In defense of the welfare state
By Jonathan Power International Herald Tribune
WEDNESDAY, AUGUST 24, 2005
STOCKHOLM The statistics had arrived on the Swedish prime minister's desk
that morning, his first day back at work after his summer vacation, cycling
around the villages near his summer estate.
It was good news. Goran Persson, now in his ninth year of office, told me
that the growth rate for this year will be near 3 percent and next year more
than 3 percent - enough, he said, to maintain Sweden's trajectory of the last
decade, which was "above the average for the European Union" and, in
particular, "as good as the Anglo-Saxons, Britain and the U.S." (He admitted
that he was referring to U.S. per capita growth, so as to discount the effect
of its fast, immigrant-driven rise in population.)
This raised the first question - how does this self-confessed socialist
state do it? What is the secret for success when Swedish taxes are the highest
in the world and the welfare state is the country's single largest employer?
After all, when Persson came in as finance minister in 1994 the country was
reeling economically, as state expenditures on the health and social sectors
raced ahead of the country's ability to generate wealth.
"If you have a free economy," explained the prime minister, "a highly
educated work force, a very healthy people, very high productivity and a sound
environment then you can create the critical size of resources to create good
growth.
"That has to be joined with adequate public financing of universities,
research and development. As long as we are efficient and constantly
challenging ourselves we continue to be productive.
"Then if we produce successful growth, the government gets the public's
support for high taxes. If the quality of the public sector is good, then a
prosperous people will continue to vote for funding it."
The Social Democrats have been in power for most of the last 73 years.
But recently public opinion has turned away from the government, partly because
of the prime minister's apparent dictatorial style and partly because of a
series of scandals including his slow response to the tsunami, when hundreds of
Swedes on vacation in Thailand died.
Despite the malaise, Persson appears to relish the coming electoral
fight. The key economic statistics are good, he argues, with low inflation, low
interest rates, and with the economy finally moving from the export-dominated
growth of previous years to domestic-driven growth, which promises rapid job
creation.
Moreover, he feels he is having some success in dealing with the
criticisms that have been made of the welfare state. Many have observed that
Sweden cannot sustain its generous womb-to-tomb system if so many Swedes abuse
the system by calling in sick and claming unnecessary disability leave. On an
average day, one-fifth of the potential workforce is claiming these rights, in
a country that along with France and Japan is the healthiest in the world.
"I had a new report on my desk today to show that we are getting these
figures down," he said. "It is now under control. We have given employers an
incentive to convince their personnel to return from sick leave by offering
them a tax benefit if they succeed. This means that they should improve their
environment and their conditions of work. At the same time, we have been
scrutinizing those doctors who have been too generous in signing sick notes."
Persson, lounging back in his chair and gazing out of the window that
looks out on the capital's beguiling mix of waterways, 18th-century
Renaissance-style palaces and grand houses, ends the conversation with two
quick jabs. "Europe has a lack of confidence vis-à- vis the U.S.," he said.
"The U.S. is competitive, but not as competitive as we think. We are too
self-critical in Europe, even though we have a much better social system and in
Sweden are just as productive. On unemployment, it is overlooked that the U.S.
has approaching two million people in jail and out of the labor market."
As for the opposition's claim that he might raise taxes, he seems
blithely unconcerned: "I have no plans for that at the moment, as the economy
is doing so well. But if at the election I have to go to the Swedes and ask
them to approve a tax rise so that we can improve our health services even
more, I believe they will support me."
The sweet arguments of success? Or the arrogance of being too long in
power? In a year, voters will decide. Meanwhile, the prime minister of the
world's most successful socialist state gives notice he is in no mood to step
down and pursue one of his two unfulfilled vocations - as either a priest or a
farmer.
(Jonathan Power is a commentator on foreign affairs.)
[Non-text portions of this message have been removed]
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