Scandinavia not such a socialist paradise

September 2nd, 2015 at 11:00 am by David Farrar

Liam Hehir writes in the Manawatu Standard:

In her final column for the New Zealand Herald, Dita De Boni lamented that New Zealand is becoming an uncaring nation whose compassion compares badly to the world’s “best-run countries”.  She didn’t specify which countries these were in the column but, acting on a hunch, I queried whether she was referring to the “Nordic countries” (being Sweden, Denmark, Norway and Iceland).

She was.

So Liam looks at Sweden:

Sweden, in particular, is often held out as an exemplar of social democratic excellence.  The radical British journalist Polly Toynbee once declared the country to be “the most successful society the world has ever known”.

These hosannas to Nordic virtues are often made as a reproach to those countries that are considered to have a more “neoliberal” disposition. This sometimes includes countries like New Zealand and Britain which have moved from largely state-directed to free enterprise economies. More commonly, however, the example of countries like Sweden is held out as standing rebuke to the supposedly corporate-dominated, compassionless and backwards United States.

But the reality:

It’s certainly true that Sweden pays for its generous welfare state through stiff levels of taxation. The burden of these taxes, however, does not fall on the wealthy to anything like the extent Left-wingers normally like to see.

According to 2014 figures, Sweden only has the 25th most progressive income tax in the OECD. New Zealand is not far behind at 26th. You might be surprised to learn, however, that the supposedly plutocratic US actually has the eighth most progressive income tax in the developed world. So in spite of the prevailing media framing of things, high-earning Americans contribute a much higher proportion of their country’s tax revenues than high-earning Swedes do.

What about corporate profits? We are constantly told that the American government is in the pocket of big business. If that is true to the extent that the media makes out, then it’s hard to see why the US government taxes corporate profits at a rate of 40 per cent, the highest such rate in the free world (and much of the un-free world to boot). New Zealand’s rate is 28 per cent. Sweden’s in 22 per cent.

Defenders of the one-size-fits-all model of education often attack the introduction of “American-style” charter schools in New Zealand. It is true that the charter school movement has attracted a lot of support from politicians across the political spectrum in the US and that this has played a large part in putting the issue on the political radar. However, it is also true that charter schools are very common in Sweden and that the country was an important pioneer in their development as an alternative to more bureaucratic, traditional forms of schooling. In fact, a cursory review of the Swedish education system shows that it offers levels of choice and consumer freedom that the ACT Party can only dream about.

Not quite the socialist paradise.

Finally, we come to issues of racial politics. New Zealanders like to roll their eyes and snigger at the rise of Donald Trump as a potential nominee for next year’s presidential election on the back of strident, anti-immigration media statements. This is taken to be proof of the notion that Americans are a uniquely bigoted and prejudiced people.

But did you know that an anti-immigration party, the Sweden Democrats, was the top-polling political party in Sweden this month?

Yep, in one poll they got 25.2%, beating the Social Democrats and Moderates. Their policies are:

  • cultural assimilation rather than integaration
  • Pay immigrants to leave Sweden
  • Lower tax rates for the elderly
  • Against special privileges for the Sami ethnic minority

The point Liam makes is that people like Dita write columns about how awful life is in NZ, because they don’t like the Government or neo-liberalism. But if you look around the world, there are not a lot of countries that have wonderful socialist societies where people want to live.

In the supposedly racist US, for example, the unemployment rate is about the same for immigrants and the native born. New Zealand does slightly worse than America on that score. In Sweden, however, immigrants are almost three times as likely to be unemployed than the native born adults. The only OECD country that does worse is Norway.

I could go on to talk about things like the Swedish penchant for privatisation, its lack of a national minimum wage and its slashing of public spending in years gone by. By now, however, the point should be well made. There might be many things the Left finds attractive about the Nordic model, but it is not the socialist utopia of their imaginings.


Swedish housing controls

September 15th, 2014 at 1:00 pm by David Farrar

Quartz reports:

Due to Stockholm’s infamously strict housing market, its citizens are having an incredibly hard time finding an apartment.

There are two main factors underlying this phenomenon. First, the city wait list for a new apartment is now 15 years on average, or 7.7 years in the Greater Stockholm region.

This is what happens when you have rent controls. No new supply.

n the last 10 years, 35,000 rental properties have been converted to condos with the result that the black market for getting a rental property is $29,000 per room. To be clear, that means paying someone $29,000 just for the right to rent that room.

So maybe all those strict housing controls are not such a great idea.

