“The welfare state we have is excellent in most ways,” says Gunnar Viby Mogensen, a Danish historian. “We only have this little problem. We can’t afford it.”
The resources the welfare state are spending are going towards housing, food, health care and disability for a certain percentage of Sweden's population.
When Gunnar Mogensen says 'We can't afford it' I think he is really saying 'we can't afford to feed, house and care for 100% of our people'.
Am I the only one that was irked by the article glancing over the fact that some percentage of Sweden's people are becoming far less economically secure?
Making life really good for a small percentage of your people is an easy, solved problem. All you have to do is use government to shave away resources from the majority and pocket them. Even the dictator of North Korea can do this.
Making life good for 100% of the people is an incredibly hard problem to solve.
My problem with articles like this one is that they don't really think throwing some percentage of the people over board and saying good luck is a problem.
Sometimes they make utilitarian arguments. I find these unconvincing based on the data.
What you see a lot in discussions about welfare is that people are confused about the distinction between the financial sphere and the real sphere. This confusion is occasionally created maliciously, but certainly most of the time it happens out of sheer ignorance.
I don't think there is any doubt that Sweden has enough access to resources and manpower to care for 100% of the people. So in real terms, they can certainly afford it.
Add to that the fact that Sweden currently has an unemployment rate of about 8.1%. This indicates that there are in fact real resources (certainly manpower, but most likely more than that) available that could be used to care for everybody, without taking anything away from anybody else, simply by activating those real resources that are currently left unused.
(TANSTAAFL, but sometimes you should just eat everything that's on the table instead of throwing it out while some go hungry.)
However, in order to activate the real resources that are necessary to achieve that, money has to be set in motion, and a government deficit may be necessary - and people believe that this is not possible in the long term, hence "unaffordable".
But the Swedish government is monetarily sovereign. They are using their own currency, are not borrowing in foreign currencies (that I know of), and so can in principle spend whatever it likes. The only limit is the inflation that would be created if spending pushed past the limit of what is available in terms of real resources - but we've already established that plenty of real resources are currently available but unused.
I really liked your statement that making life good for 100% of the people is an incredibly hard problem. It's a great way to put it. I believe that it is hard mostly because of political opposition, and the political opposition in turn can only be so strong because people in general are not used to cleanly separate the financial sphere from the real sphere. Put simply, our understanding of economics is shamefully bad.
(Disclaimer: I am not an economist myself. The above is based on my understanding that I obtained from reading mostly blogs - and the occasional research article - from Modern Monetary Theory economists and those who challenge them; if you are interested, a good but lengthy starting point is this series: http://neweconomicperspectives.org/p/modern-monetary-theory-...)
The "financial sphere" and the "real sphere" are pretty closely related: the problem governments have is not so much borrowing constraints as how to effectively deploy the unused 8.1% of the labour resource without driving up prices for related economic resources that are pretty close to full capacity.
(rough analogy: not using CPU to it's fullest capacity doesn't necessarily mean you can make a program run any faster if you're I/O constrained)
"Modern Monetary Theory" economists have a lot of interesting ideas (I like economic iconoclasm myself and have formally studied the more conventional stuff) but are a bad starting point for learning about economics not least because they consistently (and deliberately in the case of the academics) misrepresent the positions of the academic economic mainstream.
Well. Sometimes they lend in foreign currency because they get a better rate that way. There have also been occasions when they have lent in other currencies because they have felt that the Crown is undervalued.
(Personally I favor MMR over MMT. They use mostly the same framework and ideas, but MMT seems to do quite a bit a hand waving when it comes inefficiences that arise due to the job guarantee they favor.)
> "When Gunnar Mogensen says 'We can't afford it' I think he is really saying 'we can't afford to feed, house and care for 100% of our people'."
I think a more generous interpretation would be along the lines of: as demographics shift, they won't be able to afford their policies unless they can do something about costs, economic growth or both.
