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Henry, Barkley, and others,
As one of the Swedish list subscribers (thankfully
living in the US though!), let me add a general
comment:
While I don't see any immediate risk for a Swedish
secession from the union, I do foresee increased tensions between Sweden and the
EU about the common currency. Sweden did not negotiate any exemptions in this
respect so is under a legal obligation to adopt the Euro -- but has failed to
honour this commitment owing to 'domestic political resistance' according to the
government. So far that has been well taken in Brussels, but it remains to be
seen how long that patience will last.
Sweden may also come under increased pressure from
a human-rights point of view. A recent government proposition mandating
authorities to register the political opinions of anybody seeking social
assistance (about 10 percent of the population every year) is a worrying example
of the constant tendency towards more 'big brother' type registration and
intrusion into people's privacy. In judging the significance of this, one should
bear in mind that Sweden is a country where the government controls well over
half of GDP and permeates every aspect of people's lives from cradle to grave.
After two abysmal decades culminating in an outright depression, Sweden's economic performance has improved, at any rate to match the
rest of the world, since 1997. The culprit was a U-turn on the part of the
government (facing re-election problems) in fiscal policy whereby government
spending began to rise after an extended period of stagnation or decline.
Private consumption accelerated sharply, partly reflecting the acute need to
replace deteriorating stocks of automobiles and other consumer durables, partly
in response to the massive surge in equity and real-estate prices. Real incomes
also began to grow, albeit at a moderate pace. Total consumption (public and private) has increased by about 3 percent per year
since 1998 and GDP has grown still faster.
However, these three magnificent years, wherein
consumption for a change was allowed to grow at a
pace comparable to other OECD countries, came to an end last fall. Private
consumption is now standing still and government consumption is falling. GDP
still grows, albeit at a sharply reduced rate, thanks to expanding construction
activity and increasing net exports.
The current prospects are somewhat bleak, with
major problems and massive reductions taking place in the telecommunications
flagship Ericsson. The currency (crown) has depreciated sharply and is weak even
compared to the Euro. These problems are related, since the Ericsson shares are
massively important to the Stockholm Bourse (stock exchange), more one third of
which is owned by foreigners. Foreigners' sell-off of Ericsson shares and the
associated currency transactions likely account
for most of the recent weakening of the crown.
One should remember that the Stockholm Bourse has
been the fastest rising in the world, with a (comprehensively defined) General
Index peaking at about 6,800 last spring, an incredible 68-fold increase since
the base year 1980 = 100, after an increase of some 65 percent only in 1999.
Owing to the recent Ericsson crash the index now hovers around 4,000, i.e.
'only' a 40-fold increase since 1980. Nominal GDP barely quadrupled in the same
period. A 10-to-1 relationship in other words, between the stock market and GDP.
About half of the employment lost in the depression
(which amounted to 12 percent of all jobs) has been regained since the recovery
commenced, and unemployment has fallen from catastrophic levels to more
manageable rates (5.3 percent in February). It remains high by historical
standards though. Both employment and unemployment appears to be flattening out
at this time, but neither is increasing, at any rate not yet.
Notwithstanding (or as the flip side of?) the
hausse in stocks, Statistics Sweden's income distribution survey (HINK) reports
that the lowest 6 deciles of the population have an average net worth of zero.
(The net worth of deciles 5-6, i.e. the middle 20 percent is $12,000.) It goes
without saying that this is not much to fall back upon if one loses one's income
-- and the access to credit is much more limited than in the United States. The
vast majority have no significant reserves or resources to fall back on but are
in effect completely and immediately at the government's mercy should something
go wrong in their lives.
Virtually all media, all think-thanks, the entire
university system and research community, all trade unions and other major
organisations are closely interwoven with the government and dependent on
government financial support to an extent that has, at any rate in my judgement,
seriously impaired their role as controlling and counterbalancing powers to the
state. My personal experience of interacting with
these institutions in my five-year (1992-97) endeavour to publicly criticise the
government's macroeconomic policies from a Keynesian point of view is anything
but encouraging. In the end I faced the choice of doing something else or
leaving the country! (I chose the latter.)
It is hard for me to give a balanced account of
what is going on in Sweden, partly because of my personal
experiences, which have given rise to a certain amount of resentment on my
part, and partly because the situation and trends are genuinely difficult to
analyse and discern given the volatility of a social and political system where
most people now make a virtue out the necessity of following the leader, and
where the leadership is often quite capricious and unpredictable. It could end
up anywhere if it weren't for the cushioning provided by 'what the neighbours
might think' -- i.e. the international setting. In this respect, the EU
membership is an important positive factor.
What I can say for certain, is that Sweden is no longer the country that American Liberals used to
cherish. Unfortunately, the ideologically based cherishing tends to go on long
after its grounds have disappeared. I sometimes say, half jokingly, that all
that remains of the celebrated Swedish Welfare State is the taxes! Which, I am
afraid, is closer to the truth than one would like to think. Indeed,
the developments in Sweden in recent
decades may well be taken to illustrate what Hayek warned of in 'The road to
serfdom'.
Per Gunnar Berglund
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- Anti-EU demonstration in Sweden, Henry C.K. Liu Wed 25 Apr 2001, 22:04 GMT
- Re: Anti-EU demonstration in Sweden, Sven R Larson Thu 26 Apr 2001, 08:43 GMT
- Re: Anti-EU demonstration in Sweden, Harry Veeder Thu 26 Apr 2001, 18:20 GMT
- Re: Anti-EU demonstration in Sweden, Henry C.K. Liu Thu 26 Apr 2001, 21:54 GMT
- Re: Anti-EU demonstration in Sweden, Per Gunnar Berglund Fri 27 Apr 2001, 20:12 GMT
- Re: Anti-EU demonstration in Sweden, J. Barkley Rosser, Jr. Mon 30 Apr 2001, 17:43 GMT
- Re: Anti-EU demonstration in Sweden, Per Gunnar Berglund Mon 30 Apr 2001, 19:18 GMT
- Re: Anti-EU demonstration in Sweden, Sven R Larson Fri 27 Apr 2001, 09:32 GMT
- Re: Anti-EU demonstration in Sweden, Harry Veeder Fri 27 Apr 2001, 16:45 GMT