M2RB: Swedish House Mafia and Usher
Here we are, we are, we are
Here we are, we are, we found euphoria!
The leftward lurch has been
reversed: rather than extending the state into the market, the Nordics
are extending the market into the state.
By Adrian Wooldridge
THIRTY YEARS AGO Margaret Thatcher turned
Britain into the world’s leading centre of “thinking the unthinkable”.
Today that distinction has passed to Sweden. The streets of Stockholm
are awash with the blood of sacred cows. The think-tanks are brimful of
new ideas. The erstwhile champion of the “third way” is now pursuing a
far more interesting brand of politics.
Sweden has reduced public spending as a proportion of GDP from 67% in
1993 to 49% today. It could soon have a smaller state than Britain. It
has also cut the top marginal tax rate by 27 percentage points since
1983, to 57%, and scrapped a mare’s nest of taxes on property, gifts,
wealth and inheritance. This year it is cutting the corporate-tax rate
from 26.3% to 22%.
Sweden has also donned the golden straitjacket of fiscal orthodoxy
with its pledge to produce a fiscal surplus over the economic cycle. Its
public debt fell from 70% of GDP in 1993 to 37% in 2010, and its budget
moved from an 11% deficit to a surplus of 0.3% over the same period.
This allowed a country with a small, open economy to recover quickly
from the financial storm of 2007-08. Sweden has also put its pension
system on a sound foundation, replacing a defined-benefit system with a
defined-contribution one and making automatic adjustments for longer
life expectancy.
Most daringly, it has introduced a universal system of school
vouchers and invited private schools to compete with public ones.
Private companies also vie with each other to provide state-funded
health services and care for the elderly. Anders Aslund, a Swedish
economist who lives in America, hopes that Sweden is pioneering “a new
conservative model”; Brian Palmer, an American anthropologist who lives
in Sweden, worries that it is turning into “the United States of
Swedeamerica”.
There can be no doubt that Sweden’s quiet revolution has brought
about a dramatic change in its economic performance. The two decades
from 1970 were a period of decline: the country was demoted from being
the world’s fourth-richest in 1970 to 14th-richest in 1993, when the
average Swede was poorer than the average Briton or Italian. The two
decades from 1990 were a period of recovery: GDP growth between 1993 and
2010 averaged 2.7% a year and productivity 2.1% a year, compared with
1.9% and 1% respectively for the main 15 EU countries.
For most of the 20th century Sweden prided itself on offering what
Marquis Childs called, in his 1936 book of that title, a “Middle Way”
between capitalism and socialism. Global companies such as Volvo and
Ericsson generated wealth while enlightened bureaucrats built the Folkhemmet or
“People’s Home”. As the decades rolled by, the middle way veered left.
The government kept growing: public spending as a share of GDP nearly
doubled from 1960 to 1980 and peaked at 67% in 1993. Taxes kept rising.
The Social Democrats (who ruled Sweden for 44 uninterrupted years from
1932 to 1976 and for 21 out of the 24 years from 1982 to 2006) kept
squeezing business. “The era of neo-capitalism is drawing to an end,”
said Olof Palme, the party’s leader, in 1974. “It is some kind of
socialism that is the key to the future.”
The other Nordic countries have been moving in the same direction, if
more slowly. Denmark has one of the most liberal labour markets in
Europe. It also allows parents to send children to private schools at
public expense and make up the difference in cost with their own money.
Finland is harnessing the skills of venture capitalists and angel
investors to promote innovation and entrepreneurship. Oil-rich Norway is
a partial exception to this pattern, but even there the government is
preparing for its post-oil future.
This is not to say that the Nordics are shredding their old model.
They continue to pride themselves on the generosity of their welfare
states. About 30% of their labour force works in the public sector,
twice the average in the Organisation for Economic Development and
Co-operation, a rich-country think-tank.
They continue to believe in
combining open economies with public investment in human capital. But
the new Nordic model begins with the individual rather than the state.
It begins with fiscal responsibility rather than pump-priming: all four
Nordic countries have AAA ratings and debt loads significantly below the
euro-zone average. It begins with choice and competition rather than
paternalism and planning.
The economic-freedom index of the Fraser
Institute, a Canadian think-tank, shows Sweden and Finland catching up
with the United States (see chart). The leftward lurch has been
reversed: rather than extending the state into the market, the Nordics
are extending the market into the state.
Why are the Nordic countries doing this? The obvious answer is that
they have reached the limits of big government.
“The welfare state we
have is excellent in most ways. We only have this little problem. We can’t afford it.”
- Gunnar Viby Mogensen, a Danish
historian
The
economic storms that shook all the Nordic countries in the early 1990s
provided a foretaste of what would happen if they failed to get their
affairs in order.