Saint Göran Hospital

May 28th, 2013 at 3:00 pm by David Farrar

The Economist reports:

SAINT GORAN’S hospital is one of the glories of the Swedish welfare state. It is also a laboratory for applying business principles to the public sector. The hospital is run by a private company, Capio, which in turn is run by a consortium of private-equity funds, including Nordic Capital and Apax Partners. The doctors and nurses are Capio employees, answerable to a boss and a board. Doctors talk enthusiastically about “the Toyota model of production” and “harnessing innovation” to cut costs.

A hospital owned by equity funds and run like a car company? The instinct would be to deplore it as everything that a hospital shouldn’t be. But what is the reality?

The hospital today is organised on the twin lean principles of “flow” and “quality”. Doctors and nurses used to keep a professional distance from each other. Now they work (and sit) together in teams. (Goran Ornung, a doctor, likens the teams to workers in Formula One pit stops.) In the old days people concentrated solely on their field of medical expertise. Now they are all responsible for suggesting operational improvements as well.

So staff are empowered.

One innovation involved buying a roll of yellow tape. Staff used to waste precious time looking for defibrillator machines and the like. Then someone suggested marking a spot on the floor with yellow tape and insisting that the machines were always kept there. Other ideas are equally low-tech. Teams use a series of magnetic dots to keep track of each patient’s progress and which beds are free. They discharge patients throughout the day rather than in one batch, so that they can easily find a taxi.

The best ideas are often simple. My staff came up with the idea of using Facebook to organise rosters. It turned what was teh most challenging part of our operations to simplicity – as it allowed staff to arrange their own replacements.

St Goran’s is the medical equivalent of a budget airline. There are four to six patients to a room. The decor is institutional. Everything is done to “maximise throughput”. The aim is to give taxpayers value for money. Hospitals should not be in the hotel business, the argument goes. St Goran’s has reduced waiting times by increasing throughput. It has also reduced each patient’s likelihood of picking up an infection. However, scrimping on hotel services means that it has to invest in preparing patients for admission and providing support after they are released.

Sounds all positive. Reduced waiting times, reduced infections, better pre and post admission support.

Sweden has gone further than any other European country in embracing the purchaser-provider split—that is, in using government money to buy public services from whichever providers, public or private, offer the best combination of price and quality. Private firms provide 20% of public hospital care in Sweden and 30% of public primary care. Both the public and private sectors are obsessed with lean management; they realise that a high-cost country such as Sweden must make the best use of its resources.

I think it is a pity the funder provider split was never fully implemented in NZ.

St Goran’s also acts as a hare for Capio, one of Europe’s largest health-care companies, with 11,000 employees across the continent and 2.9m visits from patients in 2012. Sweden is Capio’s biggest market, accounting for 48.2% of its sales (France comes second with 37.6%). The firm performs 10% of all Swedish cataract operations, and much more besides. Capio thinks it can make huge savings in other countries by transferring the lessons it has learned in Sweden. The average length of a hospital stay in Sweden is 4.5 days, compared with 5.2 days in France and 7.5 days in Germany. Sweden has 2.8 hospital beds per 1,000 citizens. France has 6.6; Germany, 8.2. Yet Swedes live slightly longer.

A great stat.

Swedish riots

May 22nd, 2013 at 9:00 am by David Farrar

The headline in Stuff was:

Stockholm rioting continues after shooting

Sweden is not normally a country you associate with rioting. When I saw the headline, I thought that it was almost inevitable that the rioting would be by immigrants. I felt a bit guilty over jumping to such a conclusion but the story starts:

Some 200 youths hurled rocks at police and set cars ablaze in a largely immigrant suburb of Stockholm today, the second day of rioting triggered by the fatal police shooting of a man wielding a knife.

Dozens of windows were smashed, 10 cars and several containers were set on fire, and seven police officers were injured. Cars and containers were also set ablaze in another of the Swedish capital’s suburbs, Fittja, although police said it was not clear whether the two events were linked.

The unrest began Sunday night in response to the May 13 shooting, in which police killed a 69-year-old man who had locked himself in an apartment in Husby, west of Stockholm. Police refused to give the nationality of the victim.

It sounds like France.

I am an absolute fan of immigration, but it has to be done in a way where new citizens integrate into their new country, not form enclaves. Few countries in Europe have managed this. I’m pleased to say that New Zealand largely does.

Reinfeldt added that Husby – where around 80 percent of the roughly 11,000 residents are first- or second-generation immigrants – has been going in the right direction during his seven-year tenure, with employment increasing and crime falling.

