New Economist

Sweden 1, 2, 3, 4

Some more commmentary on Sweden worth noting:

1. A pleased Johan Norberg explains how radical is the Alliance?

Almost all foreign observers - and some Swedish - ask me how radical Sweden´s new government will be. It depends on your comparison. If you compare it to my ideals they are obviously far from it. Don´t expect a liberal revolution. But if you compare it to other governments, my guess is that this government will lead Europe in reform.

It´s true that the moderates were...well...more moderate this time around. But on the other hand, the three other parties are more radical than they have been before, and will push in a more radical direction, for example centern wants more labour market reform and more open borders, folkpartiet wants lower taxes on high incomes and more free trade, and the christian democrats attacks the taxes on petrol and properties...

2. Guardian columnist Polly Toynbee thinks the defeat of Sweden's Social Democrats underlines how a bored electorate could easily turn to Cameron's Tories: Why Stockholm syndrome should terrify New Labour

The fall of the Social Democrats in Sweden reverberates around Europe, but sends particular shudders through those close friends of Goran Persson in Labour ranks. As strangers occupy Stockholm's governing corridors, here is a chilly memento mori for Labour.

...Here is Labour's fear. How can a good government lose power when the country is flourishing? With a rising growth rate of 5.6%, low interest rates, thriving manufacturing and exports Britain would die for, how did it happen? True, unemployment is a problem - but hardly worse than in much of the EU, while Sweden's welfare system is the envy of the world. Abroad, Persson wasn't hampered by two unpopular wars with no end in sight. So why?

...Sweden shows "the economy, stupid" is no longer enough to win. That is alarming to Gordon Brown whose claim to the top job is Britain's unaccustomed economic strength. The warning from Sweden is that when things feel so good, voters feel they can take a punt on a fresh new party. "Time for change" is always a potential winner: a natural democratic urge tugs voters towards throwing the bastards out after a while.

...Persson forgot his wise maxim: in opposition the left must behave like a government, and in government it must act like an insurgent opposition.

3. Andrew Brown, also of the Guardian, disagrees - he doesn't think the British government can learn from Swedish politics; there are too few similarities between them: Knowing left from right in Sweden

There are some big changes under way in Swedish society that we ought to know about, but they have nothing much to do with the outcome of this election. Big changes very seldom do follow elections there, because the governing classes in Sweden tend towards agreement about the direction of policy, even if they disagree about who should carry it out.

I spent six weeks travelling around Sweden this summer, talking to small, boring, unimportant people whose perspective on the election was rather different to Polly Toynbee's. If there has been a swing to the right, it is a deep slow one, which really reflects assumptions about human nature. No one cares about equality or solidarity nearly as much as they did in the seventies. The Social Democrats are now seen as at least as upper class and potentially corrupt as their opponents.

4. Mats Engström, editorial writer at the Swedish newspaper Aftonbladet, posts at Open Democracy on why We still love the Swedish model

So have Swedish voters indeed rejected their famous model? My answer is no, on two grounds. First, there is the tightness of the vote: the "red-green" side (the Social Democrats and its allies) received 46.2% of the vote against the four-party Alliance for Sweden's 48.1%. The close result will be reflected in the balance of power in the new Riksdag (parliament), where the left bloc will have 171 seats to the right's 178.

Sweden moves to the right

The much vaunted 'Swedish model' is set for a major overhaul, with a four part centre-right alliance defating the Social Democrats in Sunday's election. Reuters's report Center-right alliance wins power in Sweden

A Center-right alliance led by Moderate Party leader Fredrik Reinfeldt won power in Sweden in an election on Sunday, ending 12 years of Social Democrat rule by vowing to lower taxes and trim the welfare state.

Reinfeldt, who will be the next prime minister, declared victory in a tight election. Social Democrat Prime Minister Goran Persson, one of Europe's longest-serving leaders, conceded defeat after 10 years in office and will quit as party chief.

According to almost complete results from Sweden's Election Commission, the four-party opposition bloc had won 48.0 percent of votes to 46.2 percent for Persson and his allies.

