The Swedish Alternative to Austerity

Back in Sweden again. What strikes me this time is the great contrast between the political and economic mood here, and back in my other home in the UK. Britain is gripped by ‘austerity’, and full of gloom and doom (except, I guess, for the very rich). More cuts in social provision are promised, hitting the poorest and most disadvantaged, and the NHS is collapsing for want of funds. The Government is using the ‘crisis’ to extend privatization and diminish ‘the state’, on what appear to be purely ideological grounds. In my part of England, shops are boarded up, and poverty is clearly rife. The tabloid press, and hence one assumes its readers, are blaming immigrants for taking the latters’ jobs and ‘sponging’ off what remains of our welfare state. Hence the particular line taken by the UK government in its negotiations with the rest of Europe, making the narrow issue of ‘immigration’ the main one determining whether we stay within the EU or not. The political Right, in the slightly comic form of UKIP – but then we should beware of comedians: look at Trump – is on the march. The Chancellor of the Exchequer, now starting to acknowledge that the five years of cuts he has presided over probably won’t substantially revive the UK economy, is blaming ‘global’ factors for this. That seems plausible. After all, the whole Western world is suffering, is it not?

Until you come to Sweden. Of course, the impression I get here is merely subjective, and may mark a difference not so much between Britain and Sweden per se, as between a very poor provincial city in the one country, and the capital of the other. So I’ve been looking out some statistics. Here’s what I found.

Sweden’s economy grew by 4.5% in the last quarter of last year. This is twice the rate of Germany’s growth. Incomes are rising. Most of this is export-driven. As well as this, ‘low interest rates have boosted consumer spending and borrowing, with house prices rising to new all-time highs’ – though leveling off now. ‘Unemployment is also finally falling as the government is boosting spending on welfare and caring for a record-surge of asylum seekers from war-torn countries like Syria, Iraq and Afghanistan.’ (This is from a recent Bloomberg report: http://www.bloomberg.com/news/articles/2016-03-01/here-are-four-charts-that-explain-sweden-s-economic-boom.)

Notice the reference to asylum-seekers there. Sweden’s notably generous policy towards refugees is causing some social discontent (to put it mildly – neo-Nazis have been burning down their shelters); but economically, and especially as regards employment, it is seen as a plus. Everything else seems to be going pretty well. The Swedish social welfare system, though nibbled away by the previous Moderaten-led government, remains pretty impressive, boasting free university education, still, and Sweden’s greatest glory (in my opinion): universal childcare and parental leave arrangements (for fathers equally with mothers); all funded out of taxation. Doctors and hospitals – I’ve experienced both – are less hard-pressed. It would be wrong to pretend that there are no desperately poor people here, but most of them – the ones one notices, begging in the streets – are Roma from Eastern Europe. The Swedes are divided about how to cope with – or look after – them. I don’t think Sweden’s reputedly high taxation is much more of a burden on ordinary people than in Britain: the last time I compared my taxes of all kinds with my partner Kajsa’s there was little to choose between us; and look at what they get for it! If it is high, then according to what has become accepted as ‘orthodox’ economics in Britain and America today, that should be a drag on growth. So should the Swedes’ short working day, and long holidays. But it doesn’t seem to work like that.

Why? How come the Swedes can manage this, and we Brits can’t? Are they harder working, when they do work? Or is it something more systemic? I’m not a competent enough economist to answer that. My instincts and – if you like – prejudices veer to the Keynesian-socialist end of the political and economic spectrums, so I should like to attribute this success to, for example, Sweden’s powerful but co-operative Trade Unions; her tighter regulation of her manufacturing and financial industries – coupled, of course, with the fact that she still has some manufacturing industry, and is rather less dependent on finance; and her social security system. That, on top of the positive immigration factor. In other words, she never had a Thatcher. But what do I know?

The only lessons I want to draw from this are that there is an alternative to ‘austerity’, and all the neo-liberal values and policies tied up with that; and that there is at least one place in the world where it seems to work. Maybe the Swedish model isn’t applicable to Britain; or it would require too painful a revolution to take us there. (It would have been easier pre-Thatcher.) But if so, we need to be told why.

(First posted on the LRB Blog, yesterday.)

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