More Swedish Triumphalism!

by hilzoy

One might imagine, if one were into armchair speculation, that a contrast between the economies of Sweden and the United States might go something like this: Sweden has provided an extensive safety net to its citizens. They don't have to worry about how to pay for medical expenses, or whether they'll be able to afford to send their children to college. And that's a good thing. However, all this social spending has taken its toll on economic productivity and competitiveness. The United States has made the opposite choice: on the one hand a much smaller and more scattershot safety net; on the other, greater economic competitiveness. There's a tradeoff between these two good things, and the two countries have just chosen to make that tradeoff differently.

One might think that, but one would be wrong (via Kevin Drum):

"The US has lost its status as the world's most competitive economy, according to the World Economic Forum.

The US now ranks only sixth in the body's league table of global competitiveness, behind Switzerland, Finland, Sweden, Denmark and Singapore.

Risks attached to the large US trade and fiscal deficits prompted its fall."

Mwahahahahahaha! Sweden RULEZ!!!

Comments

[spartikus]

I've been told for years that Sweden (and Norway and Denmark and France and Canada and......) are on the verge of collapse. People are quite certain on this point. Adamant, even.

I'm sure I will continue to be told this in the years ahead.

[JakeB]

I reckons that once that already scattershot safety net shrinks past, say, things like effective curbs on corporate corruption, effective tax auditing, and sufficient resources to combat general white-collar crime, perhaps honest economic competitiveness is a little harder to maintain. Who wants to compete when you can just bribe the ref?

Doesn't this darn armchair have a footrest??

[John Thullen]

I'm going to celebrate by having herring for lunch.

[Decided FenceSitter]

Honest question, anyone have enough of an economic background to know how one would determine the efficency bonus granted from a small system to a large system. Just looking at total populations pulled quickly, and rounded from wikipedia:

Switzerland: 7,250,000
Finland: 5,250,000
Sweden: 9,000,000
Denmark: 5,500,000
Singapore: 4,500,000
United States: 300,000,000

And that doesn't even begin to take into size of the nations, and thus transportation.

Anyone know how these figures of efficiency are reached? Is it similar to the WHO, where the best is defined as the best average care, versus the best absolute care?

[Anderson]

Of course, there's always ...

"Sweden: Where Torture Is STILL Illegal."

[ThirdGorchBro]

"Risks attached to the large US trade and fiscal deficits prompted its fall."

So what does this have to do with socialized health care? Seems to me that if it were not for the fiscal irresponsibility of the present administration and Congress, we'd still be the most competitive economy.

[Yukoner]

Note that the World Economic Forum points to the twin deficits (fiscal and trade) that the US has been and is running (with no end in sight) as the primary reason for its drop in the rankings.

If any of the other countries listed even approached those kind of deficits (as a percentage of GDP) chances are they would already be in complete fiscal and general economic meltdown. American exceptionalism (and having the ability to print the world's reserve currency) allows economic gravity to be defied, at least for now.

[bob mcmanus]

"Seems to me that if it were not for the fiscal irresponsibility" ...TGC

Because of vague statements like this and Bush's determination to look at Social Security in the midterms, I think we should be calling for large tax increases at every opportunity.

Or, if it be your political preference, withdrawal from Iraq and military drawdown.

[ThirdGorchBro]

I call for large tax increases on everybody who's not me.

Also, we need to withdraw from Iraq so we can deal with the Swedish threat.

[Anarch]

But that's just what the Belgians want!

[Jesurgislac]

No, it's what the Norwegians want! Though they may have used Belgians as a catspaw to transfer suspicion.

Tricky bastards, those Scandinavians. How can you trust a country where the cheese tastes like toffee?

[Andrew]

What does the toffee taste like?

[spartikus]

Fish

[bob mcmanus]

I would say I meant "lame duck" instead of "midterms" at 4:29, but who knows where that could take the thread?

[Jesurgislac]

Somewhere quackers.

[liberal japonicus]

mmme, duck...

[Anarch]

Yooooooou, duck?

[Jesurgislac]

Little ducky duddle
went wading in a puddle,
wading in a puddle quite small.
Said he "it doesn't matter
how much I splash and splatter
'cause I'm just a little ducky after all."

[JakeB]

Well, in four minutes I will be departing my office and walking to a fine Chinese restaurant for to consume Peking Duck.

cheers.

[Sebastian Holsclaw]

I think Decided Fencesitter has part of the answer, and I think much of it is also attributable to some free rider effects (which are easier to defend so long as small countries are the ones doing it). If the US took the Danish approach on military spending would sea trade be as safe as it is today? I doubt it. If the US killed off the profitable market for medical discoveries, would new medical discoveries continue at anything near the current pace? If the larger countries weren't willing to deal with Kosovo, would the roiling violence have damaged the markets in Sweden and Denmark?

