The Swedish reforms

February 11th, 2013 at 11:00 am by David Farrar

Will Tanner writes:

’s financial crisis struck in 1991: the product of a now familiar cocktail of housing bubble, credit crunch and anti-competitive regulation. High taxes and productivity decline foretold years of low or negative growth: GDP fell by 4 per cent between 1990 and 1993.

So what did they do?

Swedish reformers used this fiscal crisis to radically reform the state. A centre-right coalition opened up the universal welfare state to choice and competition, using private companies and people power to improve quality and efficiency. State funding for education was reformed to follow the pupil, rather than the service, meaning that schools had to compete for custom for the first time. In healthcare, the private sector was invited to set up hospitals, GP clinics and even ambulances.

Sounds excellent. What happened?

Competition has delivered better services. At Kunskapsskolan, a private free school chain, children take greater responsibility for their own learning; setting their own goals, class schedules and recording progress online. The 10,000 pupils taught in its 33 schools consistently outperform the national average. Private healthcare companies have helped the Swedish healthcare system keep up with rapid change. St Göran hospital in Stockholm has been outsourced to a private company, Capio. Since 1999, St Göran has grown its market share, improved clinical care and patient satisfaction, and saved millions.

Oh that will send shudders to some. A private hospital with growing market share. I’m more interested in the improved clinical care and patient satisfaction.

One of the most important achievements in Sweden has been bringing workers on side. While outsourcing is still controversial, once-obstructionist unions have been persuaded that competition drives up wages and improves working conditions for members. They now largely support the reforms. In 2001, a major report by the powerful Municipal Workers’ Union went so far as to say that “competition between the various providers can promote and promulgate improvements in both productivity and quality”.

Sigh – what I would give for some Swedish unions.

As a result, Sweden now enjoys budget surpluses of up to 3 per cent of GDP a year. Meanwhile, since public sector reform improves economic performance by raising productivity, the Swedish economy continues to grow. 

That is my idea of the Scandinavian dream. Well that, plus Princess Madeleine.

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31 Responses to “The Swedish reforms”

  1. krazykiwi (9,186 comments) says:

    All good stuff. I’ve noticed that rabid left, all to ready to cite Sweden as a socialist nirvana a decade ago, quietly and increasingly ignoring this country.

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  2. Colville (2,261 comments) says:

    Our unions just need a litte tough love is all. :-)

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  3. thor42 (971 comments) says:

    Excellent stuff!

    Now – if Shearer promised to follow Sweden’s reforms to the letter, then I’d be tempted to vote for him. Fat chance though. I don’t think even “Smiley Key” has the intelligence to copy these reforms.

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  4. YesWeDid (1,048 comments) says:

    Didn’t you get the memo DPF? We don’t have a union problem in this country, according to John Key we have ‘a flexible labour market and an educated workforce which is not heavily unionised’.

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  5. Cunningham (843 comments) says:

    The unions in this country are a disgrace. So ideological in their views without any consideration of anything else. No wonder there membership has dwindled as people realise how fucking pathetic they are (you only have to look at the Port dispute to see them for what they really are).

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  6. cha (3,943 comments) says:

    And if one cared to read the comments and follow the links you’d find that public spending went from from 67% of GDP in 1993 to 49% today, that the top tax rate went from 84% in 1983 to 57% today and that both health and education are publicly funded and highly regulated by the state.

    And then there’s the parental leave arrangements we can only dream about, a union participation rate of 70% and a goal of reducing greenhouse gas emissions by 40 percent by 2020, a non-fossil fleet by 2030 and net zero emissions by 2050.

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  7. Tom Jackson (2,553 comments) says:

    OK. If you will rejig the rest of NZ in line with the way Sweden does things, it sounds good to me. Welcome to a tax hike.

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  8. doggone7 (777 comments) says:

    If we surveyed results of 10,000 pupils taught in 33 private schools in NZ would we find they consistently outperform the national average?

