June 26, 2005
New Bloger
By Tino
Hello to all Truck and Barter reader. My name is Tino Sanandaji, a Kurdish-Swedish guy struggling in my first year at University of Chicago’s graduate program in Economics. I would like to thank Kevin to offer me the opportunity to post here at this excellent site. I intend to mix writing on Swedish economics with more general comments.
Why should you care about Sweden? One reasons is that our small nations has often been the ideal natural experiment (well, at least experiment) in many economic policies. We have the most extensive welfare state in the free world, the highest taxes, the strongest unions and the longest period of one party rule.
In the past century the main political struggle in the western world has been between free markets and welfare state. This has been and will long be the main ideological line for both voters and politicians. Here Sweden and the United States make up two opposite poles. America has probably the freest economy of any national state, individuals retaining most decision right on their income and making you the most rightwing economy. Sweden is the opposite, the most leftwing system.
Health care, childcare, elderly care, higher education and most insurance are tax financed and controlled by politicians. To finance this and more the state takes in some 55% of GDP. The corresponding figure for the US was some 31% of GDP (both 2004).
Not surprisingly Sweden is constantly used as a political stick in other countries. By the left as an example to be followed as the most humane, livable and fair system, by the right as a warning of economic stagnation, restricted freedom and government waste.
Despite of the great outside interest (or perhaps precisely because of this) there are many misperceptions about the Swedish economy. The left seems to have a romanticized and outdated image, not surprisingly projecting their visions of the ideal society on our imperfect reality (a Canadian neighbor told me Sweden is a great country because all old people get their own private maids!). Many right-wingers also make overly dramatic claims, such as Sweden going bankrupt or slowly becoming a Muslim nation.
As an examples of projection, many Americans and Europeans alike seem to see our system as a proof that you can achieve full employment despite rigid labor markets, and very high labor discouraging taxes and benefits.
The European Union in their annual report credited us with as much. After all, unemployment is only 5.2%.
Or is it?
Let’s see in my first real entry.
Posted at June 26, 2005 12:56 AM
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