern Europe’s economic sclerosis and America’s extreme inequality.
Of course. Denmark went through a devastating period of austerity in the 1980s, while Sweden was hurled into its own depression in 1991. In 18 months, unemployment went from two percent to 15 percent. Government cut spending and raised taxes in an austerity package equivalent to nine percent of GDP.
Denmark fell back into austerity in the early 2000s. They closed a number of hospitals under the single-payer system, forcing Danes to accept health care rationing as part of their daily lives. In Sweden, austerity continued and the single-payer health care system laid off one fifth of its medical staff in a matter of a few years.
The Swedish disaster has continued. Today, the employment level among working-age Swedes is eight percentage points lower than it was before the crisis in the early ’90s. This is reflected in massive youth unemployment, and a widespread system of temporary jobs for those who can get a foot in the door of the labor market.
The Economist again.
To politicians around the world—especially in the debt-ridden West—they [the Nordic countries] offer a blueprint of how to reform the public sector, making the state far more efficient and responsive. The idea of lean Nordic government will come as a shock both to French leftists who dream of socialist Scandinavia and to American conservatives who fear that Barack Obama is bent on “Swedenisation”.
What lean government? This classic research paper by three economists at the European Central Bank shows that the Nordic welfare states are far less efficient than the American. Output efficiency – which measures what you actually get for your tax dollars – is half, half, as high in Sweden as it is in the United States.
But of course, if you take in the world’s highest taxes and give less and less back, you don’t need a whole lot of bureaucrats to administer the spending programs. All you have to do is rake in the cash from taxpayers and then leave them to fend for themselves.
Sweden, incidentally, happens to have the longest waiting lists for health care in Europe, with the exception of Albania.. For more on the “efficiency” of the Swedish single-payer system – the crown jewel of the Swedish welfare state – check out this well-written paper.
The Economist, however, does not bother with such facts. They are out to sell the Nordic model as the Second Coming of the Welfare State:
Government’s share of GDP in Sweden, which has dropped by around 18 percentage points, is lower than France’s and could soon be lower than Britain’s.
Yes, it topped 60 percent in the ’90s. But keep in mind that financial transfers do not count here. Welfare checks, unemployment benefits, income security payments are financial transactions that don’t show up in GDP. A very large part of the Swedish welfare state is all about paying people not to work.
Taxes have been cut: the corporate rate is 22%, far lower than America’s.
Technically, that has not yet taken effect. But the big stumbling block for Swedish businesses is the conglomerate of labor security laws. Those laws have driven the exorbitant costs of labor – payroll taxes are more than twice as high as in America – to even higher levels and are part of the reason why the Chinese owner of Volvo Cars is slowly transitioning Volvo production out of Sweden. Labor laws also got in the way of saving SAAB and contribute to the decision by Volvo Heavy Trucks to move its mass transit bus manufacturing to Poland.
Back in the ’80s and ’90s Sweden lost almost all of its once-sprawling pharmaceutical industry. Ericsson, the world’s pioneering telephone company, is limping along today only because of its alliance with Sony.
Back to The Economist, who manages to get yet another welfare-state selling point wrong:
While Mr Obama and Congress dither over entitlement reform, Sweden has reformed its pension system.
And retirees are losing heavily, as the system automatically cuts benefit checks but continues to take money to the same degree from taxpayers. Right now there are mounting demands in Sweden for yet another reform to fix the gaping flaws in the reform from the ’90s. “Retired and poor” is becoming a national sport in Sweden (and sadly my mother is among those having to take a beating).
Its budget deficit is 0.3% of GDP; America’s is 7%.
It is very easy to balance the budget. North Korea has a balanced budget. Romania under Ceaucescu had a balanced budget. All you have to do is, to quote Obama, “tax the heck out of people”. It means nothing when it comes to how people actually live their lives.
The average Swede, by the way, has a standard of living that would qualify him for welfare in most states here in America.
And then, of course, The Economist brings up the shiny coin that Swedes always hold up when they want to sell their welfare state:
Sweden has a universal system of school vouchers, with private for-profit schools competing with public schools. Denmark also has vouchers—but ones that you can top up. When it comes to choice, Milton Friedman would be more at home in Stockholm than in Washington, DC.
Except for the tiny little factoid that if you want to start a private school you have to apply to the local public school district. If the district issues a certificate of need, you can go ahead and open your school. If the public school district thinks that there is no need for competition with their schools, they say no and you have nowhere else to go.
Also, The Economist forgot to mention that home schooling is illegal in Sweden, as are schools with a religious affiliation (except for islamic schools which are violating the law but allowed to continue to exist out of misguided political tolerance).
The rest of the Economist article follows the same line of snake-oil salesmanship. Their attempt at selling a used car wrapped in shiny coating is so full of questionable, superficial and sometimes outright false statements that it would take a thesis to account for all of them. This article is already 2,000 words long…
But fear not. I have finally gotten the material together for my new book, and will be submitting the manuscript this spring:
Sweden – Indictment of a Welfare State.