Poverty: an Integration Issue –
Part 3 - The Case of Sweden
Much has been said about the “Third way solution” proposed by Scandinavian
countries, as a final solution to poverty. It has been described as “the next
supermodel” by the Rightist Magazine “The Economist”.[19] Famous for their
generous welfare systems, which include public healthcare and education,
Scandinavian countries have in the last few years been cited by many countries as
21st century’s best economic model. However, how much of the success is due to a
political or economic system, and how much is more related to history and culture?
First of all, Scandinavian countries are under no circumstances the “creators” of the
public healthcare and education system. This is a very European system, and I
would assume all the countries that integrate the top 50 in the Human Development
Systems (HDI), actually have this. Welfare has also existed for many decades. It is
true that Scandinavian countries have taken welfare to a whole new level. The
production matrix of these countries though has been successful based on very big
companies in the private sector which employed thousands of people, unqualified
jobs and government jobs. They system itself does not give incentive to people to become small business owners, since it is more comfortable to live off welfare if
you don’t have a job. I will be citing a lot the Swedish author of kurdisk
background Nima Sanandaji, author of the book: “Scandinavian unexceptionalism:
culture, markets and the failure of third-way socialism (readings in political
economy)”.[20]
Just for the record, in his book he mentions the “Scandinavian
Americans”. I was born and raised in such a community, so I can vouch for his
theories. I am, after all, the “Scandinavian American” he talks about in his essay.
“It is overlooked that a redistributive system presupposes something to redistribute.
The Nordic countries enjoyed robustly productive economic systems before the
welfare states we know today were established. Starting in the 19th century, the
people of the Nordic countries created vast amounts of wealth, founded new firms
and industries, and generated societies with high degrees of social trust and moral
responsibility. They built on foundations that, as a result of their histories (absence
of feudalism) were comparatively egalitarian and mono-ethnic. After welfare states
were initiated, however, the Nordic countries began to coast on accumulated
capital. Tax rates punish those who contribute and transfer payments and encourage
those who take. The rising percentage of the populations on disability and early
retirement suggest a long-term prognosis for such a model is not a happy one.
Sweden began to fall behind as the state grew rapidly from the 1960s. Between
1870 and 1936, Sweden enjoyed the highest growth rate in the industrialized world.
However, between 1975 and the mid-1990s, Sweden dropped from being the 4th
richest nation in the world to the 13th.
Another regrettable feature of Scandinavian countries is their difficulty in
assimilating immigrants. Unemployment rates of immigrants with low education
levels in Anglo-Saxon countries are generally equal to or lower than unemployment
rates among natives with a similar educational background, whereas in
Scandinavian countries they are much higher. In Scandinavian labour markets, even
immigrants with high qualifications can struggle to find suitable employment.
High levels of trust, a strong work ethic and social cohesion are the perfect starting
point for successful economies. Lastly, descendants of Scandinavian who migrated
to the US in the 19th century are still characterized by favourable social outcomes,
such as a low poverty rate and high employment. There are similar outcomes for
Scandinavian people in different policy environments: in other words, there is
nothing exceptional about Scandinavians living in Scandinavia: a good cultural
background leads to economic outcomes; and high taxes and a large welfare state
ultimately undermine both culture and the economy”. Many conclusions can be derived from this. In the period from 1870 – 1970 there
was, in Sweden, a fantastic period of wealth creation, that is, entrepreneurship. It
was the same for all the countries in the Nordics. This was a period of
industrialization, where big companies where established. This was BEFORE the
welfare state. Once the wealth was created, the social-democratic system handled
the redistribution of this wealth amongst society. But the welfare system had it’s
disadvantage: laziness. Scandinavian entrepreneurship spirit was killed together
with the welfare. Economic reforms and liberalization took place on Sweden from
the 1990s, giving birth to a new ecosystem of technological start-ups. This never
happened in Norway, which has always been lagging behind Sweden and Denmark.
But let us deepen more into the most important issue for our discussion: Poverty. It
there really no poverty in Scandinavia? It depends of course, on how you measure
poverty. It is clear that there are no “indigent” people, meaning people on the
streets. That is the whole point of the welfare system. However, the weather must
also be considered. In colder countries people are forced to organize themselves
better since the harsh weather conditions would not allow people to survive outside
for long. However, as we have seen, there are massive amounts of people living off
welfare. In Sweden, this amounts today to almost 20% of the population. Most of
them are immigrants, or the descendants from the immigrants.