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  9. mpledger (425 comments) says:

    How can it work here? Competition is meant to deliver better results by letting the good survive and the failing die out. But what happens here – when a private schools fails the government gives them a $3,000,000 hand-out.

    If you’re going to have competition in schooling then you have to be prepared to let schools fail which means the kids get transferred around the place to surviving schools. Imagine where the kids would go if your local primary school of 200 kids failed but the other schools around the place could only take-in about 10 children, some of those kids would have to be placed 20 schools away.

    Basically, the rich (or the politically well connected) will be able to afford stable schools by paying for it and the poor will be left with shifting their kids from school to school as they start and fail.

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  10. Jack5 (5,054 comments) says:

    Good one, DPF!

    Before NZ teachers slag the Swedish education system, it should be noted that it’s considerably better than NZ’s and almost on a par with Finland’s.

    Not many Swedes migrate to NZ, but from one family I am aware of, a child was so advanced compared with NZ kids of the same age he was bumped up two years in the NZ school. The child’s parents say he was just a good average in his class in Sweden.

    The co-operation of Swedish unions and employers goes back decades further than the 1990s.

    Aspects of Swedish industrial relations include a long-standing focus on industry-wide negotiations.

    Another aspect is very high union membership. Engineers, technicians, even clergy have unions.

    There is no State-mandated minimum wage, or State rules on overtime. However, the State mandates four weeks a year of paid leave and a 40-hour week, though there is provision for groups such as farming to negotiate hours.

    Union participation in management is common, though usually with a proviso reserving for management all rights to managing and allocating labour.

    However, there are downsides to Sweden, and a big one is high tax. They have a GST-equivalent of 25 per cent with food at 12 per cent. Wikipedia says Swedish PAYE takes 48.3 per cent of gross, though there are offsets for things like savings for retirement.

    Swedes get a great education and a great welfare system, but no matter what NZ Leftists say similar high taxes would not give us as good State health, education, and welfare schemes.

    We have the wrong sort of export industries, and consideraly more poorly educated workers.

    Our temperate weather and weekend-focused lifestyle makes us less ambitious.

    That we are increasingly diverse and multicultural would make it hard for us to reach the unanimity of monocultural Sweden.

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  11. Paulus (2,608 comments) says:

    I see that a committee is overlooking the re-opening of two Maori boarding schools in Auckland – St Stephens in Bombay and Queen Victoria, in Parnell.
    Both of these are described as being of a special nature schools when closed.
    St Stephen’s had a terrible reputatation for bullying.
    They actually provided for the Maori “elite”, and I assume that like Wanganui Collegiate they will get special funding.
    Like Charter schools actually.
    Like the “MYOB” new Maori secondary school in Tauranga, where any any questions asked are rebutted (rudely).

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  12. scrubone (3,095 comments) says:

    Imagine where the kids would go if your local primary school of 200 kids failed but the other schools around the place could only take-in about 10 children, some of those kids would have to be placed 20 schools away

    Perhaps you could rethink this sentence.

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  13. bringbackdemocracy (426 comments) says:

    A government prepared to undo what the leftists have done, surely not.
    It wouldn’t happen here.

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  14. hinamanu (2,352 comments) says:

    Everyone start talking about the Iceland success in jailing bankers and getting back on track that the media is totally igoring

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  15. kowtow (8,324 comments) says:

    They need to reform their immigration policies too.

    Huge numbers of Muslims,not interested in integrating and causing massive social problems.

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  16. Kea (12,422 comments) says:

    This is terrible news for our resident lefties who try and draw upon Sweden as an example of how socialism works.

    In reality, it is (and always has been) a free market capitalist country. It is capitalism that provides the wealth for the social assistance and hand outs to those in need. Socialism is unable to deliver these things as it punishes the wealthy and drags everyone down to a bleak and grimy existence. (Everyone accept the high ranking socialists in charge that is)

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  17. Bob R (1,363 comments) says:

    ***That we are increasingly diverse and multicultural would make it hard for us to reach the unanimity of monocultural Sweden.***

    Sweden is changing in that respect. It doesn’t appear that it will be able to maintain its widely admired socio-economic outcomes and welfare state if they continue to change the demographics.

