Sweden has to roll up its sleeves to pay its way in the world
"We have it so good in Sweden," tosses out a Stockholm taxi driver, "that no one wants to dirty their hands. No one has to work if they don't want to." Put baldly, this is what many Swedes think is the crux of their country's economic problem -- a problem of a prosperous workforce with a well-distributed income: too few dirty hands.Skip to next paragraph
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It's Sweden's famous high income taxes that have most dominated headlines and pricked middle-class resentment in the last five years.
It's a labor union proposal for gradual union ownership of corporate stock that has spurred some of the hottest political controversy.
But in lean economic times the most pressing issue becomes how the welfare state can be supported. Can every Swedish worker in private enterprise, as one analyst puts it, carry two public workers on his back?
Sweden is the cutting edge of social democracy. It is both one of the most affluent countries per person in the world, and one of the most egalitarian. But for five years the economy has been falling out of synch.
The key gauge of misalignment is Sweden's growing balance of payments deficit: equivalent to 4.8 percent of the nation's total output in 1980.
Now Sweden has begun groping for the dynamism of the marketplace -- slowing the juggernaut of government growth and spurring productivity in the private sector. Optimism is limited outside the government, but to the business community the signs are welcome ones.
"Sitting in this house," says Lars Dahlberg, a top economist with the Ministry for Economic Affairs, "I see that government wasn't aware of the seriousness of the problem until late fall."
Until then, he adds, "You didn't have much hope for the Swedish economy."
Now Sweden has begun paddling on the supply side -- that is, concerning itself more with the output of goods and services rather than their consumption. Since the beginning of the year, a flurry of bills and action plans have come from Sweden's government Cabinet. More are on the way in coming weeks.
The strategy is similar to that of the new American administration. These are the goals:
* Cut the growth of government spending, especially at the local level, where public service spending has mushroomed.
* Make Sweden competitive, chiefly by keeping wage increases below those in competitor countries.
* Expand export industries through fresh investment, export financing, and the provision of skilled labor, rather than continuing the Swedish practice of propping up waning industries with subsidies.
"The changes are too small, too slow, in relation to what we have to do." says Trade Minister Staffan Burenstam Linder. "But the changes are dramatic in relation to the dogma that has been predominating in Swedish politics."
He sees reassuring changes in attitude among politicians, including "elements in the Social Democratic Party."
Sweden's moderate wage agreement early this year was another good sign, in Burenstam Linder's view, marking a change in how Swedish workers view their self-interest. Large increases in kronor per hour won't help if they stoke inflation and thereby hurt purchasing power.