SierraSong wrote:You'll notice we aren't exactly rushing to follow the Swedish example since we know the reality is that high taxes equal low growth. Sweden is in a state of general stagnation caused by their crushing tax burden. We know this. The Swedes know this. Everyone knows this. They just won't admit it.

Actually, you might not know it, but "the Swedish model" or "the Scandinavian model" is being widely talked about in Germany and Holland as an example of how the old welfare state can be reformed into competitiveness, without losing its benefit of social cohesion. Mind you, they're no longer talking of the old Sweden of Olaf Palme when they use those labels; they're talking about the way its been reformed and revigorated.
(Un)employment is specifically referred to as one count on which especially a country like Germany, with its reservoir of seemingly inpenetrable long-term unemployment, could well learn from Sweden. It offers preservation of generous benefits, but combined with strictly applied pressure to go back to work, and flexibilisation of the labour market. It poses the expectation that men and women work, but coupled with actually functioning, available and affordable daycare and parttime work arrangements.
This model is taken to suggest a version of the welfare state thats been succesfully "pimped up" to meet the demands of a globalised economy. In fact, Sweden's combination of economic competitiveness with social arrangements that promote social cohesion and public well-being still has an impressive track record. By ways of illustration:
- In the latest edition of UNDP's authoritative
Human Development Index, which takes GDP per capita (at purchasing power parity) into account but also life expectancy and literacy rate & enrollment in education, Sweden ranks in a very presentable sixth place (for easy overview see this
ranking list).
Sweden ranks behind Norway, Australia and Canada and has Switzerland on its tail, but is ahead of the US (10th) and well ahead of the UK (15th).
- Also available is the
trend over time for the HDI. While the Swedish score dropped by 0,009 since 2000, when the country ranked second, it is still well better than it was in 1995 (+0.2) or 1990 (+0.52).
- The UNDP also produces a
Human Povery Index for developed countries (HPI-2), which takes into account life expectancy, literacy skills, percentage of people living below the poverty line, and the long-term unemployment rate (there's a neat presentation concisely illustrating
the different bases for calculating the HDI, HPI-2, and other development indices).
Here, Sweden comes out on top, in the very first place, ahead of Norway, Finland, the Netherlands and Denmark. The UK is in 15th place; the US at the bottom of the ranking, in 17th place.
- In The Economist's Intelligence Unit's
Quality-of-life Index for 2005, which (see also
this accompanying article) takes material wellbeing into account as well as health, political freedom, job security, climate, political stability and security, gender equality, and family and community life, Sweden ranks a very decent fifth. It comes in behind Ireland, Norway and Switzerland but well ahead of the US (13th) and the UK (29th).
- Only when one limits measures of prosperity purely to the indicator of gross domestic product, taking the
indicator of GDP per capita (PPP), does Sweden indeed rank considerably lower - definitely lower than the US, which is in a proud second place.
Even here, though, it's worth noting that, ranking 19th in the list, Sweden is just one spot below Blairite Britain, and one spot above France.
Moreover, in that purely national-wealth oriented indicator, note that Norway scores third, Iceland fifth and Denmark sixth - all ahead of Canada and Australia as well as the UK, scoring points for "the Scandinavian model".
- Finally, when looking at GDP per capita, further analysis brings up interesting additional data. This
admittedly summary and politically engaged article, which comments on the WSJ coverage you quoted above about that Swedish think tank's findings, explains it dispassionately enough:
Quote:There is triumphalism in the Wall Street Journal's editorial of June 18 about "a growing split between the U.S. and Europe." The WSJ draws on a recent report from the Swedish think tank Timbro that notes the much lower level of income per capita in Europe than in the United States. As the report frames it, average income in most European countries place them well down among the states of the United States: Belgium is comparable to Alabama, Germany to Arkansas, and Spain is poorer than Mississippi. The WSJ attributes Europe's backwardness to its choice of "the welfare state road to decline."
The pieces do not fit quite as neatly in the Economist's June 19th comparison of Europe and America. First, if we exclude Germany [..] GDP per person grew at essentially the same rate in Europe and the United States between 1994 and 2003. Employment grew only a hair slower in Europe, and productivity per worker hour grew slightly faster in Europe. Germany aside, aggregate growth in Europe and the United States over the last decade has been essentially equal.
Still, European income per capita is only about 70 percent of the U.S. average. But here too, there is an important wrinkle. As discussed recently by Harvard economist Olivier Blanchard, income is lower in Europe not because workers are less productive - output per worker hour in Europe and the United States are almost the same - but because Europeans work fewer hours. This is not due primarily to higher unemployment or lower labor market participation, but to a shorter work-week, longer vacations, and earlier retirement. Altogether, Americans work 40 percent more hours over their lives than Europeans. [..]
Between 1970 and 2000, GDP per person rose by 64% in the United States and by 60% in France. In America, this came about because productivity per worker rose by 38% and hours worked per worker rose by 26%. In France, it came about because productivity rose by 83% while hours worked fell by 23%.
Where did the quality of life increase more? Maybe you should take your next hurried vacation in France, to find out.