LONDON – The statistics had arrived on the Swedish prime minister’s desk that morning, his first day back at work after his summer vacation, cycling around the villages near his summer estate.
It was good news. Gorän Persson, now in his ninth year of office, told me that the growth rate for this year will be near 3% and next year more than 3% – enough, he said, to maintain Sweden’s trajectory of the last decade which was “above the average for the European Union” and, in particular, “as good as the Anglo-Saxons, Britain and the U.S.” (Although he admitted that for the U.S. he was referring to per capita growth, so as to discount the effect of its fast population growth due to rapid immigration.)
This begged the first question- how does this self-confessed socialist state do it? What is the secret for success when Swedish taxes are the highest in the world and the welfare state is the country’s single largest employer? After all when Persson came in as finance minister in 1994 the country was reeling economically, as state expenditures on the health and social sectors raced ahead of the country’s ability to generate wealth.
“If you have a free economy,” explained the prime minister, “a highly educated work force, a very healthy people, very high productivity and a sound environment then you can create the critical size of resources to create good growth”.
“That has to be joined with adequate public financing of universities, research and development. As long as we are efficient and constantly challenging ourselves we continue to be productive.”
“Then if we produce successful growth the government gets the public’s support for high taxes. If the quality of the public sector is good then a prosperous people will continue to vote for funding it.”
The Social Democrats have been in power for most of the last 73 years, with only nine years in opposition. But recently public opinion has turned away from the government, partly because of the prime minister’s apparent dictatorial style and partly because of a series of scandals including his slow response to the tsunami when hundreds of Swedes on vacation in Thailand died.
Despite the malaise reflected in the polls Persson appears to relish the coming electoral fight. The key economic statistics are good, he argues, with low inflation, low interest rates, and with the economy finally moving from the export dominated growth of previous years to domestic driven growth, which promises rapid job creation.
Moreover, he feels he is having some success in dealing with the criticisms that have been made of the welfare state. Many have observed that Sweden cannot sustain its generous womb-to-tomb system if so many Swedes abuse the system by calling in sick and claming unnecessary disability leave. On an average day one fifth of the potential workforce is claiming these rights, in a country that along with France and Japan is the healthiest in the world. “I had a new report on my desk today to show that we are getting these figures down. It is now under control. We have given employers an incentive to convince their personnel to return from sick leave by offering them a tax benefit if they succeed. This means that they should improve their environment and their conditions of work. At the same time we have been scrutinising those doctors who have been too generous in signing sick notes.”
Persson, lounging back in his chair and gazing out of the window that looks out on the capital’s beguiling mix of waterways, eighteenth century Renaissance palaces and grand houses, ends the conversation with two quick jabs. “Europe has a lack of confidence vis a vis the U.S.. The U.S. is competitive, but not as competitive as we think. We are too self-critical in Europe even though we have a much better social system and in Sweden are just as productive. On unemployment it is overlooked that the U.S. has approaching 2 million people in jail and out of the labour market.”
As for the opposition’s claim that he might raise taxes he seems blithely unconcerned. “I have no plans for that at the moment, as the economy is doing so well. But if at the election I have to go to the Swedes and ask them to approve a tax rise so that we can improve our health services even more, I believe they will support me.”
The sweet arguments of success? Or the arrogance of too long in power? In just a year’s time the voters will decide. Meanwhile, the prime minister of the world’s most successful socialist state gives notice he is in no mood to step down and pursue one of his two unfulfilled vocations – as either a priest or a farmer.