[MCMC]

If the US took the Danish approach on military spending would sea trade be as safe as it is today?

What exactly is the Danish approach here? And yes, I think coordinated policing could keep the seas safe (and other random superpower duties) with relatively low levels of defense spending. And yes, there would still be medical discoveries, except there might be a few less orphan diseases and a few less erection pills (though probably still one good one), and other small countries (I'm thinking Aus & NZ in the Pacific) do good peacekeeping/nationbuilding in their neighborhoods.

Any more insipid fearmongering for us Seb?

[liberal japonicus]

I think the free rider problem is worthwhile to think about, but that free rider problem is exacerbated by a resistance to think of either international or regional bloc frameworks.

I also think that 'insipid fearmongering' is not the most helpful of collocations, FWIW.

[liberal japonicus]

I think the free rider problem is worthwhile to think about, but that free rider problem is exacerbated by a resistance to think of either international or regional bloc frameworks.

I also think that 'insipid fearmongering' is not the most helpful of collocations, FWIW.

[liberal japonicus]

In my defense, it has the same time stamp, so I'm sure it wasn't me doing it twice...

[MCMC]

No, I defend my use of insipid.

The rhetorical strategy SH is trying to employ goes like this:
1) the US does things that are good,
2) if the US didn't do those things, they wouldn't be done.

Statement 2 only necessarily follows Statement 1 in an imaginary hypothetical adjustment of the status quo in which every other condition is held constant, but of course, every other condition would not really be held constant.

This doesn't mean that Scandis don't benefit from free riding now, but barring some actual attempt to quantify this in conjunction with quantifying the externalities born by other countries as a product of US activities, and a refusal to admit that international institutions and state actors could rationally respond to fill vacant positive externalities the debate goes nowhere.

And yes, I fully consider language to the effect that 'without the US pharma market and corporations there would be no medical advances' to be insipid fearmongering.

[Jesurgislac]

MCMC: And yes, I fully consider language to the effect that 'without the US pharma market and corporations there would be no medical advances' to be insipid fearmongering.

Or capitalist nonsense, really. I was once challenged (not by Sebastian) to find a list of examples of significant medical advances accomplished by government funding, and it took me about ten minutes to find an impressive list, and I could probably do better now with Google Scholar at my fingertips. (But probably wouldn't, because as I might have thought, the challenger wasn't even a little bit interested in the list.)

[damon]

if one were into armchair speculation

I love that a philosophy professor wrote that.

[liberal japonicus]

Well, insipid means banal or tasteless, so I don't think it gets at what you are trying to go for. 'baseless' maybe, or 'recondite' or 'fanciful'.

I have to admit, the second one is one I've gone round the block with and I don't think much of it, but 1 and 3 are interesting, if only because I don't think we've thought them thru. I'm a bit interested in the 1st one, if only because a group of students went to Pakistan 10 years ago for a volunteer tour, were riding a boat for a sightseeing tour their final day when they were attacked by pirates, and one of the guides was killed when they opened fire on them, so I'm not sure if the seas (or at least some of them) are actually safe now.

[MCMC]

LP-

Jejune would also work for the connotation I was aiming for. Recondite not so much.

Anyway, safe always means safe for US interests, therefore, the US makes the oceans safe. I actually think #1 is the least problematic here. Between the many states that take an interest in transoceanic shipping I'm pretty sure something could be worked out. State-led or industry-led. I'm not so sure this is even seen as something the US actually leads on anyway.

[liberal japonicus]

Well, since that incident 10 years ago, I've been reading a bit about it, here are a few links

An article that notes that the piracy incidents may be underreported by 50%

William Arkin of the WaPo had this

This article discusses the problems in the waters off Somalia, as well as this NYTimes article, though I'm sure Clinton will be blamed.

Anyway, it's an interesting subject, and I wonder how people would propose to deal with it, given the international nature of the sea.

[Dan K]

Sebastian,
I don't get the free-riding argument. What exactly is the US defending Sweden from? In the bad old days, we had an awesome defence (and awesome defence spending, something like 3% of GDP in the fifties, sixties and the seventies). Sweden has the capacity to develop state of the art military aircraft independently - we have been doing it since the forties. Our submarines are studied by the US Navy (because the US Navy can't detect them) and here's the kicker: we still have conscription.

Swedish military capability is currently not much to write home about but who is going to attack us? Hezbollah? The Russians? OK, the Russians are the arch-enemy but their army is in even worse shape than ours, and they prefer to use economic rather than military power these days.

