Sweden redux

By Kathy G.

During my guest blogging stint at Tapped last week, I wrote a short post about Sweden that took issue with some assertions that Megan McArdle had made in an earlier post.

My post, in turn, elicited a response, this time from a libertarian named Michael Moynihan, who blogs for Reason magazine. And it cannot be said that his response is lacking in bitchiness (note to self: beware of wingnutty bloggers with the initials "M.M."). Not that the bitchy, overwrought tone is surprising, coming from Moynihan. Last year, when liberal writer Ben Adler, in the course of a rave review of The Simpsons Movie, gently pointed out that it had "a streak of politically conservative humor," Moynihan threw an over-the-top hissy fit and compared Adler to the self-styled cultural commissar of the far right, Brent Bozell. So, no, I don't think it can be said that a sense of proportion is among Moynihan's virtues.

Moynihan cutely labels me "the Google pundit" and implies that my work is based on little more than shallow googling and parroting others' arguments. This is a gross misrepresentation of my work. As regular readers of this blog know, many of my policy posts on issues like the minimum wage, paid family leave, early childhood education, unions, monopsony, and the like, are based not on "googling," but on the peer-reviewed literature on these subjects. I've studied these policies in an academic context, and I do know what I'm talking about. I don't expect Moynihan to be familiar with my work -- I sure as hell don't go out of my way to read him. But his implication that I'm some kind of googling dilettante is a serious mischaracterization, and I resent it.

Getting to the specifics of the specifics of the Swedish post -- I'll be the first to admit that I'm no expert on Scandinavian social democracy. But what I wrote in the Tapped post was factual and responsible, and I wholeheartedly stand by it. I will add, though, that all I did in that particular post was reiterate arguments that had been made by Lane Kenworthy, a political scientist whose blog, Consider the Evidence, I highly recommend (particularly if you're interested in inequality).

Normally I would probably have done more research on my own to flesh out what Kenworthy written, but I was pressed for time. There was a mix-up and I didn't realize I was scheduled to blog on Tapped this week. Content needed to be put up and I knew that post was one I could do relatively quickly. I linked to Kenworthy and gave him full credit, but I didn't attempt to find other statistics or make a deeper argument.

Okay, let's get to Moynihan's main points. First of all, he takes issue with the title of my post, "Everything You Know About Sweden is Wrong," labeling it "pompous." I agree; I think that the "everything you know about X is wrong"-type title is a cliché. But I'll add that that title was the editors' choice, not my own (I'd originally gone with "Swedish Myths and Realities," which is not great either, but better).

Moynihan next takes issue with my assertion that it's a misnomer to characterize Swedish society as homogeneous, given the fact that a substantial proportion of its population is foreign-born. I added that, of course, Sweden is not nearly so heterogeneous as the U.S., which has far more racial diversity.  Moynihan opines that "this is a mind-bogglingly imprecise comparison." But all I said was that Sweden was more diverse than is commonly assumed, not that it's as wildly heterogeneous as the U.S.

One of the classic wingnut arguments about social democracy is that it could never work in the U.S., because here, we have Teh Blacks. And they'll point to Sweden, which is often viewed as the model social democracy, and note how homogeneous the population there is. That was once very true, but it's not so true anymore. As this table shows, the percentage of foreign-born residents in Sweden was 4% in 1960, 6.7% in 1970, 7.5% in 1980, 9.2% in 1990, 11.3% in 2000, and 13.4% in 2007. The Swedish population, in fact, now has one of the highest percentages of foreign-born residents in all of Europe, as this table confirms.

It's true, as Moynihan claims, that a large proportion of Sweden's immigrants have traditionally come from other Nordic countries that are culturally similar, but that is changing as well. As the table on page 17 of this report shows, there are fewer immigrants coming to Sweden from Nordic countries, and more coming from nonwhite areas of the world, such as Asia, Africa, and South America. As of 2004, in Sweden, the foreign-born population from those three regions considerably outnumbered the foreign-born population from the Nordic countries.

Next, Moynihan takes issue with my assertion that the Swedes have a strong work ethos.  I cited as evidence the fact that the Swedish employment rate is around 74%, which is slightly higher than in the U.S., and that the share of Swedish households without an employed adult is around 5%, which is about the same as here. I could have, and should have, said more. For one thing, the proposition that Sweden has a "strong work ethic" has long been generally accepted, so much so that even the Wikipedia entry on the culture of Sweden references the country's "Protestant work ethic." Not that this proves anything, of course, but normally those kinds of generalizations about a country have at least a kernel of truth to them.

