The Most Successful Society

[Polly Toynbee]

The prime minister has been in power nine years and the people are tired of him. They say their not well-liked leader should have made way for someone else by now. A new conservative challenger to this long-standing government of the left is a young dynamic moderate, uniting the fractious forces of the right. So a social democratic government risks losing to that most lethal human instinct - boredom. The age-old "time for a change" impulse may replace a successful government with something deliberately ill-defined on the right, just for the sake of a fresh face.

Sounds familiar? This is Sweden facing elections next year with the right ahead in the polls - though the gap is narrowing. How can the government of Goran Persson be at risk when by most standards it is doing well? Growth rates are predicted to stay at around 3%, soaring above the EU. Interest rates are just 1.5%, exports boom while its giant companies - Volvo, Ikea, Tetra Pak, Eriksson - are so far resisting the pull to outsource to developing countries. Unemployment is felt to be high - officially 5.8% but higher, counting those on employment schemes - yet falling from over 8% when Persson took over.

Public services are second to none, with universal childcare staffed by graduates, schools turning out far more highly educated cadres than in the UK and a good health service (though people grumble here, too, about booking GP appointments). Stockholm gleams in the autumn sunshine with that pride in beautiful streets, public transport, fine buildings and open spaces that proclaim the value of citizenship from every paving stone. With a tax take of 51% of GDP, so they should. What's more, Sweden runs a handsome cash surplus.

How does the Nordic model work? It supports open markets and job flexibility, with all the restructuring employers need to shake out their workforce to match changing demands. But that only wins the backing of strong unions because of the generosity of the benefits safety-net to cushion frequent, unsettling change. This pact between state, employers and workforce is the magic ingredient. Lavish public services and benefits are no add-on: they are the secret to economic success. Cut back the social provision and the edifice totters, which is why the Swedish left is so anti-EU, wary of any supposedly Anglo-Saxon move to interfere.

So why is the government not riding triumphantly towards the next election? There are warnings here for Labour. Somewhere along the line Sweden, and to some extent the other highly successful Nordic economies, have lost their unquestioning sense of purpose and pride. Older social democrats grumble that the young take all this for granted, without realising how exceptional their society is. Bogged down in the daily details of governing, renewing the vision after years in power seems beyond the social democrats. So they are vulnerable to a young Turk declaring himself a moderate on the right. He proclaims that his coalition accepts that Swedes don't want cuts in tax or public services. For at least the first year he has promised no tax-spend changes. Whistling in the dark, the social democrats declare themselves pleased at how far they have pulled the right over to their side of the centre ground. But last time the right was in power, in the early 90s, it did lasting harm to social democratic institutions, things not easily repaired later.

It is curious to observe Blair and Milburn misusing Sweden as an example of a social democratic nation privatising and outsourcing its public services. If Sweden does it, what can possibly be wrong with it, they ask disingenuously. But here is the real story. It was the right that did these things last time they were in power. They allowed selection in schools, which are now far more class- segregated in a country that once prided itself on relative classlessness in education. The right allowed people to set up small private schools within the state sector - almost all used exclusively by the upper middle classes. It was the right that privatised hospitals, though only three - one to a private company, two not-for-profits. So the social democrats find it ironic that Tony Blair brought the manager of one of them into the Labour party conference to prove that even Sweden privatises its health service. The social democrats have managed to pass a law forbidding any company making money out of health service provision: private providers can only get 90% of the state price per patient while, oddly, Labour offers private providers an extra 15%. It was the right that let private providers set up childcare within state provision, mostly less good. The rightwing government lasted a short time, but did what many see as irreversible harm. Blair seems to follow the Swedish right, not the social democrats.

If the Swedish social democrats are in danger of losing the election, it is not because there is any public appetite for privatisation. The right has had to drop all such talk. It is barely distinguishable from the left, promising no tax-and-spend changes, wearing sheep's clothing. The danger to the social democrats is that people get bored. They forget and a new face with new vague promises to cut unemployment seems to be making headway. The right has been in power for nine of the past 73 years, gaining office only when things were going badly. For the right to win when things are going well would be perverse.

But there is a frisson of fear in the national air. The Swedes seem to lack self-confidence, intimidated by global neocon warnings. Despite their strong economy, they worry. Will globalisation strike? Can it be navigated if it does? Where Sweden and other Nordics should boast of an economic model far more successful than the rest of the EU, they seem to be losing their nerve in these the most successful societies the world has ever known. If the Swedes vote the right in they will be like people with vertigo who so fear falling they decide to jump and be done with it. The right has no particular answer to future forebodings, but it is always good at spreading alarm. When the left loses its optimism, it risks losing office.

