Saturday, September 16, 2006

The Death of the Swedish Model

It continues. Earlier this year we had an account from Martin Wolf, summarising a Swedish study, of the costs of the Swedish Model. Now Bronwen Maddox in the Times sums up quite neatly its political unravelling.

The ability of its state to channel the unemployed away from the official numbers has been exposed, bringing double digit unemployment to light. Immigration has hurt the homegeneity that made it possible to run a welfare state without any serious redistribution and has, therefore, complicated the political task of forming a majority. With a homogenous population a welfare state is far less likely to have to prioritise between the interests of different groups and it is, therefore, easier to find a majority in its favour.

Now a right wing party is expected to win power. Its manifesto is for an attack on the Swedish model which will go a significant way towards killing it in its hometown. Even if the current Prime Minister survives and the Social Democratic party limps along in power the political settlement that made allowed such an all encompassing welfare state to survive as long as it did is now shattered.

An important question for Sweden will be how a people long accustomed to the state looking after them will cope as the welfare state's retreat requires a relearning of habits of self reliance that are bound to have atrophied; this Mises Institute study suggests the damage may have been severe.

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