Stop fooling yourself. The US is not footing the drug development and world security bill. You are ripped off by Big Pharma and the military-industrial complex. In return you got Lipitor and a reputation as the bully of the free world.

[Jesurgislac]

liberal japonicus: Anyway, it's an interesting subject, and I wonder how people would propose to deal with it, given the international nature of the sea.

Traditionally, the country with the most powerful Navy gets to decide how international the sea is. (I was going to quote from England Your England at this point, but it's alarmingly apropos for citizens of the new empire, so I'll just link to it.) I'll note, too, that this was the unofficial (but much more popular) British national anthem during the couple of centuries when the British Navy was the most powerful navy in the world.

[Dan K]

Decided Fencesitter,
just to kill of another tired meme: Sweden is big . It is slightly bigger than California. Sweden would consequently rank as the third biggest state in the US, if we ever were invited to join (and even less likely, accepted). So we are big, sparsely populated, and rich. And we are also fairly heterogenous, 15 % or so of the population are first or second generation immigrants.

And, for those of you who desperately are looking for the US advantage, US GDP per capita is still significantly larger. But then again, probably not when factoring in hours worked.

[cleek]

how's Sweden on accepting US immigrants ?

the US is becoming less and less interesting to some of us...

[hilzoy]

cleek: I just discovered that I could, if I chose, take out dual citizenship. Heh heh.

[Andrew]

Anyone know how hard it is to learn Estonian?

[Jesurgislac]

Can't be that difficult: most Estonians learn it before they're five. ;-)

[ajay]

If the US took the Danish approach on military spending would sea trade be as safe as it is today? I doubt it.

I can't believe someone is actually saying here that, if not for the US Navy and its fleet of rusting anti-aircraft missile boats and overpriced flattops, the North Atlantic would be overrun with pirates and privateers.

If the US killed off the profitable market for medical discoveries, would new medical discoveries continue at anything near the current pace?

The continual confusion between a selfless decision to allow aging and sick Americans to subsidise the rest of the world's medical care, and a spineless decision to go easy on the pharmaceutical business for the sake of campaign contributions, should not persist.

If the larger countries weren't willing to deal with Kosovo, would the roiling violence have damaged the markets in Sweden and Denmark?

Let me think - no. No, I don't think it would have. Unless you're proposing a sort of new Thirty Years' War spreading up from Kosovo through Serbia, Hungary, Austria and Germany, until the marauding Albanian hordes crashed into Jutland?

[Jesurgislac]

I can't believe someone is actually saying here that, if not for the US Navy and its fleet of rusting anti-aircraft missile boats and overpriced flattops, the North Atlantic would be overrun with pirates and privateers.

Avast, ye son of a biscuit eater! Be ye sayin' that the grand and glorious Talk Like A Pirate Day is nought but fantasy, and them that say Aarh! and wear eye-patches and the like and emulate that thar Cap'n Jack on Disney's fine movie are nought but lily-livered landlubbers?

[cleek]

I just discovered that I could, if I chose, take out dual citizenship.

i'd be all over that.

[Anarch]

Can't be that difficult: most Estonians learn it before they're five. ;-)

Yeah, but they're all Estonians. How difficult is it for real people to learn it?

[Dan K]

Cleek:
It's actually fairly hard for anyone to immigrate to Sweden (unfortunately in my mind). The only exception is asylum seekers, and relatives to those who are granted asylum. There where some cases during the Vietnam war where US draft dodgers and deserters were granted asylum in Sweden. So if the draft is reintroduced maybe there is an opening. Your best bet is to hook up with a Swede, though. That usually works.

Hilzoy, with your ancestry you are counted as Swedish anyway, with or without citizenship.

[Sebastian Holsclaw]

"And yes, I think coordinated policing could keep the seas safe (and other random superpower duties) with relatively low levels of defense spending."

You can think that all you want, but modern history strongly disagrees with you. The seas have tended to be kept safe by one of two great sea powers. Where they did not (or currently do not) keep the seas safe they tend not to be safe.

"I can't believe someone is actually saying here that, if not for the US Navy and its fleet of rusting anti-aircraft missile boats and overpriced flattops, the North Atlantic would be overrun with pirates and privateers."

The North Atlantic isn't exactly the place where Europe engages in sea-trade. And well, if the US Navy is a fleet of rusting anti-aircraft missile boats and overpriced flattops you really shouldn't look at France.

"And yes, I fully consider language to the effect that 'without the US pharma market and corporations there would be no medical advances' to be insipid fearmongering."