    “Only 5% of native Swedish children live in poverty. For immigrant children with both parents born outside of the Sweden, the child poverty rate is 39%, a miserable number which may shock and should dishearten liberal Americans. The Swedish model appeared to produce amazing results as long as the country was completely homogeneous and full of Swedes. But the much admired welfare state was unable to deal with even moderate levels of ethic diversity (still far below the levels of the United States) without a collapse in social outcomes.”

    http://super-economy.blogspot.co.nz/2011/03/mystery-of-child-poverty-in-sweden.html

    “Hanif Bali investigates the share of pupils in Sweden who fail to quality for high-school (“obehöriga”), concluding that recently arrived immigrants cause declining outcomes. Bali is however wrong in one regard. Since outcomes among non-recent immigrants is unchanged, he concludes that “it is only the results of children who have migrated after the school start which are lowering school results”

    When analyzing the impact of immigration on the national average, it is not sufficient to look at the mean of immigrant outcomes. It is also important to look at how changes in the immigrant population share affects the national average.

    Between 2000-2010 the share of Swedish pupils who do not quality for high-school increased somewhat, from 10.6% to 11.8%. Interestingly the share of native Swedes who failed remained constant at 9%. The decline in the national average is entirely driven by students who have a foreign background.

    The increase in the population share of second generation immigrants alone appears to have caused about 30% of the decline in aggregate outcomes, even though the group did not perform worse than they did ten years ago”

    http://super-economy.blogspot.co.nz/2013/01/immigration-and-swedish-schools.html

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  18. thor42 (971 comments) says:

    @kowtow – “They need to reform their immigration policies too.

    Huge numbers of Muslims,not interested in integrating and causing massive social problems.”

    Agreed. If they don’t have massive immigration reform soon, then all of this economic good news will be for nothing.

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  19. Bill Courtney (161 comments) says:

    Before NZ teachers slag the Swedish education system, it should be noted that it’s considerably better than NZ’s and almost on a par with Finland’s.

    Good to see sheer ignorance reigning supreme on Kiwiblog again. Unfortunately, Sweden’s track record in education simply does not hold up well under close scrutiny. For the record, and for those that even consider such silly things as “facts”, here are the PISA 2009 scores and rankings out of the 62 school systems that participated:
    Reading Literacy: Finland 536 (rank 3rd), New Zealand 521 (7th) and Sweden 497 (19th). Maths Literacy: Finland 541 (rank 6th), New Zealand 519 (13th) and Sweden 494 (24th). Science Literacy: Finland 554 (rank 2nd), New Zealand 532 (7th) and Sweden 495 (28th).

    There are many other PISA stats that back this up, including their overall decline in Reading Literacy over the past decade and the increasing proportion of students who did not reach Level 2 proficiency, which is regarded as the benchmark for what is needed in modern life.

    Sweden was held up as the shining light for the current UK Conservative government’s education policy going into the 2010 election, based heavily on the Tories’ drive to set up more free schools (a la charter schools). When he visited the UK in February 2010, Per Thulberg, the director general of the Swedish National Agency for Education, became a media hot potato. But what he had to say was clear: the establishment of Sweden’s free schools had not led to better results. Where these schools had improved their results, he said, it was because the pupils they took had “better backgrounds” than those who attended the institutions the free schools had replaced.
    He went on to say: “This competition between schools that was one of the reasons for introducing the new schools has not led to better results. The lesson is that it’s not easy to find a way to continue school improvement. The students in the new schools have, in general, better standards but it has to do with their parents and backgrounds. They come from well-educated families.”