There are two less obvious reasons. The old Nordic model depended on
the ability of a cadre of big companies to generate enough money to
support the state, but these companies are being slimmed by global
competition. The old model also depended on people’s willingness to
accept direction from above, but Nordic populations are becoming more
demanding.
Small is powerful
The Nordic countries have a collective population of only 26m.
Finland is the only one of them that is a member of both the European
Union and the euro area. Sweden is in the EU but outside the euro and
has a freely floating currency. Denmark, too, is in the EU and outside
the euro area but pegs its currency to the euro. Norway has remained
outside the EU.
But there are compelling reasons for paying attention to these small
countries on the edge of Europe. The first is that they have reached the
future first. They are grappling with problems that other countries too
will have to deal with in due course, such as what to do when you reach
the limits of big government and how to organise society when almost
all women work. And the Nordics are coming up with highly innovative
solutions that reject the tired orthodoxies of left and right.
The second reason to pay attention is that the new Nordic model is
proving strikingly successful. The Nordics dominate indices of
competitiveness as well as of well-being. Their high scores in both
types of league table mark a big change since the 1980s when welfare
took precedence over competitiveness.
The Nordics do particularly well in two areas where competitiveness
and welfare can reinforce each other most powerfully: innovation and
social inclusion. BCG, as the Boston Consulting Group calls itself,
gives all of them high scores on its e-intensity index, which measures
the internet’s impact on business and society. Booz & Company,
another consultancy, points out that big companies often test-market new
products on Nordic consumers because of their willingness to try new
things. The Nordic countries led the world in introducing the mobile
network in the 1980s and the GSM standard in the 1990s. Today they are
ahead in the transition to both e-government and the cashless economy.
Locals boast that they pay their taxes by SMS. This correspondent gave
up changing sterling into local currencies because everything from taxi
rides to cups of coffee can be paid for by card.
The Nordics also have a strong record of drawing on the talents of
their entire populations, with the possible exception of their
immigrants. They have the world’s highest rates of social mobility: in a
comparison of social mobility in eight advanced countries by Jo
Blanden, Paul Gregg and Stephen Machin, of the London School of
Economics, they occupied the first four places. America and Britain came
last. The Nordics also have exceptionally high rates of female
labour-force participation: in Denmark not far off as many women go out
to work (72%) as men (79%).
Flies in the ointment
This special report will examine the way the Nordic governments are
updating their version of capitalism to deal with a more difficult
world. It will note that in doing so they have unleashed a huge amount
of creativity and become world leaders in reform. Nordic entrepreneurs
are feeling their oats in a way not seen since the early 20th century.
Nordic writers and artists—and indeed Nordic chefs and game
designers—are enjoying a creative renaissance.
The report will also add caveats.
The growing diversity of Nordic
societies is generating social tensions, most horrifically in Norway,
where Anders Breivik killed 77 people in a racially motivated attack in
2011, but also on a more mundane level every day. Sweden is finding it
particularly hard to integrate its large population of refugees.
The Nordic model is still a work in progress. The three forces that
have obliged the Nordic countries to revamp it—limited resources,
rampant globalisation and growing diversity—are gathering momentum. The
Nordics will have to continue to upgrade their model, but they will also
have to fight to retain what makes it distinctive. Lant Pritchett and
Michael Woolcock, of the World Bank, have coined the term “getting to
Denmark” to describe successful modernisation. This report will suggest
that the trick is not just to get to Denmark; it is to stay there.
The final caveat is about learning from the Nordic example, which
other countries are rightly trying to do. Britain, for example, is
introducing Swedish-style “free schools”. But transferring such lessons
is fraught with problems. The Nordics’ success depends on their long
tradition of good government, which emphasises not only honesty and
transparency but also consensus and compromise. Learning from Denmark
may be as difficult as staying there.
Related:
Euphoria
- Swedish House Mafia & Usher
We in a dodging to a feeling I don't
wanna know
Yeah I been running but it caught me
somehow
The room was never falling off I did it
anyway
You made my heart beat and pumping
Why it ain't turn it up so loud
Cause if I don't feel the water
And the night don't feel the thief
It's just you and me together
Here we are, we are, we are, we are!
Here we are, we are, we found euphoria!
Here we are, we are, we are, we are
And you're going from inside
Like the dot is in a write
I'm just here for the first time
Here we are, we are, we found euphoria!
I already know the way and thought I
could get in and out
She say relax, you gon be here for a
while
But I took caution to the way and did it
anyway
And the truth is I'm learning to loving
And I ain't gonna turn it down
Cause if I don't feel the water
And the night don't feel the thief
Once the music sets you over
Here we are, we are, we are, we are
Here we are, we are, we are
And you're going from inside
Like the dot is in a write
I'm just here for the first time
Here we are, we are, we found euphoria!
Here we are, we are, we are
Here we are, we are, we found euphoria!
And you're going from inside
Like the dot is in a write
I'm just here for the first time
Here we are, we are, we found euphoria!
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