UK, Sweden and Poverty

[George Monbiot]

"Does not already the response to the massive tidal wave in south-east Asia," Gordon Brown asked on Thursday, "show just how closely and irrevocably bound together... are the fortunes of the richest persons in the richest country to the fate of the poorest persons in the poorest country?"

The answer is no. It is true that the very rich might feel sorry for the very poor, and that some of them have responded generously to the latest catastrophe. But it is hard to imagine how the fate and fortunes of the richest and poorest could be further removed. The 10 richest people on earth have a combined net worth of $255bn - roughly 60% of the income of sub-Saharan Africa. The world's 500 richest people have more money than the total annual earnings of the poorest 3 billion.

This issue - of global inequality - was not mentioned in either Brown's speech or Tony Blair's simultaneous press conference. Indeed, I have so far failed to find a reference to it in the recent speeches of any leader of a G8 nation. I believe that the concern evinced by Blair and Brown for the world's poor is genuine. I believe that they mean it when they say they will put the poor at the top of the agenda for the G8 summit in July. The problem is that their concern for the poor ends where their concern for the rich begins.

There is, at the moment, a furious debate among economists about whether global inequality is rising or falling. No one disputes that there is a staggering gulf between rich and poor, which has survived decades of global economic growth. But what the neoliberals - who promote unregulated global capitalism - tell us is that there is no conflict between the whims of the wealthy and the needs of the wretched. The Economist magazine, for example, argues that the more freedom you give the rich, the better off the poor will be. Without restraints, the rich have a more powerful incentive to generate global growth, and this growth becomes "the rising tide that lifts all boats". Countries which intervene in the market with "punitive taxes, grandiose programmes of public spending, and all the other apparatus of applied economic justice" condemn their people to remain poor. A zeal for justice does "nothing but harm".

Now it may be true that global growth, however poorly distributed, is slowly lifting everyone off the mud. Unfortunately we have no way of telling, as the only current set of comprehensive figures on global poverty is - as researchers at Columbia University have shown - so methodologically flawed as to be useless.

But there is another means of testing the neoliberals' hypothesis, which is to compare the performance of nations which have taken different routes to development. The neoliberals dismiss the problems faced by developing countries as "growing pains", so let's look at the closest thing we have to a final result. Let's take two countries which have gone all the way through the development process and arrived in the promised land of prosperity. Let's compare the United Kingdom - a pioneer of neoliberalism - and Sweden, one of the last outposts of distributionism. And let's make use of a set of statistics the Economist is unlikely to dispute: those contained within its own publication, the 2005 World in Figures.

The first surprise, for anyone who has swallowed the stories about our unrivalled economic dynamism, is that, in terms of gross domestic product, Sweden has done as well as we have. In 2002 its GDP per capita was $27,310, and the UK's was $26,240. This is no blip. In only seven years between 1960 and 2001 did Sweden's per capita GDP fall behind the UK's.

More surprisingly still, Sweden has a current account surplus of $10bn and the UK a deficit of $26bn. Even by the neoliberals' favourite measures, Sweden wins: it has a lower inflation rate than ours, higher "global competitiveness" and a higher ranking for "business creativity and research".

In terms of human welfare, there is no competition. According to the quality of life measure published by the Economist (the "human development index") Sweden ranks third in the world, the UK 11th. Sweden has the world's third highest life expectancy, the UK the 29th. In Sweden, there are 74 telephone lines and 62 computers per hundred people; in the UK just 59 and 41.

The contrast between the averaged figures is stark enough, but it's far greater for the people at the bottom of the social heap. Perhaps unsurprisingly, the Economist does not publish this data, but the UN does. Its Human Development Report for 2004 shows that in Sweden 6.3% of the population lives below the absolute poverty line for developed nations ($11 a day). In the UK the figure is 15.7%. Seven and a half per cent of Swedish adults are functionally illiterate - just over one-third of the UK's figure of 21.8%. In the UK, according to a separate study, you are more than three times as likely to stay in the economic class into which you were born as you are in Sweden. So much for the deregulated market creating opportunity.

