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Wednesday, August 24, 2005

What Inferiority Complex? The Swedish Welfare State

We don’t need no stinkin’ US style capitalism!  Sweden tells Europe to hold its head high:

In defense of the welfare state, by Jonathan Power, International Herald Tribune:  (Stockholm) The statistics had arrived on the Swedish prime minister's desk … It was good news. Goran Persson, now in his ninth year of office, told me that the growth rate for this year will be near 3 percent and next year more than 3 percent - enough, he said, to maintain Sweden's trajectory of the last decade, which was "above the average for the European Union" and, in particular, "as good as the Anglo-Saxons, Britain and the U.S."  ... This raised the first question - how does this self-confessed socialist state do it? What is the secret for success when Swedish taxes are the highest in the world and the welfare state is the country's single largest employer? After all, when Persson came in as finance minister in 1994 the country was reeling economically, as state expenditures on the health and social sectors raced ahead of the country's ability to generate wealth.  

"If you have a free economy," explained the prime minister, "a highly educated work force, a very healthy people, very high productivity and a sound environment then you can create the critical size of resources to create good growth. "That has to be joined with adequate public financing of universities, research and development. As long as we are efficient and constantly challenging ourselves we continue to be productive. "Then if we produce successful growth, the government gets the public's support for high taxes. If the quality of the public sector is good, then a prosperous people will continue to vote for funding it."  

The Social Democrats have been in power for most of the last 73 years. But recently public opinion has turned away from the government, partly because of the prime minister's apparent dictatorial style and partly because of a series of scandals including his slow response to the tsunami, when hundreds of Swedes on vacation in Thailand died. ... Many have observed that Sweden cannot sustain its generous womb-to-tomb system if so many Swedes abuse the system by calling in sick and claming unnecessary disability leave. On an average day, one-fifth of the potential workforce is claiming these rights, in a country that along with France and Japan is the healthiest in the world. "I had a new report on my desk today to show that we are getting these figures down," [Persson] said. "It is now under control. We have given employers an incentive to convince their personnel to return from sick leave by offering them a tax benefit if they succeed. … At the same time, we have been scrutinizing those doctors who have been too generous in signing sick notes."

Persson … ends the conversation with two quick jabs. "Europe has a lack of confidence vis-à- vis the U.S.," he said. "The U.S. is competitive, but not as competitive as we think. We are too self-critical in Europe, even though we have a much better social system and in Sweden are just as productive. On unemployment, it is overlooked that the U.S. has approaching two million people in jail and out of the labor market."…

    Posted by on Wednesday, August 24, 2005 at 02:34 AM in Economics, Policy, Regulation | Permalink  TrackBack (2)  Comments (22)


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