Saturday, March 16, 2013
British Learning From Sweden
British politicians have begun looking at Sweden as a benchmark or model as they try to reform their own policies. Over the past two decades, the Swedish government has a history of coalition governments. They have introduced reforms to Swedish education, health care, pensions and tax all with cross-party support.Under their unique system, Sweden always comes close to the top when looking at rankings for national wealth, health, and happiness. I think British politicians may be going the right route in trying to reform with Sweden as a close friend. An article published March 9th (Economist Article on Britain) discussed how Britain is struggling to raise its consumer spending. So hopefully, the British politicians can figure out a way to recover.
The Economist Article
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4 comments:
Europe's social welfare economy is certainly intriguing. Sweden's high "quality of life" rankings that you reference, Kevin, might not be the answer to the consumer spending issue in the near term. The countries with high quality of life rankings frequently are characterized by relatively large social welfare and education budgets that are funded through higher taxes. I would recommend the opposite, an expansionary fiscal policy of reducing taxes to increase disposable income and aggregate demand.
I agree with Chris, if consumer spending needs to be increased the best way is to decrease taxes and put more money in the hands of consumers.
While fiscal policy may be the short term answer, I think expansionary monetary as the article discusses may be the long-term solution. As interest rates eventually ease, this will boost consumer spending. But consumers have been waiting for this ease for a little bit now, which has squeezed them temporarily as consumers are holding out for this zero-interest rate period. I think that Britain is on the brink of pulling through the hard time, but I foresee things flatlining a little longer before we see progress.
British Sweden fanciers might be right, but they forget the importance of the equality that is a precondition for Sweden's reforms. There needs to be a large welfare budgets to back up the reforms in Sweden, which is not available in Britain. Rather than replicating the reforms, British politicians should learn the Swedish habit of collaboration and pragmatism to regain public trust.
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