The question remains, though: how does one empirically investigate a concept as vague and slippery as a "work ethic"? One way to do this might be to ask business executives -- do they think the work ethic of the labor force in a given country is a barrier to doing business in that country? Well, guess what -- the World Economic Forum asks just such a question. Each year, they issue the Global Competitiveness Report, which "assesses the ability of countries to provide high levels of prosperity to their citizens" and "measures the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity."

As part of of this report, they issue what they call their Executive Opinion Survey, which polls about 11,000 business leaders throughout the world. One of the things they do is to ask these executives to select "problematic factors" for each country -- "factors seen by business executives as the most problematic for doing business in their economy":

From a list of 14 factors, respondents were asked to select the five most problematic ones, and to rank those from 1 (most problematic) to 5.The results were then tabulated and weighted according to the ranking assigned by respondents.

Along with tax rates, labor regulations, crime, inflation, and other features, the survey lists "poor work ethic in national labor force" as one of those 14 "problematic factors." So, let's see what this survey has to say about Sweden's "work ethic". To find the results, first click here, then click on "Country Analysis" at the top left, then click on "Sweden" in the box below that, and then click on "Problematic Factors" at the tab on the right. Well, according to the weighted survey results, a "poor work ethic" was identified as a problematic factor for doing business in Sweden only 3.9% of the time.

Moreover, let's see how Sweden's work ethic compares to more market-oriented economies in advanced countries such as the U.S., the U.K., Ireland, Canada, and Australia. Here are the results: in the U. S., "poor work ethic" was rated as a problem 7.6% of the time; in the U.K., 8.1%; in Ireland, 5.9%; in Canada, 4.5%; and in Australia, 4.7%.

Sweden stacks up pretty well against these countries, especially vis-a-vis the U.S. Now it's true that "problematic factor" rankings aren't strictly comparative between countries -- what this measure gets at is the relative importance of the 14 factors within each country. Still, it bears mentioning that Sweden ranked extremely high overall in this survey -- it placed #4 out of 131 countries surveyed in terms of Global Competitiveness, and also #4 in Business Competitiveness. Maybe Michael Moynihan believes Sweden's work ethic is a major problem, but the world's business leaders don't.  And how many businesses has Moynihan started recently, again?

I looked for but could not find other research that examined Sweden's work ethic per se. If anyone could direct to me relevant studies of the subject, I'd be grateful.

Moving on to other points Moynihan makes -- he does say that Swedish sick leave payments are high, and notes that after a change in policy by the new government, sick leave claims dropped by 13%. Absenteeism has indeed been a problem; in 2004, Sweden had the highest number of working days lost to sickness among the OECD countries. But just because lots of people were taking advantage of a generous sick leave doesn't mean that Sweden has a poor "work ethic." When you have a policy that's that generous, people will take advantage of it -- that's human nature. The point, though, is that the Swedes saw absenteeism was a problem, reformed the policy, and achieved the desired result of lowered absences. That, to me, is  a sign of the strength of Swedish social democracy, not weakness.

Moynihan also claims that figures about Swedish unemployment are misleading, because the Swedes measure it incorrectly by not including those on sick leave, in early retirement, and in jobs programs. But in the U.S., those people would not be considered unemployed either. You are only officially "unemployed" in the U.S. if you are 16 or older, in the civilian noninstitutional population, and "do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work." Given declining labor participation rates in the U.S., the increasing numbers of Americans going on disability, and the astonishing numbers of Americans who are "institutionalized" (i.e., behind bars), it could be argued that the true unemployment rate isn't captured by our unemployment statistic, either.

The official statistics from the OECD which compare unemployment rates in economically advanced countries are (according to page 3 of this report) "adjusted to ensure comparability over time and to conform to the guidelines of the International Labor Office." Even so, the most recent available unemployment rates that I could find comparing the U.S. and Sweden are not dramatically different: in 2004, unemployment, according to the OECD, was 5.5% in the U.S. and 6.4% in Sweden (as can be seen on p. 3 of the report). The employment-to-population ratio for that same year was 73.5% in Sweden and 71.2% in the U.S (see p. 4 of the report).

Now, it's true that, due to generous paid parental leave, sick leave, and vacation policies, many of those officially counted as "employed" in Sweden are actually temporarily out of the labor force. You can see this most clearly when you look at average annual work hours for the two countries, which (as is shown on p. 21) in 2005 in the U.S. was 1,804 hours per worker, and in Sweden was 1,587 hours per worker. So yes, the Swedes do work less.

But how much of a problem is that, really? The wingnut cartoon of the social democratic state would have you believe that because such societies offer such generous welfare benefits, everyone slacks off, no one works, no one innovates, no one wants to start businesses, and consequently the standard of living must be low. And it's undeniably true that Swedish taxes are sky-high.