It would be easier to discuss things with you if you limited yourself to accurate paraphrasing. I wrote: "If the US killed off the profitable market for medical discoveries, would new medical discoveries continue at anything near the current pace?"

Do you think that the current pace of technological innovations on microchips would continue at anything near the current pace if you dramatically decreased the profit available? It is a rather banal point that profits very often drive competition and innovation. If you want, we can discuss market failures in health care markets and whether or not they sufficiently alter the normal course of economic development to require radical measures.

Medical research--even by companies based in other nations--is fueled by access to the US market. When other countries use these advances without paying the research costs, they are free riding on the research. I don't blame them for doing so. It keeps their costs down. But you can't have all the paying customers emulate the free rider and expect the system to continue working as well. Costs have to be paid somewhere--though I wish Bush would figure that out on other issues.

Related data points regarding this survey:

Actual GDP growth 2005:
US 3.5%
Denmark 3.4%
Finland 2.2%
Singapore 6.4%
Sweden 2.7%
Switzerland 1.8%

Or to quote serial catowner from a similar Matthew Yglesias thread: "Or, you could take it with a grain of salt. For example, Mexico is ranked #31 on the measurement of Health and Primary Education, while the U.S. is ranked #40 and Venezuela is ranked #53. I know life isn't as great as we like to think around here, but I'm having a hard time believing parents should move to Mexico to make sure their kids get a good education."

[cleek]

what is the Health component of that "Health and Primary Education" measure ?

[liberal japonicus]

Could you give a few more details about that thread, Seb? Sounds interesting.

I'm thinking that this is more akin to the ranking as a number that is then treated as a unitary fact. I imagine that the parents below the median, if given a choice before their child was born, might opt for Mexico, if language and cultural factors were equal, which, of course, they are not.

[Francis]

so basically SH argues that US taxpayers / medical insurance payers should continue to be the dupe, because no mechanism exists for preventing free riding.

alternatively, we could work with western countries on effective funding mechanisms for new lines of research, or extend patent protection another few years or use our treaties to capture free riders or recognize that drug companies are already making windfall profits, so reducing their income stream won't be the end of the world, or recognize that no one (but NO ONE) is proposing nationalizing the drug companies but instead allowing the US govt to negotiate for the same prices as, say, GM gets, or recognize that pricing meds and determining what meds will be covered is a complex problem that has some impact on research but not as directly linked as SH argues or ....

well, you get the picture. The US needs more alternatives to Viagra so we cannot possibly change the system of pharmaceutical pricing.

[Sebastian Holsclaw]

"I imagine that the parents below the median, if given a choice before their child was born, might opt for Mexico, if language and cultural factors were equal, which, of course, they are not."

I'm not sure what you mean. Do you mean below the median in the US, below the median in Mexico, or below the median in whichever country you happen to be born into? I can imagine that if someone had below the median income in the US and could transfer that to Mexico that they might vaguely consider Mexico. But for all the other definitions of below the median I would seriously doubt it.

The MY post is here.

[Sebastian Holsclaw]

"alternatively, we could work with western countries on effective funding mechanisms for new lines of research, or extend patent protection another few years or use our treaties to capture free riders or recognize that drug companies are already making windfall profits, so reducing their income stream won't be the end of the world, or recognize that no one (but NO ONE) is proposing nationalizing the drug companies but instead allowing the US govt to negotiate for the same prices as, say, GM gets, or recognize that pricing meds and determining what meds will be covered is a complex problem that has some impact on research but not as directly linked as SH argues or ...."

Whoa. You are well into straw-man territory if you think that because I argue against adopting the free rider tactics that we can do absolutely nothing.

We could attempt to extend US patent protections to other countries via treaty. Bush and Clinton both tried to do this. Last time we talked about that I'm certain the liberal side of the blog commenters was aghast but if we want to revisit I'm happy to.

"we could work with western countries on effective funding mechanisms for new lines of research". This is a good seed-thought, but it smacks a bit of "the magic occurs here" planning. John Quiggan of CrookedTimber had some interesting though I believe ultimately unconvincing discussions of alternate funding mechanisms over at his blog (probably a year ago or so) if you want to look over there.

"so basically SH argues that US taxpayers / medical insurance payers should continue to be the dupe, because no mechanism exists for preventing free riding."

I actually don't buy the concept that the US taxpayers/medical insurance payers are in fact "the dupe". We fund a high level of innovation. That is a good thing even if free riders exist.

The existence of a free rider problem is not an argument against trains. Often strict enforcement mechanisms to completely defeat the free rider problem are so costly that they aren't worth it. The answer is not to shut down the train.