    Sorry to disappoint the ideologues but the Sweden v Finland experiment remains the most conclusive evidence yet that two remarkably similar countries can have such radically different educational outcomes by choosing the wrong approach. Finland’s commitment to the “Equity” model has seen it leave Sweden and the “Choice” or market model in its wake. Go Finland!!

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  20. Jack5 (5,054 comments) says:

    Re Bob R at 1.51

    We need debate in NZ, too, on immigration and diversitiy levels. Multiculturalism, like most -isms comes at a price.

    One of the first for NZ is likely to be the loss of open entry to Australia.

    Another, scarier result is the possibility of an extremist backlash, from young white men, who are increasingly sidelined.

    I favour the assimilationist, or melting pot, approach rather than the approach that NZ’s PC mob promote. They argue all cultures are of equal value. That necessarily includes Papua New Guinea brain eating.

    Multiculturists are trapped by THE TREATY, however. So most make exceptions for Maori culture, which they can then regard as special. So they entangle as well as envelop NZ in multiculturalism.

    How twisted logic is becoming in this trying to square the circle stood out for me when I heard Professor Anne Salmond talking on Waitangi Day. She’s the anthropologist who ardently values Polynesian oral history and by implication regards oral history as authentic as written history. I think it was Salmond I heard on RNZ’s Labour Radio last week extolling the value of learning Maori language.

    She said our English language gave us a door into the great Western cultural tradition, but Maori gave us an equivalent key to the parallel and great Asian tradition.

    As if, for studying Asian history, literature and culture generally, learning a Polynesian language, struggling to survive, with no written tradition before the arrival of whites, was of comparable benefit to learning Chinese, or Japanese, or even Korean.

    So Maori language is equal in academic study value to Chinese (Mandarin), Japanese, Korean — and English.

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  21. Jack5 (5,054 comments) says:

    Re Bill Courtney at 2.1:

    As expected NZ’s teachers rise to clobber any suggestion that Swedish education is better than NZ’s.

    PISA scores! As useful as NCEA, eh?

    When Swedish kids come here, and though they start school at a later age than Kiwis, are promoted to a higher age group, it’s obvious NZ’s teaching isn’t great.

    Ask employers about the educational standard of kids coming out of NZ schools. Ask a university that is running classes to bring first-year students up to minimum English-language standards (and we’re not talking about foreign kids).

    And, Bill C: writes that Finland outpaces Sweden in education. If so, wouldn’t have anything to do with the greater ethnic homogeneity of the Finns, would it?

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  22. cha (3,943 comments) says:

    Fuck yeah, anecdata rules.

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  23. hinamanu (2,352 comments) says:

    So God made a banker

    Great parody by financial analyst Chris Greene

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  24. Jack5 (5,054 comments) says:

    Cha posted at 2.51:

    Fuck yeah, anecdata rules.

    Okay, let’s have the Cambridge International Examinations, as many charter schools will have. Nothing anecdata about them.

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  25. Tom Jackson (2,553 comments) says:

    Priorities people!

    If we’re going to become like Sweden, then we need to work out how to make sure our women start looking more like Swedish women!

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  26. Jack5 (5,054 comments) says:

    Tom (4.24 post), you are bang on!

    If not that, let’s corner the wizards who are ethnically restructuring NZ. There are Swedish lady lookalikes in Latvia, Estonia, and Belarus where NZ still looks to have an attractive lifestyle. Can the ethno-wizards please make room for them.

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  27. Bob R (1,363 comments) says:

    @ Bill Courtney

    Charter/voucher schools only make up about 10% of Swedish schools so that’s hardly the explanation for the difference with Finland. Sanandaji again:

    “Between 2006-2009 the results fall declined in private schools, but even during this period they fell more in public schools. It is sometimes argued that the higher test-scores of private schools in Sweden is due to grade inflation. However the PISA scores are internationally standardized, so they are a fair metric.

