Friday, 11 February 2011

What Every Spaniard Should Know About the Swedish Welfare State

It tends to get embarrassing when people from small countries try to explain why they are so proud of their origin and hope for the rest of the world to understand. Yet that is exactly what I am about to do. My excuse is, partly, that here in my new home, Vilanova i la Geltrú (Barcelona), I have friends who live in the delusion that my country is a proof of the superiority of democratic socialism. But above all that, recently, Sweden has received a lot of positive attention.

The economic growth in Sweden for 2011 is estimated to be 4% which makes the country "as strong as Pippi Longstocking", as a representative of the OECD put it. Wall Street Journal has praised the Swedish government for planning for a budget surplus of 1% already this year and, in the Economist, we have been able to read about how David Cameron, England's Prime Minister, has shown interest in the financial discipline and market oriented reforms so successfully implemented by right-wing governments in Scandinavia. The international coverage of Sweden certainly has not always been this encouraging, although our difficult years seem to have passed unnoticed in Spain.

I was born in 1971, in a country which ranked number four in the world in terms of GDP per capita, but which twenty years later, had slumped to the 17th place. In spite of good intentions, the traditional “Swedish model” created a society where taxes made that personal efforts like education or extra hours at work did not pay off any longer and where the public administration – and, hence, public debt - grew larger and larger.

Even the Social Democrats realized that things were wrong but the fiscal reform they carried out in 1988 did not reach far enough. In 1991, I personally took part in an election campaign where we warned about an “unemployment bomb” about to explode, and unfortunately that is what happened. In late 1992, the confidence of Sweden’s creditors was ruined and the crisis became acute. The government was forced to drop the peg of the Swedish krona, which rapidly lost nearly 30% of its value.

At the time, many of us considered that the market - personified by financier George Soros - treated us unfairly, but we could all see that the problems were almost isolated to Sweden so there was never any disagreement about who had to solve them. In the spring 1993, Swedish Public Service TV broadcasted a four-hour program with the title "A day for Sweden" (“En dag för Sverige”) where politicians, commentators and others tried to map out a path towards the future and since I had just started to study economics at the university, I followed it from beginning to end. For me, that day has remained a symbol of the prevailing spirit, not of consensus - that is too strong a word - but a mutual insight that people's crisis awareness offered a unique opportunity to make those difficult decisions which both the right and the left knew were necessary.

During the autumn 1992 and spring 1993 the government and the opposition together adopted a radical shift in the pension system, stricter rules in the national health insurance and improved conditions for employers. At the same time it was agreed that Sweden would apply for membership in the EU which in itself did not influence the economy, but sent a signal that the experiment with "Third Way politics" was over. These measures did not solve all problems - the cuts in public spending went on year after year until 1998 - but laid the foundation for the more competitive country that we see today.

After those years, the Swedish Social Democrats made a comprehensive move towards the center of the political landscape - what I would call a de facto adaptation to the realities of a market economy. When the crisis was over, many of their supporters demanded a reset (återställare, in Swedish), but the party leadership resisted. "He who is indebted is not free," Prime Minister Göran Persson kept repeating and continued amortising the public debt.

Not even today would the Swedish labour movement dismiss the international praise of our country with the argument that it comes from a dangerous neo-liberal business press. It is more likely that the Social Democrats feel hurt - not because they disagree with the policies pursued (in the moment of writing this post, they have not yet decided whether to head left or right in the future) - but because for so many decades they were able to present themselves as the only political force which could generate prosperity. Now our sitting right-wing government has efficiently proven to have the same capacity. That the positive opinions come from USA and England makes matters even worse - I would argue that no other countries have such a strong impact on the image we Swedes have of ourselves.

Now, the Social Democrates are not the only ones who have repositioned themselves. Without exaggerating too much, I would say that we now have a parliament, Riskdagen, where six of eight parties compete for the same voters, or at least are careful not to scare them away. The electorate, for its part, is made up of people who with their own eyes have seen that a welfare state can be reformed without being destroyed. As a result we have a debate on economic and social policies which is totally focused on rational and measurable solutions and where no time is wasted on ideological dogmas. This lack of visions is, indeed, boring but strengthens the stability of and confidence in the economy, which in turn generates the prosperity needed to maintain a strong welfare state. Not the same model which, once upon a time, made the Social Democrats famous, but a welfare state which even they themselves have had to recognize as superior.

At this point, I do not care if it embarrasses you: I am very proud of Sweden! But although I hope to continue being so, I promise not to write about these feelings again. Doing so is not very Swedish, is it?

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Additional reading: On further adaptations to reality

The second big adaptation to reality came about a few years ago when Moderaterna, until then the political force with the most market-liberal profile. After Fredrik Reinfeldt took over the leadership, they finally accepted that the average Swede truly likes the welfare state, so instead of trying to limit it, this party now focuses on making it financially sustainable and more efficient. Thanks to that strategic change, Moderaterna is now a bigger than Socialdemokraterna and leads a government which enjoys a strong voter support.

A third shift towards the center seem to happen right now since Gustav Fridolin - one of the top candidates to lead the Green Party - has written an article defending Sweden's liberal heritage. This might seem strange in Spain, but Milöjpartiet became the third biggest party in last year’s elections to the Swedish parliament, and since they aim to keep that position, they cannot afford to be branded as solidly "left-wing".

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This text is also available in a Catalan, Spanish and Swedish version, respectively.

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Sources and inspiration: Nice up North Where did it all go right? The Swedish Model Britter skall spara i svensk stil De gröna ska inta mitten i den svenska politiken

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