An 80% concentration of immigrants is not healthy in my opinion. As I said above, integration (which is different to assimilation) is the key.

The Swedish Tobin Tax

April 17th, 2013 at 12:00 pm by David Farrar

Magnus Wilberg writes in the Financial Times:

Europe is making a mistake. In February, the European Commission published a proposal for a financial transaction tax – also called a Tobin or “Robin Hood” tax – in the EU. Eleven states have been granted the right to impose a minimum 0.1 per cent tax on equity and debt transactions and a minimum 0.01 per cent charge on derivatives transactions. If the experience of Sweden’s use of such a tax is anything to go by, this move is extremely unwise.

Why do some people advocate for a FTT?

One aim of the proposed tax is to improve the efficiency of financial markets by reducing speculation. Another is to generate tax revenues. Those were also the reasons why Sweden introduced a transaction tax in 1984.

If an FTT actually worked, and it was used to lower income tax rates, then it could be worth considering as part of a policy of broad base and low rates. But do they work?


Initially, the tax rate was 0.5 per cent in connection with the purchase and sale of shares. In mid-1986, the rate was doubled and the tax base was broadened to cover share options and convertibles. The trading volume on the Stockholm stock exchange changed dramatically when the tax was increased. Average turnover fell 30 per cent during the second half of 1986 and throughout 1987. The turnover in the 11 most traded shares fell 60 per cent. It seems unlikely that this sharp decrease reflected a decline only in speculative trading.

Later, in 1989, the tax base was broadened to include bonds. This, in turn, led to an 85 per cent reduction in bond-trading volume and a 98 per cent reduction of trading volume in bond derivatives. The increase in tax revenues resulting from the broadening was less than 5 per cent of what had been expected.

By 1990, shortly after the last vestiges of the currency controls were abolished in Sweden, more than 50 per cent of the trading in Swedish shares had moved to London. Conversely, once the tax was abolished in December 1991, trading on the Stockholm stock exchange recovered.

We live in an increasingly mobile and borderless world. Companies can decide where to locate, where to pay tax, and where to do financial transactions. The best way to have a good tax base is to have low rates.

This conclusion is reinforced by studies on the effects of the Swedish tax, which suggest that it reduced market liquidity but not volatility. Since increases in speculative trading tend to be associated with more volatility, this also suggests that the tax had little substantial effect on speculative trading.

So it didn’t even achieve its main aim.

The Swedish reforms

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

Will Tanner writes:

Sweden’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.

Is Sweden emasculating boys? Is NZ next?

June 29th, 2011 at 11:42 am by Jadis

I am hoping like hell that our policy makers in the area of Early Childhood Education aren’t looking to Sweden as way of the future.

Simply put, the Swedish National Curriculum for Early Childhood Education affirms three values – children’s rights, gender equity, and education for sustainable development.  The gender equity component indicates that girls and boys should have the same opportunities to develop and learn “without limitations imposed by stereotyped gender roles and patterns.”  So, the teachers in have worked to counteract traditional gender patterns and gender roles.  I am actually supportive of that, within limits.

The latest, albeit radical,  representation is the pre-school with no gender references.  This is a taxpayer-funded ECE provider.

  • There are no fairytales
  • All children are referred to as “friends” (may as well be ‘comrades’)
  • No references to ‘him’, ‘her’, ‘he’ or ‘she’
  • Construction activities (like Lego) are placed next to the toy kitchen so that no “barriers” are in place between the two activities

But this centre also goes further to breakdown views beyond just gender – into “fostering an environment that is tolerant of gay, lesbian, bi-sexual and transgender people.” So, this centre has:

  • books that represent gay or lesbian parents, solo parents, and adopted children
  • teachers who suggest children can be “two Mums” and not just the stereotypical Mum and Dad

To be fair, this is a radical example and representation of the new direction for ECE in Stockholm.  And, there are certainly calls  for it from parents and caregivers – the Centre Director says there is a long waiting list for admission to the kindy.

My concern, shared by Child Psychologist Jay Belsky, is that boys like doing boy things and that if ECE is to go to the extremes as evident above then we run the risk of emasculating our boys.  Yes, it is important to break down barriers for girls and women to succeed but not at the expense of boys and men.  In turn, I do want to see an acknowledgment of different family structures however this centre appears to have gone beyond the ‘tipping point’.  I suspect it is meeting a need within their local community.

