STOCKHOLM, SWEDEN – Way up here in the northern latitudes you’ll discover some people who ought to be the world’s happiest. They have more of everything: more holidays, more wall-to-wall welfare and more Volvos, relatively speaking, than almost anybody else. They even tend to live longer than anybody except the Japanese.
We’re talking about Swedes, nine million of them, dispersed in a California-sized country of lakes and vast forests where a few wolves still roam. Not for nothing has the Financial Times labeled Sweden as one of the world’s most successful societies because of its potent mixture of welfare and high economic growth. A steady stream of analysts from Europe and developing countries treks to Stockholm to figure out how it all works.
But… something strange happened over the weekend. Even as economic growth sizzled at 5.5% – highest in the developed world – voters yesterday booted out the long-reigning Social Democrats who largely made the Swedish model possible. Twelve years of unbroken rule ended close to midnight on Sunday when a right-of-center coalition led by Fredrik Reinfeldt, leader of Moderate Unity, took 48.1% of the vote, narrowly defeating the Social Democrats and their allies, who got 46.2%. Except for brief intervals, the Social Democrats and left-wing allies have ruled the roost since 1932.
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Prime Minister-elect Reinfeldt pulled it off by repackaging his conservative party – describing them as “New Moderates”, aping New Labor in Britain. He lost no time shifting to the center of politics by pledging to uphold the welfare state. Then, he proclaimed unemployment as the No. 1 issue, thus usurping the traditional stamping grounds of the working class-based Social Democrats. The official jobless figure is 6.1%, down from around 8% two years ago and slowly declining – too slowly.
“People who never had thought of voting for us have given us their vote,” said 41-year-old Reinfeldt in a victory speech to party workers and the nation. “We won because the Swedish people chose to stop turning a blind eye to, for example, unemployment.” The outgoing prime minister, bitter in defeat, swung back. Göran Persson said his party scored actual electoral gains in regions of high unemployment.
Persson, 57, told stunned supporters he will resign as leader of the Social Democrats to let somebody younger step forward. He didn’t say who. “I fully understand that if you lose an election at age 57 and after 10 years as prime minister, it won’t be me who’ll spearhead the comeback.” Son of working class parents, Persson entered politics at age 15. Named as finance minister in 1994 and prime minister two years later, he hauled Sweden from depression, bank crashes and soaring indebtedness into a more serene sphere of trade surpluses and thriving global businesses. Even opponents concede that he did it all deftly.
Stayed too long?
Some pundits suggest the voters perhaps got bored with Persson and wanted to see fresh faces.
Perhaps. But nearly 35% of the electorate could only make up their minds on Election Day or even behind the polling booth – suggesting something else. Politics, it seems, had become blurred. The “new” Moderates and their coalition grabbed so much territory in the central arena that it was difficult to determine distinctions between the parties.
Even so, Reinfeldt’s focus on unemployment did strike a nerve. Like people everywhere, Swedes fear unemployment like the plague. In wake of accelerating mechanization and globalization, very few jobs are permanently secure. He has promised more jobs by encouraging tax breaks for companies, among other things, in order to stimulate new hiring, particularly of young people. He would also like to enable tax cuts for wage earners and eventual abolition of property tax while offering new perks like subsidized housecleaning. Swedish schoolchildren, meantime, will be graded much earlier, while state hospitals may also host private clinics on their premises.
Not all voters read the fine print. Reinfeldt and his coalition want a sharp cut in state unemployment benefits after the first 180 days to help pay for income tax breaks. Union membership would no longer be tax deductible in New Sweden – a potential blow to the labor movement. Social Democrats maintain that unemployment insurance cutbacks could force people into accepting low wage jobs. Damaging the finances of organized labor could have the same effect.
Reinfeldt has a four-year mandate and wants to remain in power after that; some programs may be soft peddled. But in a nation with the lowest income gaps in Europe, Sweden may become somewhat less than equal during his stewardship. In addition, the gains that Sweden has made through globalization may well be offset by a shift in the balance of power against workers and in favor of companies.
Sweden, in other words, may become more like the rest of Europe.