Prosperity Ahead: Sweden’s Past Points Minnesota Forward Lee Egerstrom Minnesota 2020 July 2010 TAbLE oF ConTEnTS Executive Summary . .2 Introduction and Acknowledgements . .3 What was the “Middle Way?” . .5 Finding a “Middle Way” in Minnesota . .8 Shelf-Ready Models . .13 Conclusion and Recommendations . .17 References and Further Reading . 20 Minnesota 2020 - www.mn2020.org 1 ExECuTivE SuMMAry The outcome of any serious research can only be to make two questions grow where only one grew before. Thorstein Veblen When the United States and most of the then-Developed World were in the throws of the Great Depression, American journalist Marquis Childs wrote an international best-selling book about Sweden’s success in avoiding the worst effects of the global economic collapse . That book, Sweden: The Middle Way (1936), had numerous editions published here and abroad . It influenced President Franklin Delano Roosevelt and congressional leaders then looking for ways to stimulate the economy and guard against Truth be told, the u.S. has future collapses . become like Sweden; we have adapted most if not We are coming through another economic crisis – the worst all of Sweden’s “Middle since the Great Depression . When President Obama took Way” protections for office in 2009, he and congressional leaders went to work on markets and business. economic stimulus actions, plans to overhaul the nation’s health care mess, and stabilize and re-impose disciple to the nation’s financial markets . Historians will undoubtedly view all three of these public policy areas as interconnected and inseparable . Longer historical memories will recall that these actions were among interventions in the economy that were part and parcel of Sweden’s “Middle Way,” and were among actions taken by the United States and other developed nations to weather financial downturns in more recent times . But opponents of moderation and preemptive economic action were ready . Doomsday warnings brought out the old cry, “But will we end up like Sweden?” That had been an effective scare tactic in earlier times, although less so in Minnesota and other states that have cultural and historic ties with Sweden and Northern Europe . Truth be told, the U .S . has become like Sweden; we have adapted most if not all of Sweden’s “Middle Way” protections for markets and business . But we haven’t supported our people to the same extent; in other words, we don’t set our goals that high . Class, race, and nearly every divisive social issue found in American society prevent us from establishing safety net programs and policies that are commonplace in Sweden and now throughout most of Western Europe . In the spirit of Thorstein Veblen, Minnesota’s most famed sociology, economics and philosophy maverick, we should raise two new questions that aren’t being asked: • Is there anything we can learn from Sweden’s “Middle Way” experience that would be useful in today’s economic climate? • Is there a Minnesota Way that can draw on those experiences, and our own cultural development, to help Minnesota and its people prosper in the global economy? The answer to both questions is “yes!” This paper explores the reasoning behind that conclusion . 2 Prosperity Ahead: Sweden’s Past Points Minnesota Forward inTroduCTion And ACknoWLEdgEMEnTS All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident. Arthur Schopenhauer Taking Criticism Regarding Sweden, hopefully we’re reaching the third stage in Arthur Schopenhauer’s progression of truth . As an example of Claims about Sweden’s evils didn’t go the ridiculous and violent opposition stages, we can look light unnoticed in Sweden or in international news reports . Olle Wastberg, director- heartedly at a segment on “The Daily Show with Jon Stewart” general of the Swedish Institute, where he parodied a Fox News broadcast warning Americans responded in a September 2009 inter- about the “evils” of Sweden . view in www .thelocal .se, an English language online newspaper from Fear-inducing complaints about Sweden as a “rampantly Sweden (“Beyond the insults: Swedish Model 2 .0”) on frequently flung insults socialist” country that represents “neo-liberal market excesses” from America’s far right and special do nothing more that delay reasonable discussions about interests that were opposing U .S . health creating better social policy, especially when it comes to ensuring care reform . health care for all Americans . Wastberg denied Sweden being rampantly socialist and represent- Let’s take a look at the Swedish economy and standard of living ing neo-libral marker excesses . The measurements by the Organization of Economic Cooperation Christian Science Monitor (Sullivan), and Development (OECD) and other international research New York Times articles, Organization groups . We trail Sweden on most measures where comparable of Economic Cooperation and Develop- ment (OECD) reports and studies, and statistics are available; on issues such as child mortality we aren’t even comparative studies of business even close, though