Crisis Book Swedish
Nella Mcnairy
In September 2008, economists Brad DeLong and Paul Krugman proposed the Swedish experiment as a model for what should be done to solve the economic crisis that was affecting the United States at the time.[4] Swedish leaders who played a role in devising the Swedish solution and have spoken about the implications for other countries include Urban Bckstrm and Bo Lundgren.
Japan, which was struggling to handle the deflationary situation due to the Japanese asset price bubble, since the early 1990s, were considering restructuring their economic policies around Sweden's, during that of the Swedish financial crisis, however, such policies never took place.[5]
After staying out of World War II, Sweden had evolved into a high-performing export-oriented economy, based on a stable parliamentary democracy and social consensus. The country had top-notch health care and education. It enjoyed social and gender equality, had low crime rates and little ethnic conflict. While grounds remain for optimism about some of these indicators, especially in the industrial sector, most have been transformed beyond recognition.
For a knowledge-based country, this is serious indeed, and the central bank is far from alone in raising the alarm. Warning bells have been sounding with increasing intensity for some time, and the political sphere has finally begun to shed its long-standing denial. The problem is that few if any seem to know what can be done.
The main cause of the crisis is a combination of an open-door migration policy with no accompanying policy to help the newcomers integrate. The consequence has been the emergence of neighborhoods where almost all residents are immigrants, where unemployment rates are very high and where the children of immigrants go to schools where no other children, often not even teachers, are proficient in Swedish. This has served as an incubator for crime, as gangs take over where society fails.
Having been long in denial, even the Social Democrats have now released a report of their own, recognizing that two decades of excessive immigration and failed integration have produced a national crisis.
According to official statistics, the number of foreign-born residents in Sweden has increased dramatically over the past two decades. Out of a population of 10.61 million in 2022, a total of 2.14 million were registered as foreign-born, more than double the number in 2000. That comes to just over 20 percent. If a broader definition is used, to include those who are born in Sweden with two foreign-born parents, the number rises to 26 percent.
At a casual glance, these numbers need not be taken as evidence of a dark future ahead. Those who take a positive view of migrants and asylum-seekers are right in pointing out that Sweden has a long history of successful immigration. The problem with this argument is that it refuses to accept that all migrants are not the same.
The Swedish government has recently commissioned a study of the costs and benefits of migration, to be broken down by countries of origin. It is expected to highlight the current challenge: the task of integrating large numbers of illiterate adults with many children. Previous immigration waves amounted to accepting people from culturally similar countries who move straight into gainful employment.
The reason why the problem has been allowed to get out of control is that so many representatives of the media and of the political establishment have for so long been cocooned in naive views of criminal dangers, leading to extremely lax legislation and enforcement, and of dangerous strains of Islamism, leading to a profound inability to scale up defenses against the current wave of radicalization. Those chickens are now coming home to roost.
The legislative agenda is built on inspiration from Denmark. It features much longer sentences for serious crimes, double penalties for gang members and special prisons for young offenders. It offers new tools for law enforcement, ranging from rights to electronic surveillance of gang members even before crimes are committed, to the introduction of visitation zones where police may stop and search even in the absence of suspicions of violations. And it includes a substantial boost in the creation of prisons to house convicted felons, including plans to rent space abroad.
While the government is strongly committed to realizing this agenda, it may not succeed. Denmark has been so successful because it started before the problems had gotten out of hand. In Sweden, the government has not only started late but also shied away from adopting the Danish example in its entirety.
Doing so would require the dispersal of migrants to different regions and the requirement that children of migrants learn the local language and values, as in Denmark. The reason why this is not being considered in Sweden is that the existing agenda is already viewed as so radical that the outcome in the next general election is impossible to predict.
The essence of a pessimistic scenario is that the electorate may fail to live up to the fundamental principle once established by Immanuel Kant: whoever wills the end also wills the means. For the time being there is strong popular support for something to be done. But once viewers get inured to images of innocent bystanders being killed by children wielding assault rifles in public spaces, then leftist legacies from the past will come to the fore, undermining law enforcement.
The Swedish public debate has already become polarized to a frightening extent, with accusations of racism and fascism polluting the public space. The flames are being fanned from a variety of quarters, from Russian trolls and radical Islamist circles to left-leaning public service media. Surfing on a rising wave of outrage against the government, the opposition has gained a massive lead in the polls.
This is not to say that the game is over. The next election is in September 2024, by which time the government may be able to show inspiring results. Having been in power during 2014-2022, when the problems spiraled out of hand, the Social Democrats feel that they are in a tough spot. The remedy sought is a daring chameleon act, pretending to have always been tough on crime and in favor of strict rules on migration. While this may be successful in some quarters, it still leaves the fact that the left and the greens will be very difficult to dragoon into this act, and without their support, no government on the left can be formed.
The Social Democrats are, moreover, reluctant to see the government succeed in resolving the problems, for the simple reason that this would cement a non-socialist government. They are consequently hesitant to cooperate. At the same time, they realize that if the government does fail, then the situation will get so awful that calls for law and order and intervention by the army will become so strong that serious right-wing parties will be swept into government by default.
Looking beyond politics, the core of the problem is the uncertainty that legislation and law enforcement alone can be effective against the deepening chasm in societal norms and values. If that divide cannot be bridged, and few if any seem to know how that may be done, then the best that can be hoped for is that increasingly draconian law enforcement could curb the worst problems, as the country gets used to living with a parallel society that is ruled by gangs and radical Islamists. There are ample reasons for the neighbors to be concerned.
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The Swedish banking crisis was part of a major financial crisis that hit the Swedish economy in 1991-93. Its origin should be traced to financial liberalisation in the mid-1980s that triggered a rapid lending boom. The pegged exchange rate for the krona prevented monetary policy from mitigating the boom by means of interest rate increases. The boom turned into bust and crisis around 1990, threatening a meltdown of the banking sector. The response of policymakers developed into the Swedish model for bank resolution. It comprises the following seven key features.
A central feature was the political unity across party lines which underlay the bank resolution policy from the very start. The Centre-Right government and the political opposition - the Social Democrats - joined forces and avoided making the banking crisis into a partisan political issue. This unity, initially forged by the determination of the major political parties to defend the pegged exchange rate of the krona, lasted throughout the crisis. Political unity guaranteed the passage through the Swedish parliament, the Riksdag, of measures to support the financial system. It also created policy trust amongst voters.
In addition, this measure proved highly beneficial, as it expanded the options for the Riksbank to support commercial banks regardless of their financial position. The government guarantee of bank liabilities gave the Riksbank the option to lend to any commercial bank operating in Sweden, even to those that were on the brink of insolvency.
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