Taking the stage with his arms raised, a jubilant Reinfeldt told supporters: "We campaigned as the New Moderates, we won as the New Moderates and together with our alliance partners we will rule Sweden as the New Moderates."

The result was a victory for the alliance's pledges to stimulate job growth by fine-tuning, but not dismantling, the welfare system. Persson, whose party has ruled Sweden for six of the last seven decades, had vowed to continue government largesse and keep one of the world's heaviest tax burdens.

Despite Sweden's strong economic performance under the Social Democrats, opinion polls had shown many favored change in the Scandinavian country of just over 9 million people due to voter fatigue with Persson and a perceived lack of new ideas.

...The Moderate Party was crushed at the last election in 2002 but 41-year-old Reinfeldt enhanced his party's appeal by shifting it toward the center and paring down earlier tax and benefit cut promises.

He leads an alliance with the Folk Liberals, Christian Democrats and Center Party that says years of excessive benefits and high taxes have eroded Swedes' will to work. Reinfeldt also said the real unemployment rate was about 20 percent, almost four times the official level. Reinfeldt says changes are necessary now to preserve the welfare system for the future, a theme of reform across Europe.

Press reports are describing it as a shock - but to those who have been talking to Swedish friends, it was no surprise. The Moderate Party have engaged in a similar rebadging of their image to the overhaul the British Tories have undergone under David Cameron. They are no longer scare Swedes in the way they once did. Bloomberg's election report by Jonas Bergman adds:

Reinfeldt toned down the Moderate Party's previous tax- cutting message, which brought it only 15 percent support at the last election in 2002, and emphasized that the alliance would not cut spending on education and health care.         

The alliance has promised income and corporate tax cuts of about 60 billion kronor ($8.2 billion), partly financed by reductions in unemployment and sickness benefits, arguing that Sweden needs to stimulate hiring and wean people off welfare.         

"They have done almost everything right,'' said Anders Sannerstedt, a professor of political science at Lund University. "They changed their profile, Reinfeldt has transformed the Moderates and they have acted almost as one.

What should Labour do now?

As Gordon Brown prepares for the 'speech of his life' at next week's Labour Party conference, a panopoly of commentators have been offering their assessment of the Blair years and giving advice for the party. This weblog doesn't often stray into party politics, but as there is some interest amongst readers, here goes...

Peter Hain, candidate for Deputy PM and Secretary of State for Northern Ireland and Wales, thinks Being bold and progressive will win back disillusioned voters (The Observer, 17 September). He wants Labour to recapture the green vote, "narrow the gap between those at the top and those at the bottom" (without saying how), and "deepen democracy" through democratic reform of the House of Lords, and electoral reform (introducing the alternative vote). Hain concludes:

For Labour, the task of renewing after 10 years in government is onerous - and rarely, if ever, achieved by governments of either party.What happens ne But with a renewed and revitalised party, we can do it. What matters now, at this point of transition from Labour's most successful-ever Prime Minister, is to rediscover our passion for our values and so enable the decent, caring, moral and progressive majority in British politics not to be seduced by Cameron's trendy soft focus or feel driven into the arms of the Liberals in protest, but to come home to Labour.

Will Hutton writes in the Observer that if Gordon Brown becomes Prime Minister, his first duty should be to restore New Labour's core values: Blair is dead but Blairism must not die with him

The heart of Blair's problem was that he could no longer win the arguments. For all the strengths of his core creed, it had become intellectually incoherent. Parts worked and continue to work. But it did not add up to a progressive position at home, while abroad, its attachment to pre-emptive unilateralism meant that it became an apologist for American and Israeli might, the least progressive position of all. Intellectual incoherence is political death and last week Blair died.

But not, I submit, Blairism or at least a reconstituted version. ...Blair's successor must rescue Blairism from its blind alleys but, simultaneously, own and reinvigorate its core propositions. At home, the Labour party must drive on with the consensus achieved in the mid 1990s while making more explicit its aims to increase public value, legitimacy for public action, opportunity and social justice.

The Fabian Society's Sunder Katwala ponders What happens next? in the October issue of Prospect Magazine. British politics has moved to the centre-ground, so there is little point Labour turning right-ward.