Whereas Dr. Sanandaji makes a point, he does not understand the history behind
this. The Germanic region has seen very little immigration. In the last decades,
massive waves of immigrants from all over the world entered the region. Multiculturalism means as well multi-religion. These different ethnical groups do not go
well with each other, since there is no trust. As a Lutheran, I myself have
experienced collisions with catholics. Lutheran, catholic and orthodoxs are still
very much divided. Try to get Southern, Eastern, Northern Europeans, to
collaborate with Asians, Indians, Pakistanis, people from the Middle East,
Africans… It really seems too much to make it real. Some countries though have a
better chance at multiculturalism than others. This again corresponds to historical
reasons. Consider that the Roman Empire was a multicultural empire. Even if you
were captured as a slave, there was always the chance of freeing from slavery and
becoming a citizen. See the following map, to understand the influence of the
Roman Empire. Even if integration is always challenging, all of these countries
have up to certain extent succeeded in integrating immigrants. Germanic countries
though remain, even today, quite “pure” as a race. Before 1970s, Scandinavian
countries were uni-cultural, meaning most of the population was Germanic
descendant. Remember the history of Scandinavia. When the Ice receded, people
from the Germanic tribes moved towards the region of Scandinavia. In the 1600s,
migration from the Germanic area moved to Stockholm helping with the region’s
development. Many times I have heard that it is multicultural since people or have
grandparents that were coming from different countries. But they are always
coming from the Germanic region. You will find people with parents of
grandparents from Germany, Denmark, etc. But it is still the same culture, which
makes the Germanic region a uni-cultural region. The South of Germany though
was under Roman influence. This explains why people from southern Germany are
known as much more friendly and open that the rest of the Germans.
Now, GDP in Sweden has increased substantially in the last 40 years in Sweden,
whereas population has increased only by 40%, which is not so much considering
that world population has more than doubled in the same period. This is reflected in
the growth in GDP x capita, which has tripled.
So based on these charts, we could say that Sweden really has it still very well.
However, notice how reported crimes have actually doubled in the last 40 years.
Felonies, rapes and murders are now not so uncommon, especially in big cities. But
how is it possible then, in a country that is not so bad off economically, for the
situation to be worsening steadily? Again, it comes to integration. In Scandinavian
countries, to be considered Scandinavian you must have two Scandinavian parents.
And by that I mean of “Germanic” origin. If you have one non-germanic parent,
you will be considered half-scandinavian (which would be my case). And if you
have two non-germanic parents, you will be considered a “foreign”, even if you are
born and raised in Scandinavia. Now, because of historical reasons, Scandinavians
are skeptical towards non-germanic people. This results in worse job opportunities,
exclusion from the job market and social segregation. The foreigners, and their
children, are born and raised in guettos and never fully integrated. 2nd, but also 3rd
and 4th generation might never leave the guetto. They of course mingle with each
other, leading to the growth of these guettos, were they also develop a hatred
against the society that excluded them. In the long term, this results in worsening
living conditions, regardless of the country’s riches. The situation does not differ so
much of that of the Bolivians and Paraguayans in Argentina.
I quote now an article entitled: “Sweden to become a Third World country by 2030,
according to UN”.[21] “In 2010 Sweden had the 15th place in the HDI rankings but according to UN
forecasts, Sweden will be 25th in 2015, and in 2030 on the 45th place. Negative
developments, or rather liquidations can be exemplified by Orrefors Kosta Boda, which in 1992 had 940 employees in Sweden and was a profitable industry. Today
less than 100 remain in the company after further cost reductions and adaptations in
order to meet global competition. Sweden's leftist establishment and media believe
a cornerstone of their perfect society is multiculturalism: large scale immigration
from some of the poorest, most backward nations on earth. Swedes who disagree
with that plan risk being labeled racist, fascist, even Nazi.
"We had a perfectly good country," Ingrid Carlqvist, a journalist said. "A rich
country, a nice country, and in a few years' time, that country will be gone." The
logic should be really simple to understand, yet many have difficulties grasping it:
If you import the Third World, it's what you'll get”.
The article also cites on Finland, as a success case in the Nordics: “Finland
demonstrates one of the world's best school systems, while the Swedish school
have lost competitiveness. Fewer ends up on welfare dependency in their Nordic
neighbouring countries while Sweden continues to have a greater amount of family
households forced to live on welfare, which are a couple factors causing the
dropped global competitiveness”.
However, as it has been mentioned until “death” by my fellow Scandinavians,
Finland is not really Scandinavian but “half”. Finland was occupied first by the
Swedish empire, and then by the Russian empire. So it could be considered “halfswede / half-russian”. That would make them of course better at integrating
foreigners than “unicultural” countries.
This is the constant of my study and research, and my challenge to modern
economic theory. Whereas most economists focus on metrics and government
measures, I am proving that poverty is, at least in “mildly developed countries”, an
integration issue. Whereas in Scandinavia there will always be issues integrating
non-scandinavians (and their children), in Argentina Europeans from all regions
have integrated perfectly, but not those of Indian descendant. Whatever government
efforts from right or left, poverty will always remain unless attacked at it’s root.
But we will discuss that later.
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