Peter Marklund

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Wed September 18, 2002

The Social Democrats Mean Continued Relative Wealth Decline

So the outcome of the swedish election was no big surprise. My initial reaction, struggling to be positive, was that, oh well, continued governance by the Social Democrats and Göran Persson is no worse than a status quo, it's business and politics as usual, how bad can that be?

However, as a good friend of mine pointed out the Social Democrats bring not status quo, but continued deterioration. In terms of material wealth the deterioration is only relative of course, but it is significant. According to an interesting article in the Financial Times labeled "Sweden's ageing model" growth during the last 30 years in Sweden has averaged 2.1%, compared to 2.6% in the EU and 3.1% in the US.

I don't think it has quite sunk in with swedes that Sweden is less wealthy than other western countries. When bringing this issue up some people will object that money and growth is not what matters in life. However, the majority of people will realize that a slower growth is a real problem. It cannot be proven of course that high levels of taxes and various restrictions on trade such as price regulations decrease growth. However, it's intuitive and suggested by economic theory and many prominent economists believe in it. It has also been argued by the two major news papers in Sweden for as long as I can remember. Reading the leaders of those papers I am amazed by how little the political debate and landscape have changed over the last ten years.

So overall then politically there is nothing new under the sun in Sweden. Sometimes no news is bad news.

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