New Labour’s political success, in beginning to convert its opponents, means that the 1990s politics of triangulation now delivers diminishing returns. Attempts to define “New New Labour” on the “think of something the Labour party will hate” principle (such as Stephen Byers’ call to abolish inheritance tax) now makes little strategic sense, because the dynamic of the cross-party battle has been reversed.

For a decade, New Labour claimed the centre-ground by pushing rhetorically into Tory territory, and the Tories consistently fell into the trap seeking “clear blue water” out to the right. Three defeats later, they have worked it out. Just as Labour had to show it had a response to crime, Cameron seeks attention by addressing issues which Tories used not to talk about—the environment, social justice and global poverty.

Aussie econobloggers deliver down under

Australian economists held their 34th Annual Conference of Economists at the University of Melbourne earlier this week. Aussie John Quiggin caught up with fellow econobloggers Stephen Kirchner and Andrew Leigh, "and lots of old friends and sparring partners". First, the econobloggers contributions:

* John gave a keynote address (written with Simon Grant) on Learning and Discovery (PDF), "an attempt to unravel the knotty problem of unknown unknowns".

* Stephen delivered a paper on Japanese Monetary Policy under Quantitative Easing: Neo-Wicksellian versus Monetarist Interpretations (PDF), which argued that "central bank policies are unlikely to be credible in the absence of a compelling account of the underlying monetary policy transmission mechanism at the zero bound".

* Andrew gave a paper (written with Justin Wolfers) on Competing Approaches to Forecasting Elections: Economic Models, Opinion Polling and Prediction Markets (PDF), which found that during the last Australian election betting markets wre much better at predicting the outcome than opinion polls.

The keynote speeches included:

Germans face Sunday's election: Selected reading

Plenty of good articles have appeared ahead of this Sunday's German election. Here's a sample...

Writing in today's Guardian, James Meek says the German mood is one of fear that the good times may be past.

"At the moment, you have a situation where things are getting worse, little by little, and no political party in Germany has the courage to make a hard and painful cut, to say, 'We don't live in the world of the 80s, we have to adapt to new conditions'," said Thomas Brussig, a novelist and screenwriter living in Berlin. "So a reform solves a problem for two years, or for a year, or for half a year, and then you realise it's not enough, and that new cuts are necessary."

Katrin Bennhold of the International Herald Tribune reports that German voters voice anger and doubt.

As Germans prepare to vote Sunday, they seem resigned to an economic status quo that has seen joblessness stuck above 10 percent for the best part of a decade. ...Many feel betrayed by an economy that has allowed big companies to reach record profits at a time when unemployment remains at 11.4 percent. They are angry at a government that, despite imposing painful reforms, has not kept its promises to cut that joblessness.

..."Schröder is very good with the cameras but not so good at governing this country," said Werse, 57, a housewife and mother. "He had seven years."  "Why should everything become better all of a sudden now?" she asked. "I am voting for Angela Merkel. At least she comes across as honest."

Tilman Spengler says Germany’s election is coming alive as the leading candidates offer divergent visions of what their country needs to become. It is Germany’s time of choice:

...the bigger and the smaller political parties have started to talk not just about elections but about a Richtungswahlkampf - a word as ugly to look at as to hear it pronounced. A Richtungswahlkampf is not just a battle over different political strategies, between charismatic (or not-so-charismatic) MPs, or for or against higher taxation: it announces nothing less than a clash of political civilisations.

Tobias Schwarz at A Fistful of Euros wonders whether the CDU is screwing up on purpose?

It’s not that the CDU is not attempting to win in the sense that they do not want to govern. They do. But I think many of them, certainly within the league of state premiers would be relieved with the prospect of a “grand coalition”. One without Kirchhof, with more labour market reforms, but a less radical model of tax reform, and a new, less bureaucratic, model of health reform designed to include non-wage income into the public health redistribution system.

Ferda Ataman and Daniela Gerson at Der Spiegel ask Will Germany's Turks Pick the Next Chancellor?

More than a half-million German-Turkish voters are eligible to go to the polls... They overwhelmingly support the Social Democrats, and Chancellor Gerhard Schröder has put Turkish voters at the front of his campaign this week.