The New Zealand education system needs to reject the Swedish model (and radical representations) and instead focus on celebrating being male and being female without placing undue barriers or judgments in the way.  The problem with removing gender is that too many pieces of curriculum actually remove ‘being male’ and inadvertantly place the ‘being female’ as more important.  The more that we emasculate our boys the fewer roles we allow them to have within our society.


Swedish Success

March 7th, 2011 at 10:00 am by David Farrar

An interesting WSJ article:

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.

I’m probably one of the guilty ones who has traditionally associated Sweden with socialism, or social democratism (whatever they call it now).

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. …

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.

Sounds a bit like a country I know.

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.

Definitely sounding familiar.

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 abolished the wealth tax, and instituted a new system of income-tax credits that lets working people with average incomes keep what amounts to an extra month of wages, after taxes, per year. Today, the state’s total tax take comes to 45% of GDP, from 56% ten years ago.

And best of all:

Stockholm has also introduced a law that empowers Swedes to chose their providers for health care and other public services. This has led to a robust surge in entrepreneurship within the health-care sector, where more competition is bound to improve services.

Who’s up for a study tour to Sweden?

Congrats Swedish Christian Democrats

September 20th, 2010 at 1:00 pm by David Farrar

Congratulations to my friends in the Swedish Christian Democrats, wo have just got re-elected to Government.

Reuters reports:

Official preliminary results showed the centre-right coalition government winning 173 seats in the 349-seat parliament and the Social Democrat-led centre-left with 156 seats.

Reinfeldt, who has benefited from one of Europe’s strongest economic recoveries and sound public finances, would be the first sitting center-right leader ever to win re-election in Sweden. The Social Democrats, architects of Sweden’s welfare model, ruled for much of the last century.

A very good result to be the first CR Government re-elected. The Moderate Party is the largest CR party.

However, the big news of the night for a country which has long prided itself as being one of the most tolerant in Europe was that the anti-immigrant Sweden Democrats looked set to win 20 seats, their first entry to the national parliament.

This is not a surprise. In most countries in Europe there is a backlash against immigration. Not against all immigration, but against immigrations where immigrants do not assimilate into the local community, but instead form hostile enclaves.

Israel vs Sweden

August 31st, 2009 at 12:32 pm by David Farrar

The Economist reports:

BARELY two months into its six-month presidency of the European Union, Sweden’s government is entangled in a scrap with Israel. Because it pitches Swedes’ cherished free-speech principles against Middle Eastern sensibilities, it is loaded with a wearying sense of déjà vu—and a potential to escalate.

It started on August 17th when Aftonbladet, a Swedish tabloid, published an incendiary article claiming that Israeli soldiers had harvested the organs of some Palestinians whom they had shot. Within hours, Israel’s deputy foreign minister had denounced the article for racism and demanded that it be condemned by the Swedish government. …

Sweden’s ambassador in Tel Aviv obligingly called the article shocking. But she was countermanded by the Swedish foreign minister, Carl Bildt. Israel, he wrote in his blog, wanted the Swedish government to distance itself from the article or take steps to prevent a replication, but that was not how the country worked. This robust defence of freedom of expression was endorsed by the prime minister, Fredrik Reinfeldt.

Matters quickly deteriorated. An internet campaign called for a boycott of Swedish companies, including IKEA and Volvo. A planned official visit by Mr Bildt to Israel may be under threat. Lawsuits have begun. And Sweden stands accused by prominent Israelis, including the prime minister, Binyamin Netanyahu, of blood libel and anti-Semitism.

This has uncomfortable echoes of Denmark’s cartoon wars, started when a Danish newspaper published drawings of the prophet Muhammad in late 2005.

The article in the Swedish tabloid newspaper was racist and gross anti-semitism. It was designed to give credibility to the lies spread in many Middle East countries about Jews and organ harvesting.

The newspaper incidentally is owned by Swedish Trade Union Confederation and has a history of anti-semitic articles.

Now it is debatable about whether the Swedish Government should or should not condemn the article, but there is absolutely no way the Government should be trying to prevent the article, or be held responsible for the actions of the newspaper.

So the campaign against Sweden, and especially Swedish companies, is misguided and wrong. Do not hold a country responsible for the actions of one newspaper.

There are some parallels to the Danish cartoon controversy. The aspect in common is the misguided desire to punish an entire country for the editorial decisions of one newspaper.

But I have not seen any burning down of Swedish embassies or incitements to violence against Sweden.  A boycott campaign is not the same as death threats against journalists.