More and more countries are going to start finding themselves in Japanese-style economic situations: where GDP per worker may continue to grow, but the net workforce begins shrinking. And it becomes increasingly difficult to support the elderly and disabled as the workforce shrinks, unless you have sufficient economic growth to cover the gap, and/or are free to adjust costs/benefits when it isn't.
There are clearly better and worse ways to confront this problem. But it's very real and not just a boogeyman invented by those who would take from the needy to line their own pockets.
Sweden has successfully defeated low birth rates by making it more attractive for professional working women to have children. How? By not only giving maternity leave, but also instituting "use it or lose it" paternity leave. This has in a way made it almost as "inconvenient" to hire a man, because the majority of men who never took any paternity leave (even when they could) now do, thus reducing discrimination.
Why would adding it for men matter? Why wouldn't there be a dynamic where men simply don't take the paternity leave and life goes on as usual? Much the same way as maybe you don't technically have to work any overtime or past 40 hours a week (but everyone understands that if you do so, your career will go the way of the dodo and you'll be on the first list of pink slips).
The way it works is that parents get 16 months (roughly) to split between them, but 2 of those are reserved for the father. If the father doesn't take them, then the mother doesn't get them either, hence "use it or lose it". This seems to have made it acceptable for men to take paternity leave, while before it wasn't. Men have an acceptable excuse in a way. It seems to really have changed the underlying attitude to the point where taking a few months paternity leave is the norm. It has a positive feedback loop: suddenly you can see fathers in town with strollers, so that in itself makes it more acceptable. Many have argued that legislation is not the way to deal with problems like these, but on the other hand it has been very successful in its goal to shape public opinion.
I don't see why that would change the dynamics: the men can still just skip the 2 months and continue to work and signal their loyalty to the company. I think there must be something cultural or economical going on: worker-protection laws, low unemployment rate, or something like that.
>Making life good for 100% of the people is an incredibly hard problem to solve.
The 90's problem in Sweden started with politicians believing that this was a solvable problem. It's actually counter productive for the population having a state with this delusion.
Until the oil runs out. Our economy is so definitely not self-sustainable as things are now if you take away the oil, and we have a government-sector which (depending on who you ask) is around 10x bigger than it needs to be.
I'm a Norwegian, I'm having a good life now, but looking at how utterly mismanaged and inefficient everything governmental is in this country, I'm seriously wondering how this will end up by the time I get old.
I'm a Norwegian who live in US, and have lived in Spain and Australia. The inefficiencies you notice in Norway are tiny compared to those in other countries. The most blatant differences to US are:
* The existence of Altinn, which has no equivalent in any other country, as far as I know
* Everyone has a personal ID number and the number is not secret (it's printed on the front of all forms of ID, including student cards), so it can actually be used for stuff
* The existence of numerous national online databases like Folkeregistret and the vehicle insurance database, which ensures doctors, banks and insurance companies have real-time information about you, given only your personal ID number. You don't need to fill out forms everywhere, or provide the same information to several agencies (e.g. both DMV, IRS and your bank)
* Bank account numbers are not only not secret, but safe to publish on the Internet, and wire transfers are free. In US, domestic wire transfers cost $15-$25!
* Contracts for payments can be enforced, so there's no need for a credit score system other than the "yes/no: have paid all bills" database
Thank you for posting this. There are tremendous inefficiencies in the US system. Some are just dead enders from past times, some stem from American individualism and it's ideology, and a lot from failures to invest in infrastructure and our human resources (our citizens).
Of course health care is an incredibly contentious topic but I was struck by the sheer waste and cruelty of the system when I read of the story of a 24 year old man that died because of a tooth infection.
He went to the pharmacy with two prescriptions, an antibiotic and a pain killer.
Lacking the money for the higher priced antibiotics he only filled the pain killer prescription. He died from that infection.
Society spent at least $7000 per year for 12 years to educate this young man and we let him die for lack of $70 for a prescription. Even if you feel no empathy and discount national shame this is an example of breath taking irrational economic waste.
“The welfare state we have is excellent in most ways,” says Gunnar Viby Mogensen, a Danish historian. “We only have this little problem. We can’t afford it.”