Writer and commentator Günter Grass bangs the drum for Schröder :

With Sunday's general election now too close to call, Grass has urged Germans to vote for Mr Schröder. The conservatives had "nothing to offer" on culture, Grass wrote in an article for the Social Democrats' newspaper, Trust in Germany. The writer also praised the chancellor's decision to keep Germany out of the war in Iraq, despite "considerable" pressure from the Americans. "Two wars have originated from Germany in the last century, whose consequences are still palpable in the present," Grass writes.

Le Monde Diplomatique's Mathias Greffrath argues the SPD "is in steep decline' in Germany: new left, old right. It's all the market's fault, of course:

So the social democratic movement of the Brandt-Schmidt era has split irrevocably into three parties: the party of well-to-do workers and public sector employees (SPD); the party of the unemployed, those in precarious employment, and the victims of modernisation (Left party); and the party of urban leftwing liberals (Greens).

This break-up is the consequence of the political failure to master economic globalisation and of the widening social divisions caused by globalisation. It has destroyed the SPD as an integrating force and makes more difficult the task of building a parliamentary alliance of different categories of wage earners to defend a reformed welfare state and propose a strong alternative. As a result, submission to the market will increase. The crisis of the SPD is a sign of the impending crisis of parliamentary representation as a whole.

Der Spiegel also writes about The Price of a Failed Reunification :

On the campaign trail, Germany's politicians are mostly silent about one of the country's most pressing problems. Former East Germany is a major liability costing the economy €100 billion annually. An eastern German report card 16 years after reunification.

And Ulrike Guérot, Senior Transatlantic Fellow at the German Marshall Fund examines Merkel’s New Foreign Policy: What, if Anything, Will Change?

..on the European level, Merkel will not build up a coalition with Blair for a ‘liberal’ Europe versus the ‘social’ one of France... What she can do, however, is to bridge between France and the UK, who are the two most important players in European policies.

...Merkel could, first, take the forthcoming EU-budget negotiations that will be on the table under the Austrian EU-Presidency starting 2006, to forge a necessary Franco-British deal.  ...She could, second, bring Germany back to the middle of the institutional reform process and – in the spirit of Helmut Kohl’s European policy – be more demanding on France with regard to respecting the small countries, a strong Commission and a strong European Parliament (the only truly supranational entities of the EU). ...Bridging between France and the UK would also and essentially bring back Germany as a key European player in European affairs and policy...

Hat tip for some of these articles to the essential Political Theory Daily Review.

UK election: What will the outcome be?

Almost all the pre-election polls, other than the final eve-of-poll  predictions, are now in (results here). They vary widely, from the latest MORI/Financial Times poll which shows Labour with a 10 point lead over the Conservatives, to the YouGov/Sunday Times poll which estimates Labour has just a 3 percentage point lead. Whatever the result on Thursday, someone will have egg on their face.

To put those poll results in perspective, Labour won a majority of 167 seats in the 2001 election. The swing-o-meter at Electoral Calculus estimates that with no tactical voting effects, the MORI/FT figures would see a Labour majority of around 162 - almost no change. By contrast, if the YouGov poll is acurate that majority would be cut to 96 seats - still quite a workable majority.

However if the LibDem to Labour tactical voting advantage turns negative (from +2% to -2%), that majority falls to 62 seats. Figures around those levels would start to make PM Blair uneasy, and might prompt an early move to oust him by Chancellor Gordon Brown.

One solution to the divergent poll results is to pool the major surveys. The Financial Times have done this on their website, using UK Polling Report numbers:

It shows that the earlier Tory campaign gains have been pared back over the last two weeks. Several commentators have attributed this to backlash over the Conservative's negative campaigning and attacks on Blair, but it may also reflect the Tory's campaign peaking too early, or their narrow focus on populist issues such as immigration that galvanised their electoral base, but did little to attract swinging voters.

Anthony Wells, on his UK Polling Report Blog, gives reasons why he expect YouGov to be the most accurate pollster. I think he may be right, for several reasons:

1) There is widespread anecdotal evidence of large Labour protest vote. Many Labour supporters appear likely to either stay home or vote Liberal Democrat.