The reason for these differences is straightforward. During most of the 20th century, Sweden has pursued, in the words of a recent pamphlet published by the Catalyst Forum, "policies designed to narrow the inequality of condition between social classes". These include what the Economist calls "punitive taxes" and "grandiose programmes of public spending", which, remember, do "nothing but harm". These policies in fact appear to have enhanced the country's economic competitiveness, while ensuring that the poor obtain a higher proportion of total national income. In Sweden, according to the UN, the richest 10% earn 6.2 times as much money as the poorest 10%. In the UK the ratio is 13.8.

So for countries hoping to reach the promised land, there is a choice. They could seek to replicate the Swedish model of development - in which the benefits of growth are widely distributed - or the UK's, in which they are concentrated in the hands of the rich. That's the theory. In practice they have no choice. Through the International Monetary Fund and the World Trade Organisation, the G8 governments force them to follow a model closer to the UK's, but even harsher and less distributive. Of the two kinds of capitalism, Blair, Brown and the other G8 leaders have chosen for developing countries the one less likely to help the poor.

Unless this changes, their "Marshall plan for the developing world" is useless. Brown fulminates about the fact that, five years after "almost every single country" signed up to new pledges on eliminating global poverty, scarcely any progress has been made. But the very policies he implements as a governor of the IMF make this progress impossible. Despite everything we have been told over the past 25 years, it is still true that helping the poor means restraining the rich.

http://www.guardian.co.uk/Columnists/Colum...1387530,00.html

[David Richardson]

The very existence of Sweden seems to raise hackles in both the UK and the USA. I remember once making a very innocuous comparison between Thatcher's YOP programme and Swedish labour-market training in the letters column of the Guardian and receiving a vituperative letter from someone in the UK about Swedish cowardice in not joining in World War 2. Actually the officer class very nearly did - on the German side! I know quite a few old men who remembered being allocated the job of shooting the captain if the Germans invaded to stop him from taking his unit over to the German side.

The funny thing is that neither Norway or Denmark (with very similar social systems) arouse this level of hatred.

On the other hand, Norway and Denmark are both members of NATO, and I think that it is Sweden's combination of being Social Democratic for most of the time since 1932, together with the policy of "neutrality in war, freedom from alliances in peace", which really winds the Americans up.

Of course, the reality Swedes live in isn't the rosy world of the outside commentator. However, this is a society with relatively low discrepancies between rich and poor, a relatively high standard of living, and a relatively enlightened social structure … which is why I live here!

By the way, there's been a Freedom of Information Act here since 1766 (journalists can go down to the equivalent of 10 Downing Street and take a look at yesterday's post - or the Prime Minister's credit card receipts - if they want to) and the concept of 'trespass' is almost unknown.

[John Simkin]

The very existence of Sweden seems to raise hackles in both the UK and the USA. I remember once making a very innocuous comparison between Thatcher's YOP programme and Swedish labour-market training in the letters column of the Guardian and receiving a vituperative letter from someone in the UK about Swedish cowardice in not joining in World War 2.

Sweden provides a problem for most politicians. They have shown that it is possible to humanize capitalism. They have also shown you do not have to spend a lot of money on nuclear weapons, etc. in order to stop yourself from being invaded by other countries. Sweden is a constant reminder of their own failure.

[John Simkin]

Couple of interesting letters on George Monbiot's views appeared in today's Guardian:

George Monbiot's valid criticism of neoliberalism does not justify his grasping Sweden as a "promised land". The Swedish government is on the same track as Blair. In 1980, a Swedish manager earned nine times the wage of an industrial worker - today it is 46 times. According to a recent report, only Britain and the US have experienced a more rapid growth of inequality since 1990. Electricity and postal services are completely deregulated, with huge price increases as a result. Sweden's stock market-linked pension system has become a model for Bush, Berlusconi and others. And the Swedish government prides itself on having inspired Schröder's welfare attacks in Germany.