we are closing in on Cuba . freedom by the conservative Heritage Foundation in Washington (see Refer- Two other measures of contemporary Sweden are especially ences) would back him up . Toynbee important and germane to this report . First is the “Democracy (“The most successful society the world has ever known”) takes Sweden’s Index,” compiled annually by the Intelligence Unit for The praises to extraordinary lengths . But Economist, in which Sweden typically ranks first out of 166 other Nils-Eric Sandberg, a thoughtful former countries . The U .S . typically doesn’t crack the top 15 . columnist at Stockholm’s Dagens Nyheter newspaper and a disciple of Also, the United Nations Development Programme’s (UNDF) economists Friedrich Hayek and Milton Friedman, can find much to criticize Human Development Index (HDI) ranks Sweden 7th . This UN with both past and current Swedish measure was largely designed “to shift the focus of development policies that look like excesses in many economics from national income accounting to people centered parts of America (Sandberg) . policies” (Haq) . Minnesota 2020 - www.mn2020.org 3 Minnesotans wanting to ponder questions about Sweden and its culture more deeply should find a book by former Minnesota Judge and State Representative Earl Gustafson, The Swedish Secret: What the United States Can Learn from Sweden’s Story . Minneapolis publisher Syren Book Co . described it this way: “Imagine a country where very few people are homeless; there has been no war for 200 years; there is high-quality health care for all; there is excellent free public education (and) a living wage is the norm and there is low unemployment; voter participation is high and political advertising on TV and radio is prohibited by law; the economy grows without creating extremes of wealth alongside poverty’ and there is little national debt. “You don’t have to imagine this country. It is Sweden today.” For rational people, it does beg a question: “What did Sweden do?” Stockholm, Sweden by Michael Caven 4 Prosperity Ahead: Sweden’s Past Points Minnesota Forward WhAT WAS ThE “MiddLE WAy ? ” Life can only be understood backwards, but it must be lived forwards. - Soren Kierkegaard Marquis Childs, author of Sweden: The Middle Way, saw it as choosing an intentional middle course between extremes of capitalism and communism . Apologists and proponents of those extremes in both Moscow and Manhattan would have you believe the concept was nonsense . Extremes of Capitalism and Communism Childs defined the points of extreme as the United The extreme on one end of the spectrum became symbolized by Josef Stalin’s abuses of power in States holding its “concentration of economic power the early decades of the former Soviet Union . The in the hands of a few men” and the Soviet Union, with extremes of capitalism were more complex . In the “the trials and hardships in Russia .” time of the Great Depression, it came to symbolize rising nationalism that we’ve lumped together as Those polar points don’t exist today as they did in the Fascism, or what Italy’s Mussolini described as “cor- poratism .” By others who took a narrow, libertarian 1930s . One extreme is gone entirely . view, it came to symbolize Adam Smith’s “invisible hand” of markets that would correct excesses, over China remains a Communist country with a single time, if you lived to see the corrections . party controlling politics, but it has liberalized its economic structure along a modified capitalist path . Meanwhile, almost all nations have adapted parts or all of Sweden’s depression fighting tools . Trade agreements modify business and economic behavior and protect against abuses of market power . National policies tighten these rules, and governments intervene in response to economic cycles or to scandals and abuses . Meanwhile, remnants of the political thought behind the two extremes remain well embedded within Russia, by lingering Marxists, and in the United States and elsewhere where immigrant groups and others remain targets for discriminatory actions and by groups seeking to dismantle government . how it worked in Sweden In a nutshell, the Social Democrats who came to power in Sweden in 1932, the same year FDR was elected in the United States, formed most of the modern Swedish welfare state . In a coalition with the Farmers’ Party, now known as the Center Party, Sweden intervened in the domestic economy with sweeping agricultural price and income support Sweden intervened in the programs . It instituted support of businesses to maintain domestic economy with employment, and encouraged development of consumer and sweeping agricultural producer cooperatives that made the Swedish economy more price and income support resilient by lowering transaction costs, bringing efficiencies programs to supply chains, and keeping profits from home-owned businesses in Sweden . The state intervened and took equity positions in or nationalized some industries that were failing or struggling with trade in the global depression (see Sarlin for U .S .