The World's Best Economy...isn't China or the U.S.A

GRGeorge's Blog

Originaly published 09/13/2006

The depressing TRUTH

The Worlds Best Economy ain't Here

What country consistently has low levels of unemployment, high wages, lower inflation, universal health care and social services, and 6 weeks of vacation per year, and for many a 30-32 hour work week?

Sweden, whose nine million people make it by some counts, the biggest Nordic country, is a particular example. In 2005, the English newspaper Guardian, , said that Sweden, was the most successful society the world had ever known. As proof, the Swedish economy grew at a annual rate of 5.6% in the second quarter of 2006, enough to trigger a spate of interest-rate rises by the central bank. Sweden's big companies, such as Ericsson, SKF, Telia and Volvo, are breaking export records.

FOR much of Europe, the past decade has been depressing. Slow growth, high unemployment and the burdens of rising public debt and falling competitiveness have renewed doubts about the sustainability of the European “social model”, which is also starting to creak under the weight of an ageing population. The youthful dynamism of America, and now of China and India, seems to be leaving the decrepit old continent in the shade. Yet there has always been one bright spot amid the gloom: Scandinavia.

In recent years defenders of the European social model—capitalism tempered by a generous and interventionist state—have taken to praising Scandinavia to the skies. The Nordic region, to go a bit wider, has the world's highest taxes and most generous welfare benefits. And yet Sweden, Finland and Denmark (Norway's oil sets it apart) have delivered strong growth and low unemployment, and rank among the world's most competitive economies. Nordic companies are strong in technology and research and development. Their health-care and educational systems are much admired. And, unlike other European countries, most Nordic states run healthy budget and current-account surpluses.

This is in part because history shows Sweden's economy to have flourished when it has been more liberal and low-tax—and to have gone off the rails when higher taxes and more regulation have been imposed.

Thirty years ago Sweden was a largely homogeneous country, but today 10% of its people (and one-seventh of those of working age) are foreign-born. Sweden's new immigrants—especially the country's fast-increasing Muslim population—have integrated poorly compared with the arrivals of the 1970s and 1980s. But the biggest problem for immigrants, as for young Swedes, is work. A study of comparable Somali groups in Sweden and Minnesota found that less than a third of working-age Somalis in Sweden had jobs, half the share in Minnesota.

The result is a worrying new group of people in Swedish society, non-assimilating immigrants, who come into the country "taking more from the system in services, than they give to the system in the form of social capital."

I'm not going to take the time to explain what I feel is a direct correlation between this and a problem with illegal immigration here in the US, some of you already get it..some of you never will, but if we REALLY want to stop people from comming across the border...modify our "anchor baby" access to public services, If a child is born here, but the mother is in the country illegally, citizenship should not be granted automatically to the child, and our laws need to be changed ..by an amendment to the constution that reflects differences between citizens and non-citizens, I know that on the surface this seems very harsh, but we must think of it as prioitising our needs..as a Father, I could never take someone else's kids to McDonald's knowing that my own child would go hungry as a result.

In Denmark, their economy has picked up to annual growth rates of over 3% per quarter since the first half of 2000, this coupled with low growth in the overall population leads to high output rates or as it best known..GDP or Gross Domestic Product per capita.

The increase in Danish growth and stability of it's labor market, is credited to a policy mix of supply-side and demand-side measures that reduced deficit spending in 1993 followed by tax reductions and strict budgetary consolidation between 1994 and 1997 which resulted in a balancing of the budget by 1997 and a budget surplus of 2.8% in 1999

( You can NOT reduce taxes unless you FIRST reduce deficit spending...there is NO point in reducing taxes alone...unless it's to make the Rich richer and to eliminate the Middle Class. Would you, if you knew that your income would decrease 10% next year, make arrangements so that your bills would increase by 10-15% in the next year?)

By placing it's focus on fiscal consolidation (like if you were to become "debt free" in your household fianances...you would pay off the Credit Card with the lowest balance and highest interest rate first..then you use the additional money that you have paying off card #1 against card #2 and so on..) Denmark was able to reduce it's general public debt to only 52.5% of annual GDP in 1999 with a mandate by law, that it can not ever exceed 60% of annual GDP.

The recipe for the perfect “Nordic model”, stretching the geography: Finland's education, Estonia's progressive tax policy, Denmark's labour market, Iceland's entrepreneurship, Sweden's management of big companies and Norway's oil. The right conclusion, in other words, is that it is wisest not to look for a single-country model at all, but just to take best practice wherever you find it.

The depressing Truth is, much of this is out of the pages of "Reaganomics" but that economic policy was never fully implemented..The Neo-Cons reversed policies that would have provided true ecconomic growth, raised the standard of living for all, lowered taxes while reducing the national debt. At the present time we don't know how bad the economy really is. The first act of the new Charman of the Federal Reserve was to stop reporting M3 money supply figures, so there is no way of knowing what the Reserve is doing with all the money it creates..making the Reserve the largest "BlackOps" in the goverment, not to mention how the Bush Adminstration is "cooking" the numbers on the economy (real unemployment in the US in the 2nd quarter of 2006 was over12% and climing).

We know the answers to our problems, Vote'm all out..

Glen George

09/13/2006