The Swedish Alternative to Austerity
Back in Sweden again. (I travel back and forth.) What strikes me this time is the great contrast between the political and economic mood here and in the UK. Britain is gripped by ‘austerity’, and full of gloom and doom (except 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 privatisation and diminish the state, on what appear to be purely ideological grounds.
In my part of England (Hull), shops are boarded up and poverty is rife. The tabloids are blaming immigrants for taking their readers' jobs and ‘sponging’ off what remains of the welfare state. Hence the line taken by the UK government in its negotiations with the rest of Europe, making the narrow issue of immigration the main one in determining whether we stay in the EU or not. The political right, in the slightly comic form of Ukip – but we should beware of comedians; look at Trump - is on the march. The chancellor of the exchequer, 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, isn't it?
Until you come to Sweden. I know my impression is subjective, and may mark a difference not so much between Britain and Sweden as between a very poor provincial city in one country and the capital of the other. So I’ve been looking at some statistics. Sweden’s economy grew by 4.5 per cent in the last quarter of last year – twice the rate of Germany’s. Incomes are rising. Most of this is export-driven. At the same time, ‘low interest rates have boosted consumer spending and borrowing, with house prices rising to new all-time highs' (as in southern England), though they are levelling 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.’ (All this is from a recent Bloomberg report.)
Notice the reference to asylum seekers there. Sweden’s 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.
The Swedish social welfare system, though nibbled away by the previous Moderaten-led government, still boasts free university education and what may be Sweden’s greatest glory: 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 than in the UK. It would be wrong to pretend that there are no desperately poor people here. Some of them are Roma from Eastern Europe. The Swedes are divided over how to cope with – or look after – them. I don’t think Sweden’s reputedly high taxation is more of a burden on ordinary people than Britain's is: the last time I compared my taxes with my Swedish partner’s there was little to choose between us – and look at what they get for it. If taxes are high, then according to ‘orthodox’ economics in Britain and America, 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 the British can’t? My instincts and – if you like – prejudices veer to the Keynesian and socialist ends of the political and economic spectrums, so I should like to attribute the success to Sweden’s powerful but co-operative trade unions, tighter regulation of manufacturing and financial industries (along with the fact that it still has some manufacturing industry, and is less dependent on finance), and social security system. But what do I know?
The only lesson I want to draw from this is that there is an alternative to ‘austerity’, and all the neo-liberal values and policies tied up with it; and 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.