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April 01, 2013 at 09:41 PM
A sustained period of tax cutbacks, strict budget discipline and selective privatization in certain areas that began in the 1990s allowed Sweden to avoid the major pitfalls that other European nations have had to contend with in recent years.
Yet, Sweden has preserved the essence of the unique economic and social model that has allowed this small northern European nation of 9.5 million people to repeatedly score high on all manner of global indexes, not least the OECD’s Better Life Index, which measures overall well-being in numerous categories.
Today, as Europe is struggling to get back from several years of downturn, Sweden is in a relatively strong position, with manageable unemployment and a GDP growth rate that’s forecast to rise this year. Public sector expenditure has fallen from 67% of GDP in the early 1990s to around 49% today, so it’s no surprise that the spotlight is on Sweden as a potential model for other countries to follow and a good example of how economic dynamism can exist within the boundaries of a strong welfare state.
That welfare state has delivered to the Swedish people, in exchange for the high taxes that they pay, what it was mandated to deliver. However, thanks to political and economic astuteness, the model has never reached a point beyond which it would become too bloated to control and from which there would be little recourse to backtrack, according to Krister Thelin, a former deputy minister of justice in Sweden.
At any rate, not yet.
That’s partly because Sweden has always had a healthy outlook on business—which Thelin, who also served as judge on the International Criminal Tribunal for the former Yugoslavia in The Hague, said dates back to the 19th century and owes to the fact that Sweden was never a feudal nation.
“A lot happened back then that enabled the mindset for entrepreneurship, and that has continued through the years,” Thelin said. “Sweden, unlike Denmark, which doesn’t have any natural resources, has been able to rely on forests and mines, so we have had grand-scale industries that fitted very well with the ‘bigger is better’ concept of the Social Democrats [who held power in Sweden from the 1920s to 2006], who didn’t nationalize companies but nationalized concepts instead.”