This is a contest Labour is watching closely. Young Labour ministers have close connections with the Persson government, as they ponder how a long-serving government renews and refreshes itself in office. Good governments can fall if they lose progressive, forward trajectory. The social democrats say they will regain self-confidence and win. Labour, too, needs to guard against spreading more fear than hope.

http://www.guardian.co.uk/Columnists/Colum...1599939,00.html

[David Richardson]

It's going to be an interesting election next year - for people who live here, anyway. The opposition had a comfortable lead in the opinion polls … until they started telling voters what they intended to do. The chaos caused the last time the opposition were in power is still fresh in people's minds here, and it looks like it's working against the opposition.

At the same time the Social Democrats in particular seem to be regaining their appetite for fighting for their policies and political philosophy, so it'll be interesting to see whether Polly Toynbee's analysis holds up next year too.

[Dalibor Svoboda]

When Sweden is described by foreign journalist many Swedes doesn´t recognise themselves and their own country in the description. Of course they are proud when the country is praised which it often is. But the nagging, wondering question which often lie in wait is: why do I not recognize myself and my country in this description?

Is this article written by Stryker McGuire painting a better picture of Sweden than article written by Polly Toynbee in the Guardian??

There is yet another article in The Guardian which headline reflect Swedish problems: "Europe's leaders look north, but has Sweden really got the best of both worlds?" .

Interested persons in this thread can find it at:

http://www.guardian.co.uk/eu/story/0,7369,1678192,00.html

Europe: Who Hails Sweden?

For all the foreign praise it gets, many Swedes focus on the weak points of their model society.

By Stryker McGuire

Newsweek International

Jan. 9, 2006 issue - Sweden is back. Sweden: where high taxes meet economic competitiveness. Sweden: a high-tech nirvana populated by fit armies of Internet explorers and early adapters unafraid of the next new thing. Sweden: cool and cold.

In the winter of its discontent, with Germany and France stagnant and Britain heading for choppier waters, Europe is pining for the Swedish model as it did in the 1930s and again in the 1970s. It's Sweden as object of desire: the way forward for European economies seeking to be both socialist and competitive in a free-market world. Think tanks can't write enough about it, media dote on it and politicians pan it for policy gold. A headline not long ago in London's left-wing Guardian newspaper said it all: the most successful society the world has ever known. Swedes have it good, and we want what they have.

What Swedes have is impressive. Cradle-to-grave health care. An excellent education system, including some of the best universities in Europe (Lund, Uppsala). One of the world's most competitive economies. The world's highest per capita ownership of second homes and pleasure boats in the world. A country of just 9 million people that has produced a startling number of big industrial brands: Volvo, Scania, Electrolux, Eriksson, IKEA. A privileged country that wears its wealth lightly: when a Ferrari-Maserati dealership opened in Stockholm during the height of the Internet boom, it was shunned by most dot-com millionaires, who stuck to their bicycles. This tolerant, liberal country has adapted well to the twists and turns of globalization. "A small country has to be very open-minded," says Swedish Finance Minister Per Nuder, in typically understated fashion.

As models go, Sweden actually has a fair bit of competition, at least along Europe's northern tier. Finland's education system is repeatedly ranked as the best in the world. Denmark gets noticed for giving employers greater flexibility in hiring and firing workers within a generous welfare state. According to a recent report by the World Bank, oil-rich Norway is the most business-friendly country in Europe, thanks to its lack of red tape. Tiny, remote Iceland has one of the highest growth rates in Europe. All in all, Sweden and its Nordic neighbors, Robert Taylor of the London School of Economics wrote in a pamphlet last autumn, are among "the most efficient, affluent and equitable countries in the world."

So what's wrong with this picture? An increasing number of Swedes do not recognize the socialist paradise-cum-economic wunderkind of Guardian headlines. The model is showing "visible cracks," says Klas Eklund, the Stockholm-based chief economist of SEB bank. Among them: the lack of incentive to work, resulting in a real unemployment rate roughly three times the official 6.3 percent; the failure to foster entrepreneurship (Swedes are the Europeans least likely to consider starting businesses), and the "total inability to handle the integration of immigrants," who face an unemployment rate one third higher than native Swedes. The disparity is among the widest in Europe.

The cracks are starting to cause trouble for the Social Democratic government of Prime Minister Goran Persson, in power since 1994. A new center-right opposition called Alliance, led by the Moderate Party, is pulling ahead in the polls, as elections approach in September. The Moderates' 40-year-old leader, Fredrik Reinfeldt, based his challenge on a simple choice: welfare (the Social Democrats) versus work (the Moderates). "The Social Dem-ocrats put the subsidy system first," says Reinfeldt. "We put work first."