But though the Swedes do indeed work less, they still enjoy relatively high levels of growth, productivity, and GDP per capita. Sweden also ranks high in surveys that measure global competitiveness (as I mentioned before, it ranked #4 out of 131 countries surveyed here) and ease of doing business (it ranked #14 out of 178 countries surveyed on that score in a recent report  by the World Bank). The Economist magazine, not known for its leftist ideology, ranked  Sweden #5 on its most recent "quality of life" index (from 2005; the U.S. was #13.).

And there's more: the Swedish class system is far less ossified than is America's -- Swedish society has considerably more economic mobility than the U.S., both between generations and over the life cycle. All this plus, as you might expect, Sweden enjoys far lower levels of economic inequality than the U.S., and the Swedish poor are better off economically, both in absolute and relative terms.

A couple of more points: Moynihan argues that Sweden's new immigrants are  having a  hard time being integrated into the labor force. That is true -- see this paper, especially pp. 40-41, for details about the lower employment rates of immigrants in Sweden, compared to native-born Swedes. But as the aforementioned report demonstrates, this a problem for many other European countries, not just Sweden. And besides, not all the evidence Moynihan introduces on this score is especially compelling. For instance, there's this:

Indeed, a recent study tracking the fortunes of Somali immigrants in Sweden and in Minneapolis (reported here in Swedish, summarized here in English) found that its sample group in the U.S. started approximately 800 companies. In Sweden, they managed only 38.

I tried to find this study online, but I was unable to (and I probably wouldn't be able to read it anyway, because I doubt it's available in English). I have a lot of questions about it, though. Did Moynihan read the study? How sound is the methodology? Does Moynihan even have the social science training to be able to evaluate it? Were the Somalis studied refugees, or did they leave for economic reasons?

Unless the Somalis were randomly selected to be placed in one country or the other, or the differences between the two groups were controlled for in a rigorous fashion, the study would be worthless from the point of view of social science. One would assume that the group that self-selected to emigrate to the U.S. was more entrepreneurial in the first place, and if that's the case, the study falls apart. So excuse me if I'm highly skeptical of a study I haven't read, that doesn't appear to be available on the web in any form, and that has only been cited by right-wing anti-social democracy polemicists, and not (so far as I could determine) anyone who's nonpartisan, or anyone on the left.

Another odd feature of Moynihan's post: he seems to believe that just because I like a lot of things about the Swedish economic system, that I'd give unqualified support to everything the Swedish socialists want and oppose everything the Swedish conservatives want. Why he thinks this I have no clue. In my post I mentioned that Sweden has, for example, school choice and a partially privatized pension system. I do not support those things for America, but in the Swedish context, they may well make sense (I'd need to know more about how they work in Sweden before I'd support them there, though).

Moynihan seems to think that just because my political views are pretty far left in the American context, they'd be far left in the Swedish context as well, but that's simply not true, because the two systems are not comparable. Even the most liberal American politicians are probably, in most respects, considerably to the right of the current conservative Swedish government.

The bottom line is this: the wingnuts always get really hot and bothered by the fact that the Nordic countries tend to have a high standard of living, are thriving economically, have governments that are robust democracies, and yet, still have generous social programs and enjoy high levels of economic equality. They want you believe that they are only two choices: virtually unrestrained crony capitalism with a meager safety net, as in the U.S., on the one hand; or The Gulag, on the other hand. But there is a viable and promising third option, that combines democracy, and markets, and a generous welfare state.

Swedish society has its problems, and contra Moynihan, I never implied that it didn't. Sweden's tax rates, as I said, are exceptionally high. But even if Sweden's problems of unemployment, overly generous sick leave, and difficulty assimilating immigrants are every bit as bad as he claims they are, I would still  take their economic system any day over the one we have in the U.S. Because even though it's far from perfect, Sweden is still an economically thriving society with a high standard of living and far more equality and real opportunity than in the U.S..

Moreover, in the U.S., our prosperity comes at an extraordinarily high cost, and is far from equitably shared.  The U.S. has, among other things, soaring levels of economic inequality, a high poverty rate, the world's highest incarceration rate, and shamefully large numbers of people without adequate health insurance, or without any health insurance at all. All of those things cause profound, and needless, suffering. They lead to tragic, needless deaths and wasted, unfulfilled, and diminished lives. Moynihan may be fine with that -- hey, as long as you're letting the market do its magic, who cares about the human wreckage?