2) The Liberal Democrat tactical voting which steered about 2% of votes in Labour's favour in 2001 may well disappear, and could even turn negative.

3) Labour has a lot fewer rank and file supporters on the hustings than last time, which will make it harder for them to get out the vote on Thursday.

4) There is some evidence of "shy Tories" who are too embarrassed to admit to an interviewer that they support the Conservatives, understating support for the Conservatives (Wells discusses this effect).

5) The latest ICM poll suggest the Tory campaign focus on key marginals is bearing fruit. I expect the Conservatives to pick up more marginals than the overall national swing would predict.

6) The betting markets have for some time favoured a much lower Labour majority than the polls suggest. According to Monday's Independent:

Punters are betting that Labour's majority will be as low as 60 seats. Few punters are backing a majority of more than 80 seats.

A final variable to factor in is the far higher number of undecided voters this time around. The MORI/FT poll claims that 36% of voters may yet change their mind, compared with just 21% still undecided in the final week last time. Of course most could vote Labour's way, but if polls continue to indicate a large Labour win I expect quite a few to register a protest vote.

For what it's worth, I expect the popular vote to be very close - with a good chance that the Conservatives will get more votes than Labour in England - the so-called Al Gore scenario. There won't be a hung Parliament, but Labour's majority will be drastically trimmed - down from 167 to between 60 and 90 seats. The Liberal Democrats, meanwhile, are on track for their best result in 22 years.

UPDATE: Tony Blair has achieved an historic third term, but with his majority slashed - as most commentators, including myself, had expected. The final declared result saw a 5.4 percentage point swing against Labour, bringing their national vote down to just 35.3% - the lowest ever winning share of the vote. But most of those lost votes went to the Liberal Democrats (up 3.8 percentage points), not the Conservatives (up just 0.6 ppts). The populist Tory campaign may have consolidated its base, but it won few converts. Labour suffered from a big protest vote, not a swing to the right.

The BBC/ITN Exit Poll, conducted by MORI, predicted a Labour party majority of 66 seats. That was where we ended on election night. The final majority, with all seats declared, was 67. The Sunday Times rightly dubbed this a "triumph for the pollsters".

But the opinion polls and political betting also got it right. As Anthony Wells explains, the election-eve opinion polls were all very close to the actual voting shares, ranging from a very small 0.2% average error for the NOP/Independent poll to a still respectable 1.6% average error for the Populus/Times poll. These were all well within the usual 3% margin of error.

Finally, electoral betting sites had been predicting an outcome of this magnitude for weeks, even while earlier opinion polls were proclaiming a big Labour win. As Mike Smithson comments, "other spread markets seemed to have been good reflection of what actually happened."

UK election: Who should you vote for?

With pollling day this coming Thursday, Brits will soon have to decide how to cast their ballots. Chris Dillow at Stumbling and Mumbling says he will not be voting, but is not not apathetic:

What I’m saying is that my vote is a precious thing. Too precious to waste on idiots. What worries me is that my abstention will be misinterpreted. The meeja will think it’s apathy. This is a howling fallacy.... It’s not apathy I feel. It’s contempt.

Chris, I feel your pain. But your argument sounds like self-serving twaddle to me. To quote Chicken Yoghurt:

Whatever your views, I urge you to vote even if it’s to spoil your ballot. Spoiled papers get counted, abstentions do not and low turnouts are spun by the victors to suit their own ends

Tim Worstall says you "should ..be biased to vote against the incumbent in any and all elections". But ultimately his true (blue) colours are revealed:

This leaves the Tories as the only viable alternative. Clothes pegs on noses perhaps, but yes, Vote Tory!

But why rely on them? The internet can tell you which party most closely aligns with your views. For example, the Public Whip can advise you how to vote based on how your ex-MP and the parties voted in parliament over the last 4 years on eight key issues. More sophisticated versions of this type of poll are Who do I vote for? (done in horse racing format) and Who should you vote for? The results may surprise you.