Its policy to developing countries is also no different. Sweden's main concern in recent years has been to increase its arms exports. The jet fighter JAS has been sold to South Africa, with Brazil in the pipeline. The Swedish government strongly backed Bush's "war on terror", even allowing US agents to deport Egyptian suspects. Sweden and has also used inhuman measures against refugees.

Jonas Brännberg

Luleå, Sweden

I don't recall the Economist arguing "the more freedom you give the rich, the better off the poor". It has been strident in its criticism of cronyism, corruption, irresponsible tax regimes (particularly those of Bush), negligent corporate behaviour and what it describes as "apologists for capitalism". Sweden has become something of a poster pin-up for the whole neoliberal movement. It does operate a high-tax policy - and as a democracy it is entitled to set whatever taxes the public will bear, and to redistribute those taxes however it chooses. Neoliberals have no grief with this.

But what is interesting is how its economy is regulated. Sweden does rank highly for "global competitiveness" and "business creativity and research". It is one of the most economically free, and least corrupt, of countries. Sweden is also far more integrated into the global economy than most other countries. It is by creating such an environment that Sweden is able to prosper and thus gain the resources used to tackle poverty. Neoliberalism does not argue against redistribution of wealth, it merely suggests how such wealth is to be created. Helping the poor is not about the freedom of the rich, but freedom of trade.

Alan Macdonald

Glasgow

[Jean Walker]

David

What is your response to the letters above from an insider's point of view?

We will be in Gothenberg in June and our friends there are always intersted in a good political debate about their country. I'd like to be up to date!!

[David Richardson]

Sweden is, of course, a country with a history and a present firmly rooted in the world of capitalism, so both of the letters from Guardian make fair points. My own theory is that each political party accuses its opponents of its own worst faults. Thus, the Conservatives accuse the Social Democrats of being hostile to companies … whereas it's always been the case in Sweden that the Social Democratic governments have put the interests of companies first (often before the companies have realised that that was what their interests were). The Conservatives, on the other hand, have had an over-representation of stockbrokers, estate agents and other people whose interests lie in short-term speculation, which is the exact opposite of what companies need to stay healthy.

When pressed, Social Democrats make a simple point: we are the party of the workers, and workers need work in order to prosper. To get work, they need a healthy industrial sector, which we will provide. I remember years ago when Volvo were thinking about building the Uddevalla plant outside Gothenburg, the Minister being criticised by the Conservative opposition for building a motorway to Uddevalla to sweeten the deal. He just said that any company and any town which could come up with several thousand jobs for factory-workers would get the same treatment … and there was a deafening silence from the opposition.

Sweden's also a small country, which means that you have to have a very clear picture of where your interests lie in order to survive. Back in the 1920s margarine packets had a little instructive picture on them showing how buying margarine made from domestically-grown oilseeds reduced imports and benefitted the Swedish economy, "thus making everyone rich". One of the key decisions made by Per-Albin Hansson's first Social Democratic government in 1932 was to rescue a company called L.M. Ericsson from the ruins of Kruger's empire, and give them plenty of government backing to establish a state-of-the-art telephone system in Sweden (at a time when few countries had many telephones at all), which later enabled Sweden to become a world-leader in telecommunications. Sweden's wealth has nearly all come from this kind of very specifically directed 'interference' in the free market by the State (with IKEA, Tetra Pak and, perhaps, SKF being the main exceptions).

The extensive Swedish armaments industry also comes from a realisation of Sweden's hemmed-in position in northern Europe, although Swedish cannons were well-regarded even in the 17th century. Neutrality in war and freedom from alliances in peace, as the policy goes, is somewhat of a necessity for any small country wishing to retain a degree of independence and freedom of action.