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Monday, September 18, 2006

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finnsense

I think "major overhaul" is probably a bit strong. They'll probably take a Danish approach to employment and a Finnish approach to welfare and taxation. They'll still have some of the highest tax rates and the strongest welfare in the world.

I think it's a good thing. Sweden needed tinkering with and they will tinker with it in line with typical Nordic commonsense. Soon the Finns will be able to get back to their favourite pastime of opining on how wonderful everything in Sweden is.

Members of Finland's Kokoomus (Coalition or Conservative) Party are secretly hopeful that if Sweden dares to elect a party on the right, the Finns might do the same. That would be interesting.

Edward Hugh

"by vowing to lower taxes and trim the welfare state"

Well looking at the demographics moving forward, I don't see much margin on the lower taxes front, quite the contrary, the most probable outcome is higher taxes and welfare trimming, the question is, of course, the mix.

They will - Berlusconi style - undoubtedly get some short term cash from selling off some state assetts.

To some extent their situation can be eased by putting economic migration more to the forefront on the Swedish agenda, and the new government may well do this. Interesting to note (following your point about Cameron) how the centre right are becoming much more immigrant friendly. I suppose you followed Cameron's recent visit to India.

Incidentally, don't miss my piece "Of Population Pyramids and Value Chains" on Afoe. I think it is a first stab at a framewaork for thinking about these issues.

A. PERLA

Once the euphoria is over, perhaps the Moderate Party will realize that a plurality of 1.8% is nothing to crow about?

Sweden needs a couple of years of state budget cutting and a loosening of its labor regulations in order to jump start the economy once again. The timing may be right for Sweden.

Europe shows some tentative signs of rebounding. But, this happened before (in 2000) to no avail. Will the rebound sustain itself?

A. PERLA

"with typical Nordic commonsense."

And, where, pray tell, will they find that ... ?

Remember a chap called Carl Bildt ... gone and forgotten.

Wikipedia: "His government program was one of liberalizing and reforming the Swedish economy as well as making Sweden a member of the European Union. It initiated the negotiations for Sweden's accession to the European Union, and Bildt signed the accession treaty at the European Union summit at Corfu in Greece on June 23, 1994.

Far-reaching economic reforms were enacted, including a new pension system, voucher schools, liberalized markets for telecommunications and energy as well as the privatization of publicly owned companies, privatization of health care, contributing to modernizing the Swedish economy.

The period was also marked by a severe economic crisis, and a European financial crisis in 1992. The Swedish currency had to be floated in the fall of 1992. The different measures, including large cut-backs in public spending, did contribute to a rapid increase in economic growth as well as a reduction in the public deficit in 1994 and 1995.

THIS NOTWITHSTANDING (my emphasis), the Social Democrats returned to power in September 1994, although Bildt's Moderate Party scored a slight gain."

Finnsense

I wish people would stop talking about the economic crises Finland and Sweden faced at the start of the 90s as though they came about due to something they did. The Soviet Union collapsed and with it a huge part of both their markets. Both countries responded decisively and saw years of growth afterwards which continues to this day. You can argue they shouldn't have traded so much with the USSR but it's not very realistic. You trade with whoever will trade with you and line your pockets.

A. PERLA

"I wish people would stop talking about the economic crises Finland and Sweden faced at the start of the 90s as though they came about due to something they did."

Tell Wikipedia.

The fact that both Sweden and Finland had too many eggs in one basket was unfortunate for both in the early nineties. But, it is an economic context that can repeat itself, only differently.

Nothing will prevent the Swedes from voting for the socialists should another crisis hit them in the future. It is an instinctive reflex for protection, as if the socialists new how to protect jobs any better than any one else - which is a common European myth.

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