By Per Gunnar Berglund
In the parliamentary Budget debate, Minister of Finance Erik Åsbrink reported that he has "seldom felt so happy". Happy about what?
There are not many subjects of rejoicing in the Swedish economy of today. In fact, the economy has not been is a worse state for a century. According to the OECD statistics, Swedish per capita purchasing power has plummeted from the fourth position to the sixteenth since the mid-seventies. