There are many myths about Sweden and they go back a long time.
For example, in the 1930’s various supporters of the ‘Middle Way’ (such as the future Conservative party leader Harold Macmillian) suggested that if Britain followed a policy of greater statism, Britain would be more prosperous – and they pointed at Sweden as an example of greater statism. Such folk did not tend to stress such things as Swedish levels of taxation being about half British levels at the time.
Sweden’s great success was avoiding both world wars (and the capital consumption these wars involved), but this is not often talked about (the record of Sweden, in relation to Germany, in the 1930’s and during WWII is especially not something people like to talk about).
Of course these days Sweden does indeed have very high taxes (although I doubt they really are the “highest in the world”, as is often claimed – after all the stats for levels of taxation in many nations in the world are fantasy as they do not include the endless bribes one must pay and extortion one is subject to in these countries).
However, at least in recent years the Swedish government has at least managed to control its (very high) levels of government welfare-state spending (unlike the United States – see the Cato Institute for the Bush Administration’s latest lies about the cost of the Medicare extension), and whilst not as well off as Americans (“Sweden most prosperous nation in the world” is an absurd myth one still finds being talked of from time to time) the Swedish people are not doing too badly.
Apart from the control of government spending (yes it is still very high – but at least it’s growth has been controlled in recent years so government spending as a percentage of GDP has fallen – although, I repeat, it is still very high) which has led to a balanced budget, Sweden has also followed a policy of one of the lowest money supply growth rates in the world.
Now why is this? Fiscal and monetary conservatism is hardly what Sweden is supposed to be about – this is supposed to be a nation that has long worshipped the doctrines of Lord Keynes.
However, a theory does occur to me. The Swedish government has long wished to get the nation to join the European Union’s system of money (the “Euro”). How would the people of Sweden be convinced to vote to join the EU currency?
According to the doctrines of Lord Keynes (at least as they are popularly understood) if a government follows a policy of balanced budget and tight control of the money supply then (at least at some points of the “economic cycle”) such lines of policy will produce recession.
Could the intention of the government of Sweden have been to produce recession and get people to vote for the Euro as a possible “way out”? In short could the rising levels of GDP and industrial output in Sweden be not just unintentional, but the opposite of what the government wanted?
Hilarious!
Wait! I got one too!
Greenspan is planing hyper-inflation to bankrupt the US so that the UN can turn America into a UN protectorate!
Of course it’s legal tender will be the Euro!
I have difficulty believing that the swedish government would attempt this, and I have even more difficulty with the idea that they could do it and maintain secrecy.
Even if they did a) believe it and b) try it, they would be leaving themselves at the mercy of capricious economic cycles. In short, there are too many variables (whether or not it would work, whether or not it would produce the desired reaction being the big two) for the Swedish government to justify the large risk involved with having your electorate find out that you’re involved in willfull economic sabotage. Well, I guess socialism is, in fact, willful economic sabotage, but at least then they have some semblance of plausible deniability and ‘good intentions.’
So some government behaves responsibly, curbs the deficits and halts inflation, and it is so unbelievable that you must seek hidden motives and conspiracy theories ?
I mean: a balanced budget is a precondition for any stable and maintainable long term policy, whether it opts for a high level of state welfare or a low level.
BTW – do you have links to some articles about the Swedish economy ?
I don’t think so.
Jacob – It’s not online, but there’s an interesting and amusing chapter on the Swedish economy (with some history) in P.J. O’Rourke’s book “Eat the Rich”.
This might be of interest in dispelling the idea that good Swedish economic performance is an intricate state conspiracy to adopt the Euro. It would appear that Sweden in the early 90s suffered from several of the same problems Britain did, for similar reasons.
No conspiracy, just a rational approach to state finances?
EG
Actually IMHO The UK economy has improved for roughly the same reasons namely low M4.
M4 has been reduced greatly from historical levels, and as M4 is the level of currency defraudment or “real” inflation it follows that low M4 => better economy.
You can look at the deflationary effect of capitalism by taking M4 away from measured inflation (say RPI) to get the deflationary effect of competition.
Monetary “expansion” should in reality allways be seen as another stealth tax. As the state gets first dibs on their new spending power before you get the chance to compensate.
Good heavens, it seems every time I check in here there’s some nutty libertarian theory being espoused.
The last time I came to the site someone was proposing that the Coronado Bridge in San Diego curves because it had to be a certain length to qualify for government funding.
And now we have the theory that the conniving Swedish government wants to hurt Sweden’s economy so that its people will decide to adopt the Euro.
This place really takes the cake. I will have to come here more often.
The UK economy has improved for roughly the same reasons namely low M4.
Oh please!
The reason “M” classifications are hardly mentioned these days is they ignore much of the money supply i.e. ready credit used and spent on Credit Cards, which is effectively used as money and has been, on a wide scale, since the relaxation of credit controls in 1984. Consequently money supply in the UK is anything BUT low.
I’d say it is fairer to say that the UK economy has been stable through the downturn because consumers have continued to buy fueled by easy credit and high notional personal wealth created by a booming housing market.
Dave you are confusing the amount of currency (M4) with the rate of use. High utilisation i.e. turnover of money helps the availability.
M4 is the estimated total money supply. The others are various figures for a amount of coin (M3) etc.
I would agree that the UK spending has been artificially inflated by Mortgage Equity Withdrawal which effectively means that follish people pay for kitchens, cars and holidays over 25 years.
There IS a huge problem with the amount of consumption brought forward (debt) in the UK that will squeeze the economy longer term. However the economy has been helped by low money supply expansion which has meant that currency holders haven’t been defrauded.
Rob, one of the problems since the mid 80’s with the M4 definition has been how to factor easy access credit Debt into the money supply calculation – which is why the M4 definition you are using is inadequate.
You say “rate of use” – but rate of use of what? Do you consider a Credit Card to be part of M4 or not? The definition says no, however, the reality is the available credit on a credit card is, in actual fact part of the money supply as it is readily and immediately available just as a bank current account deposit is.
Not all credit card spending is related to mortage equity withdrawal. A lot is preuly unsecured bank lending – a potential house of cards in and of itself.
There has been low inflation, that is certainly true but I’m afraid that I haven’t accpeted classical monetarist economy theory since the late 80’s.
Sweden: interesting and complex culture, great babes and an object example of the adaptability of the welfare/warfare state.
Most important point is the neutrality and lack of participation in two world wars.
Up to 1945, Germany was, by far, the greatest cultural influence in Sweden, and by this, I don’t mean Naziism, for any conflationists out there.
It seems that my effort at humour has failed – very well I will avoid such things in future.
Two other points (in the comments) have interested me.
On the point about the British money supply – I very much agree with those people who argue that it rapidly growing. As for silly consumers – well the credit has to come from somewhere and the Bank of England (the state) stands behind the financial institutions.
As for German influence on Sweden – yes lots (in the past).
Some good – such as the high standards in education (till the late 1960’s of course).
And some bad – such as German racial and eugenics ideas, which persisted in Sweden up till the 1970’s.
I know many places indulged in eugenics – but few were interested in such things as eye colour, as the Swedish government was.
It may be hard to believe, but within living memory having brown eyes could have serious consequences in Sweden.