    Keep in mind that there may be composition changes going on here, which the averages don’t tell us about. It is also theoretically possible that the decline in public schools is caused by private schools. One claim of the left is that if the smart and motivated kids leave, the other children become worse students. The Swedish left also accuses private schools of draining public schools from resources, which go towards detested profits. However it is unlikely for several reasons that pubic school failure is the fault of private schools.

    First, the private school sector remains small, with less than 10% of 8th graders tested by PISA in 2009.

    Second, in Sweden private schools cost taxpayers 8 percent less per public on average than public schools, so they are not draining financial resources. The average profit margin of all Swedish private schools is only 5% (and much of this is the return of injections of capital into the schools).

    Third, studies seem to indicate that there is little sorting in Swedish private schools, that is to say it is not mainly the richest or brightest kids who go to private schools. (e.g Böhlmark and Lindahl, 2007, 2009).

    Lastly international research has generally failed to detect a negative effect of school choice on those who stay behind. (having more girls in your class may help, but that’s another issue).

    Studies of school choice suffer from methodological problems, because children who choice private schools may be different in ways we cannot control for. Therefore probably the best study are those like this one, which uses lotteries. There is no comparable study for Sweden. They generally find that school choice does not lower outcomes, contrary to the claims of the Swedish left. While they also don’t detect major increases in test scores, they detect improvement in outcome variables such as arrest rates.

    Voucher funded schools have more satisfied teachers and parents and students. They cost less for taxpayers. They don’t appear to hurt public schools. In addition, they have been improving their test-scores in a period where public schools scores are declining. ”

    http://super-economy.blogspot.co.nz/2011/03/on-swedish-voucher-system.html

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  28. mister nui (1,027 comments) says:

    There was an excellent in-depth look at the Nordic countries in the most recent edition of the Economist, the full article doesn’t appear to be available on-line, but hear is the first section:

    http://www.economist.com/news/special-report/21570840-nordic-countries-are-reinventing-their-model-capitalism-says-adrian

    There was also this brief synopsis:

    http://www.economist.com/news/leaders/21571136-politicians-both-right-and-left-could-learn-nordic-countries-next-supermodel

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  29. Fletch (6,296 comments) says:

    Sweden has the highest rape count in the world, and it’s mostly Muslims committing the crimes.

    Who has the highest number of rapes in the world?

    The title sadly goes to Sweden, which now sees one out of every four Swedish women being the victim of rape.

    Is this the result of the rapid influx of Muslim immigrants who continue to form a larger percentage of the Swedish population?
    From the Counter Jihad Report:

    With Muslims represented in as many as 77 percent of the rape cases and a major increase in rape cases paralleling a major increase in Muslim immigration, the wages of Muslim immigration are proving to be a sexual assault epidemic by a misogynistic ideology.

    The escalation of rape in Sweden is so bad that in July of last year there were an average of five rapes a day reported in Stockholm. Think about that for a minute; five women being raped a day in a modern civilized city. This isn’t Afghanistan or Mexico we’re talking about; it’s Sweden.

    France is no better off where Muslim immigrants rape 24,000 French women on average and gang rape 7,000 females in France on a yearly basis.

    Only Lesotho, a small country in south Africa, has more reported rapes than Sweden.

    1. Lesotho: 91.6
    2. Sweden: 53.2
    3. USA: 28.6
    4. Zimbabwe: 25.6
    5. Norway: 19.8
    6. Israel: 17.6

    http://www.americanthinker.com/blog/2013/02/which_country_has_the_highest_rape_rate_in_the_world.html

    http://themuslimissue.wordpress.com/2013/01/28/shocking-predictive-muslim-rape-numbers-one-in-fou-swedes-will-be-raped/

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  30. cha (3,943 comments) says:

    Presenting hate and opinion as fact Fletch. Shame.

    http://www.nationmaster.com/graph/cri_rap-crime-rapes

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  31. Tom Jackson (2,553 comments) says:

    Fletch… Most of those rapes were committed by Julian Assange.

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