Swede dreams

In: Uncategorized

29 Aug 2012

Which country had the best performing economy in Western Europe in both 2010 and 2011?

Those who follow the news closely, or spotted the clue in the headline, will have realised it is Sweden. The largest economy in the Nordic region grew by 5.8 per cent in 2010 and 4.0 per cent in 2011, according to figures from the International Monetary Fund. The corresponding figures for Britain were only 2.1 per cent and 0.7 per cent.

Under such circumstances it is no surprise that British politicians are flying to Stockholm to try to work out what Sweden is doing right. Luckily for them, as a recent BBC Radio 4 Analysis programme showed, the Swedish story can be twisted to suit both Labour and Conservative cases.

The one feature of Swedish society that stands out to foreigners is its relatively low inequality. America’s Central Intelligence Agency (CIA) ranks it as the least unequal in a listing of 136 states.

This low inequality has won the country praise from pundits such as the authors of the Spirit Level. Leftists can clearly use Sweden’s relatively egalitarian structure to claim it as their own but the truth is not so straightforward. David Cameron, Britain’s prime minister and Conservative leader, has also endorsed the Spirit Level’s argument that high inequality can be harmful.

Sweden’s relatively high state spending and generous welfare provision can also be read both ways. Public expenditure accounted for about 49.1 per cent of GDP last year compared with 45.7 per cent in Britain and 41.4 per cent for America. Sweden’s spending was lower than some other European nations, such as France and Belgium, but these were bloated by the economic crisis.

To outsiders the support given to families is probably the most striking example of Swedish generosity. Parents are allowed 480 days of parental leave when a child is born or adopted. For 390 of them the maximum parental allowance is SKr 901 (about £87) a day with SKr 180 for the remaining 90 days. Many leftists would view such provision as humane while conservatives typically see it as a lavish overindulgence.

In any case the days of social democratic domination of Swedish politics have long gone. The centre-right Moderate party has governed Sweden since 2006. Its victory in 2010 was particularly significant as it was the first time a conservative party had won two consecutive general elections for about a century.

It should not be a surprise therefore that Sweden’s welfare provision is more privatised than British Labour admirers tend to assume. Many public services, including hospitals and schools, are sub-contracted to be run by private operations. Sweden has gone far further in this direction than Britain.

Not that Swedes are universally satisfied with the system. On the contrary, during a recent visit I was surprised to hear several Swedes complaining about having to pay to see GPs and about the poor quality of the service.

Nor is Sweden the straightforward economic success that those with a short-term time horizon seem to assume. Back in the early 1990s it suffered a banking crisis and economic contraction after a property bubble burst. In some respects it experience was reminiscent of what happened to America 15 years later.

The traditional way to resolve all these contrasts is to portray Sweden as a land of contradictions. A clean-cut country of low crime that is routinely portrayed in popular detective novels as a haven for corruption and debauchery.

Perhaps a better conclusion would be that the traditional labels of left and right have lost all their meaning.

This post first appeared on the Fundweb site.