The only reason I mention the problem is because some people here seem to think that we can adopt the policies of the free riders and still have a functioning system just because they have free rider policies.

We can't. If you try to adopt their policies, the system they were free riding off of falls apart.

Does that mean that the current system is the only possible system? No. Does it mean that there is nothing to be learned from their system? No. But it does mean that we can't adopt the free riding aspects.

[liberal japonicus]

Thanks for the link. Yes, I meant the median in the US. My thought was that someone from Bolivar Co. MS might want to get down to Mexico. (The link is only vaguely related, and it's worth a read for reasons unrelated to this)

[MCMC]

"And yes, I think coordinated policing could keep the seas safe (and other random superpower duties) with relatively low levels of defense spending."

You can think that all you want, but modern history strongly disagrees with you. The seas have tended to be kept safe by one of two great sea powers.

What is this modern history you speak of? Was Blackbeard around? It's absolutely ridiculous to suggest some historical precedent would apply to the modern era and its levels of oceanic transport. Coordinated policing would be feasible now due to the historically unprecedented number of states and firms with interest in the same maintence of sea transport. Seriously.

[Sebastian Holsclaw]

"Coordinated policing would be feasible now due to the historically unprecedented number of states and firms with interest in the same maintence of sea transport. Seriously."

And yet it doesn't. Where the US doesn't police the waters there is lots of piracy.

[ajay]

Where the US doesn't police the waters there is lots of piracy.

No. When was the last pirate attack in the South Atlantic, where there is little or no US presence? The US has plenty of naval presence in the western Indian Ocean/Red Sea/ Persian Gulf region (including carrier groups) but that's still a piracy hotspot. The US Navy is not an anti-piracy police force. It is not structured as such and it does not act as such. Incidentally, piracy's dropped 50% in the last two years.

The North Atlantic isn't exactly the place where Europe engages in sea-trade.

This is a blindingly stupid thing to say. Yes, it is. Europoort/Rotterdam is the biggest cargo port in Europe. It's on the North Sea coast. Where do you think all the cargo's going after it leaves Rotterdam? How do you think all Europe's imports from the US east coast come in? How, not to put too fine a point on it, do you think Europe gets all its stuff?

[Jesurgislac]

I actually don't buy the concept that the US taxpayers/medical insurance payers are in fact "the dupe". We fund a high level of innovation.

So do taxpayers in other countries. Independent, government-funded medical research is invaluable.

The leech on the system - the "free riders" are the US medical insurance companies and pharmaceutical companies. Stipulating for the sake of argument that the US government funds better medical research than any other government, the whole world would be better off if the US would get rid of its current health care system.

[Harald Korneliussen]

Hey SH, if you want to get paid for your heavy superpower-man's burdens, sure!

But if we are going to pay for your services, we will want to have formal agreements about what your obligations are, what payments there should be, rules for breach of contract and termination and so on.

Seriously. I can't believe what I'm hearing. I don't recall voting in your elections, or otherwise telling you which seaways to protect. I imagine the US does what it thinks is in its best interest in this case, as in all others. But it's not the first time these ingratitude delusions turn up. I thought people as capitalistic as you should understand that you can't expect payment or even gratitude for something you supply unbidden and unwanted.

I'm about as grateful for the US millitary protection of the seaways as I am with the Natural Law party's yogic flying sessions. No, wait, the yogic flyers at least give me a good laugh, your attitudes are just appaling.

[Sebastian Holsclaw]

"I'm about as grateful for the US millitary protection of the seaways as I am with the Natural Law party's yogic flying sessions. No, wait, the yogic flyers at least give me a good laugh, your attitudes are just appaling."

Once again, I don't ask for grateful. I mention the free rider problem to point out that the US can't currently adopt certain policies which other countries adopt.

[Jesurgislac]

I mention the free rider problem to point out that the US can't currently adopt certain policies which other countries adopt.

It's certainly a wonderful excuse for the US not adopting more sensible policies. It's not a very realistic or convincing excuse, but it is quite wonderful.

[Sebastian Holsclaw]

"The North Atlantic isn't exactly the place where Europe engages in sea-trade."

Sorry, I'm the victim of my own typo. It was supposed to read "The North Atlantic isn't exactly the only place where Europe engages in sea-trade." It makes more sense when I use all the words in my head. :)

"It's certainly a wonderful excuse for the US not adopting more sensible policies. It's not a very realistic or convincing excuse, but it is quite wonderful."

One of the problems is that we disagree on "more sensible". In any case I'm all for more sensible, but adopting free rider policies because they appear to save money for the free rider is rather not sensible unless you don't like the train in question.