But he does seems oddly uninformed and blasé about the deep social and economic problems facing the United States. However, there may be a very good reason for that. Because if you read his post, you'll find out that Moynihan doesn't actually live in the United States. Instead, he's chosen to become a permanent resident of . . . you guessed it! -- that social democratic hellhole, Sweden. Well, as the wingnuts like to say about America: love it or leave it, dude!

Comments

[Jacob Christensen]

Comparisons are fun: It is interesting to note that in the Global Competitiveness Report both Swedish and US employers complain about taxes, given the big differences.

Also, note the differences with regard to the view of the education of the workforce and the view of public authorities in Sweden and the US.

(Personally, I found the differences between Sweden and Denmark intriguing - as I see it, the level of education and efficiency of public administration are pretty much the same in Sweden and Denmark, but you get completely different evaluations).

Generally, Sweden suffered a bad recession in the early and mid-1990s - there were partly financial, partly industrial reasons for this - and this generally has affected Sweden's performance during the late 1990s and early 2000s. One question may be how the big old firms of Sweden will adapt - some went down in flames during the 1980s and 1990s, others merged (medical industry is a case in point) and some have more or less left Sweden as their home base.

[DrDick]

Libertarians hate Sweden because it proves what all the rest of us have always known: they are full of shit. Also anytime some one uses "ethnic diversity" as a reason why social democracy will not work in the U.S., it is racist code for "all those brown and black folks are lazy and won't work." Moynihan thus reveals himself as both an idiot (obvious since he is a libertarian) and a racist.

[Stephen Bank]

pwned

[hilzoy]

This is absolutely true:

"Moynihan seems to think that just because my political views are pretty far left in the American context, they'd be far left in the Swedish context as well, but that's simply not true, because the two systems are not comparable. Even the most liberal American politicians are probably, in most respects, considerably to the right of the current conservative Swedish government."

Last time I was in Sweden, some big issues were: to what extent should private hospitals be allowed to compete with public hospitals? As I understood it, people would still get the same kind of care paid for by the state, at the same rates. It wasn't about the health care, it was about having private hospitals competing for the patients whose care was paid for. Likewise, schools, etc.

I thought: well, not having the time to go deeply into the issues here, my impulse is: why on earth not have private entities competing with public ones -- not, say, in the case of the army, where there's a good reason for having only one army run by the state, but in cases like hospitals?

And so I found myself on the opposite side from the Social Democratic party. Because that's the conservative position in Sweden: generous health benefits for everyone, well-funded public hospitals, and some private hospitals too.

(Note: all this is from conversations with people. If I got it wrong, sorry.)

[hohum]

I have two colleagues who live and work in Sweden. One tells me that yes, taxes are high, but the tax collectors are much nicer than the IRS and he feels like the government provides pretty good value for those taxes--good schools, health care, transit, etc. as well as housing allowances.

The other makes a pretty good case that when you consider the cost in the US of income taxes, Social Security, Medicare/Medicaid, and health care, he's financially better off paying Swedish taxes.

[DL]

"But though the Swedes do indeed work less, they still enjoy relatively high levels of growth, productivity, and GDP per capita. Sweden also ranks high in surveys that measure global competitiveness"

From somewhat shaky anecdotes, I'd agree that this is true. I'm a foreigner working in Norway, whose culture is obviously very similar to Sweden's. The work hours here are shorter, and the holidays longer, but the people just seem to work harder. I don't know, but the work gets done. When some Norwegians hear about the ridiculously long hours some Americans work, they say "What, can't they get their work done on time?"

Gotta love Scandinavia!

[MikeT]

Generous sick time policies might also mean people staying home when they're starting to feel sick, resulting in less spread of disease. I wonder if there are public health stats that could provide evidence one way or another on this.

[ligedog]

I read that comment list on Tapped. Good grief!

[Retief]

"Moynihan cutely labels me "the Google pundit" and implies that my work is based on little more than shallow googling and parroting others' arguments. This is a gross misrepresentation of my work. As regular readers of this blog know, many of my policy posts on issues like the minimum wage, paid family leave, early childhood education, unions, monopsony, and the like, are based not on "googling," but on the peer-reviewed literature on these subjects. I've studied these policies in an academic context, and I do know what I'm talking about."

And everyone knows this is an all Yahoo shop. Inktomi all the way!

[parsec]

Not a scholar on the subject either, but I have it on good authority that any moment now hordes of desperate Swedes will be climbing up the sides of freighters frantically trying to escape their crumbling socialist nightmare. I've been hearing this for about 40 years now.

[terence]

Richard Layard made the point in his book Happiness that the main reason people in the US pay lower taxes than those in Europe (so not specifically Sweden) is that their taxes don't cover health care. Once you add health insurance into the picture (either private or through employers) remaining 'discretionary' incomes are similar.