As in other European countries, work (or the lack of it) is at the heart of Sweden's present dilemma. Private-sector productivity has grown phenomenally in recent years, behind only South Korea and Ireland. But Sweden's employment profile is decidedly mixed. Lennart Erixon, an economist at Stockholm University, points out that only Turkey has experienced a steeper decline in the rate of work-force participation than Sweden since 1990. Counting the hidden unemployed, including those on disability, paid leaves or "perpetual students" at tuition-free universities, more than 20 percent of the working-age population is out of work, according to some estimates.

Social leveling compounds the problem, says Eklund. Sweden has a relatively narrow gap between high and low incomes, because wages are often fixed by union contracts that keep low wages relatively high—and keep many newcomers out of work. Reinfeldt argues, in particular, that the state encourages immigrants not to work with subsidies that exceed the pay in off-the-books jobs for cleaners, handymen or day laborers. He and other critics also say Sweden undermines its competitiveness by allowing entry more readily to refugees than to immigrants with technical skills that the economy needs.

Few Swedes would suggest that their welfare state has broken down. Most think it simply needs a tune-up. In an unscientific NEWSWEEK Poll of Swedes in Stockholm and Uppsala, only one—a hardworking, hard-pressed farmer, Jan Tannfors, 55—complained about the system itself. "I don't want to feed so many people in Sweden with my taxes," he said with some asperity. More typical was Pers Karin Skogar, 48, who owns a small interior-design company in Uppsala. She would rather that her company didn't have to subsidize her employees' benefits out of its own coffers, but added, "If we're going to continue to have a welfare state, we're going to have to pay for it."

It's hard to argue with a nation that has come so far. In the 19th century, Sweden was one of Europe's poorest countries; Londoners organized charity drives for needy Swedes. Once the country began to industrialize, however, it did so with a vengeance. By 1900 Stockholm boasted more telephones than London or Berlin. Over the decades, as Taylor notes, Swedes achieved "modernization through consensus," constantly reinventing themselves for a changing world. After a severe recession in the early 1990s, political leaders worked with enlightened labor unions to adapt to globalization. They slashed taxes, up to a point. (Though corporate taxes are low, at 28 percent, Swedes still pay the highest income taxes in the world.) They deregulated banking, telecommunications and energy. They granted the central bank independence, and they turned the budget deficit into a surplus.

At Stockholm University, Erixon is bemused by the attention lavished on the model he has spent his career studying. In 2004, he was invited to speak at a conference in Bad Mitterndorf, Austria. The attendees were starry-eyed about the Swedish model, "as if they'd seen the northern lights," Erixon recalls. He describes himself as a fan of the Swedish model, but says he felt compelled to lecture the overexcited crowd on its downsides. "I was not invited back," he says with a laugh.

But of course he will be, if not to Austria then to some other European nation struggling to keep pace with mounting international competition and keep hold of the good life. Right now the Swedish model, for all its shortcomings and no matter how heavily questioned at home, looks about as good as it gets.

© 2006 Newsweek, Inc.

http://www.msnbc.msn.com/id/10682390/site/newsweek/

Edited January 9, 2006 by Dalibor Svoboda

[David Richardson]

In my view, one of the reasons why some Swedes often don't seem to recognise the picture of their country portrayed by foreign observers is that Sweden is still a very divided society. It's been many, many years since there was a real breakthrough by one or other of the political blocs, with 51%/49% being a typical election result (Sweden uses proportional representation, so the votes cast pretty well determine the distribution of seats). The 49%-ers have nearly always been the political right … who tend to own newspapers, become economists, etc, and it's an article of faith for them that the policies of the 51%-ers can't be right. They're nearly always the people who write letters to foreign papers to point out the errors of their ways in saying anything good about Sweden at all.

In 1992-1994, when the political right were having one of their rare periods of political office, I was a Team Leader on a World Bank project in Trinidad and Tobago. The Swedes had been hired to advise a young entrepreneur programme about how the 'Swedish model' of training for enterprise worked (I was counted as an honorary Swede …). At that same moment, the right-wing Swedish government was trying its hardest to abandon the Swedish model, partly on the grounds that 'no-one else organised their society like this'. I found it profoundly ironic that the World Bank was supporting the Swedish model, whilst the Swedish government was trying to abandon it!

At the same time, good governance is a bit boring. When the economy works, people just assume that that happened by accident, rather than by a consistent application of political principles by the people in power. Having a high degree of equality is also irritating to people who see themselves as 'natural rulers' (who've been largely out of office since 1932). In a profoundly unequal society (like the UK or the US) part of the fun of being rich is to sweep past the bus queue of people who can't afford to run a car in your vehicle that costs the same as a house. Now in Sweden the rich people do have fancy cars … but even the poor people can afford to run cars too. There are still plenty of people who can't afford holidays abroad … but everyone gets their 6 weeks in the summer.