It’s the free-market reforms, stupid.

Laissez faire et laissez passer

In a Europe plagued by debt crises, one country has no budget deficit at all and is currently returning to surplus. This same country is consistently among Europe’s fastest growing economies, with GDP growth set to hit 4% this year.

That country is Sweden.

For many years, foreign policy-makers have pointed to Sweden as a positive model to follow, making Swedes like me proud.

Too often, though, foreigners have drawn the wrong lessons from Sweden’s success. For instance, whenever I give a lecture, anywhere in Europe, about economic reform, I always get the following response: «But you come from Sweden, which is socialist and successful—why should we launch free-market policies ?»The simple truth is that Sweden is not socialist.

According to the World Values Survey and other similar studies, Sweden combines one of the highest degrees of individualism in the world, solid trust in well-functioning institutions, and a high degree of social cohesion.

Among the 160 countries studied in the Index of Economic Freedom, Sweden ranks 21st, and is one of the few countries that increased its economic freedoms during the financial crisis. Sweden gets higher scores for liberal markets than Germany and Belgium, or reformers such as Cyprus and Georgia.It’s true that Sweden wasn’t always so free.

But Sweden’s socialism lasted only for a couple of decades, roughly during the 1970s and 1980s. And as it happens, these decades mark the only break in the modern Swedish success story.In the mid-1800s, Sweden was one of the poorest and underdeveloped countries in Europe.

Then, Finance Minister Johan August Gripenstedt, a proponent of de Tocqueville and Bastiat, launched far-reaching economic reforms that forged Sweden’s transition to capitalism. Sweden was opened up to the world, to free trade, and to migration. Free enterprise and free competition were introduced. In particular, the financial sector was deregulated.

By 1890, Sweden’s economic growth was the fastest in the world, and remained so through 1950. The Swedish tax burden was lower than the European average throughout these successful 60 years, and lower even than in the U.S. Only in 1950 did Sweden’s tax burden rise to 20% of GDP, though that remained comparatively low.But Socialism was fashionable in post-War Europe and Sweden was not immune. The 1970s were a decade of radical government intervention in society and in markets, during which Sweden doubled its overall tax burden, socialized a slew of industries, re-regulated its markets, expanded its public systems, and shuttered its borders. In 1970, Sweden had the world’s fourth-highest GDP per capita.

By 1990, it had fallen 13 positions. In those 20 years, real wages in Sweden increased by only one percentage point.Remnants of its earlier success remained, and the idea of following «the Swedish model» had already caught hold around the world. Fine, except the roots of this success were confused with Stockholm’s more recent big-government policies, which in fact were destroying the country’s enviable prosperity. This confusion also played into domestic debates, stalling reform for too long.By the late 1980s, though, Sweden had started de-regulating its markets once again, decreased its marginal tax rates, and opted for a sound-money, low-inflation policy.

In the early 1990s, the pace quickened, and most markets except for labor and housing were liberalized. The state sold its shares in a number of companies, granted independence to its central bank, and introduced school vouchers that improved choice and competition in education.

Stockholm slashed public pensions and introduced private retirement schemes, keeping the system demographically sustainable.These decisive economic liberalizations, and not socialism, are what laid the foundations for Sweden’s success over the last 15 years. After the reforms of the early 1990s, Swedes’ real wages increased by roughly 35% in a decade.

And, as businesses have become more productive and people’s incomes have risen, living standards improved. More people eat at restaurants now, more people travel abroad, more people buy DVDs and new cars. More people get more.

The path to reform has, however, come only in waves. After the intense overhauls of the early 1990s, the pace slowed somewhat and it wasn’t until a center-right government returned to power in 2006 that free-market reforms picked up again. That center-right coalition, led by my own Moderate Party, was re-elected last year, after beating our leftist opposition by almost seven percentage points.

The leftists’ campaign promise? To roll back economic reforms.Even smarting from the financial crisis, Swedes turned the leftists down. Over the last four years, they have seen their borders opened for more labor migration, they have seen still more state-owned companies sold, and have seen their public authorities shrink in number. Stockholm has also cut property taxes and abolis

Πηγή: The Swedish Model – WSJ

About brexians

Demetrios Georgalas (A Surviving Globalization Consultant) was born in 1961 in Bern and grew up in Athens. In1985, graduated from Surrey University with a Tourism Management BSc (Hons). In 1998, graduated from LMTB under Freie Universitat Berlin, with a Diploma Lasers in Medicine. His professional career was started in the private sector and at the same time he created his first consulting company D+G Consultants Inc. Worked for major multinationals in Greece and abroad (FMCGs / Pharmaceuticals / Tourism). Demetrios Georgalas, having established also Travelling 2 Greece a destination management company, while with the D+G Consultants working in the areas of BTL and special marketing projects. He is activated except from Greece in the Balkans and in Turkey, consulting his clientele with new innovative proposals. Apart from his enterprising activities, he dabbles at blogging, travelling and cooking while he is married and has two children. In conclusion Demetrios Georgalas is an Athenian, Greek, Agnostic, Traveller, & Liberal he likes sci-fi, photography, blogging, travelling and cooking and if you like fascism or any kind of dogma, keep out! Δημήτρης Κ. Γεωργαλάς Γεννήθηκε στην Αθήνα το 1961, σπούδασε Τουριστική Διαχείριση στο Ηνωμένο Βασίλειο και κατέχει μεταπτυχιακό τίτλο στην Βιοτεχνολογία. Έχει εργαστεί σε μεγάλα τουριστικά γραφεία του εσωτερικού, και σε πολυεθνικές σε Ελλάδα και Εξωτερικό, στο χώρο των φαρμάκων, των ιατρικών μηχανημάτων και των FMCG’s. Από το 2001 είναι ελεύθερος επαγγελματίας, με δραστηριότητα στην διαχείριση προορισμού, τον θεματικό τουρισμό και τις ειδικές ενέργειες marketing. Είναι παντρεμένος και πατέρας δυο παιδιών, διδάσκει ειδικά θέματα εξωτερικού εμπορίου και κοινωνικής δικτύωσης, σε επιχειρήσεις και οργανισμούς. Ασχολείται ενεργά με το διαδίκτυο από το 1993 με άμεση εμπλοκή στα κοινωνικά δίκτυα και στο «ιστολογείν». Φανατικός ταξιδευτής, ερασιτέχνης φωτογράφος, μαχόμενος αγνωστικός και φιλελεύθερος. Όραμά του μια Ευρωπαϊκή Ελλάδα. https://brexians.wordpress.com
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