Finally, if you have time, Chris Lightfoot provides the only internet survey of political views based on real opinion poll data (from YouGov). "We can tell you not only where your views lie, but how they compare to the views of the rest of the British population." Impressive - and revealing.

UK election: Winners and losers

Which UK households are likely to win, and which stand to lose, after the general election? Yesterday Stuart Adam and Mike Brewer from the Institute for Fiscal Studies published an election briefing note which addressed that question, Proposed Tax and Benefit Changes: Winners and losers in the next term (PDF). It looked at legislated tax and benefit changes due in coming years, coupled with those changes proposed in the major party's election manifesto's. The authors concluded that more households would gain under Conservative and Liberal Democrat tax and benefit plans than under Labour:

On average, the highest-income three decile groups would gain most under the Conservatives, while the remaining seven decile groups would gain most under the Liberal Democrats.

The highest-income two decile groups as a whole would fare worst under the Liberal Democrats, while the remaining eight decile groups would fare worst under Labour. All decile groups gain on average under the Conservatives, the bottom seven do under the Liberal Democrats and the bottom three do under Labour.

Both the Conservatives and the Liberal Democrats are proposing more progressive packages than they did in the 2001 election. This is despite Labour introducing a more progressive package of reforms in its second parliament than in its first.

Got that? If not, Scheherazade Daneshkhu at the Financial Times summarised it well:

Under the Lib Dems, the bottom 70 per cent of earners would fare best; under Labour, the bottom 20 per cent would gain the most; and under the Tories, the top 30 per cent would gain most.

But today's newspaper headlines show most 'cut-and-paste' journalists took the IFS findings at face value. For example:

UK election: Labour's business manifesto

This morning the Labour Party launched its 28-page business manifesto (copies here). It promised companies it would "maintain a competitive tax environment for businesses", and offered new promises to curb regulation - though stopped short of ruling out tax increases. Secretary of State for Trade and Industry Patricia Hewitt said:

Labour has now replaced the Tories as the party of enterprise and the party of business. Their flimsy business manifesto was an insult to British companies.

Labour also promised to boost investment in science, technology and the creative industries and to make the UK a "leading advocate'' of free trade. The document pledged to use its EU presidency in the second half of this year to press for regulatory reform and more work to open the European market in services. It also chided progress on economic reform in Europe:

Progress on economic reform in Europe has, to date, been disappointing. ...We need full delivery of the Commission commitment in its better regulation action plan. This will include policies to regularly review regulators and regulation to ensure that they are necessary, effective and consistent with achievement of the Lisbon agenda.

Business reaction has been mixed. According to a new MORI poll of 200 financial directors of UK companies, many more (49%) thought the Conservatives had the best policies for business than did Labour (23%). But 58% thought that Labour's Gordon Brown would make the best Chancellor, compared with only 29% favouring the Tory's Oliver Letwin.

Blogging the UK election

Has the Financial Times finally grasped the potential significance of weblogs in accelerating the dissemination of news and comment, and influencing political debates? Perhaps. John Lloyd writes in today's issue that Politics takes off into the blogosphere. Here are some key excerpts:

This will be a blogging election: bloggers, already a political and media force in the US, will have real visibility in the UK for the first time. Will that be a good thing? Yes - if you think politics should be even more personal than they already are. Blogging is a child of the confessional age: that time which has brought Big Brother, Jerry Springer and I'm a Celebrity, Get Me Out of Here.

Stephen Coleman, professor of internet studies at the Oxford Internet Institute and the country's expert on blogospheric intercourse, thinks bloggers will flourish and will be of three kinds: one, political wonks whose pitch will be that "you can't trust anybody, except me"; two, candidates and their aides who do blogs to show they are in touch with the emotions of ordinary people and find the fuss and flummery of politics as tedious as the next voter; and three, journalists or would-be journalists who write what they can't in reports or columns, or do not have reports and columns in which to say anything.

"The blogosphere," says Prof Coleman, "allows people to say things like: 'I've never been able to stand Michael Howard's voice!' It is a place for the expression of emotion and the unsubstantiated observation. There are no protocols. There are no limits. It's getting more and more about ME and what I FEEL all the time."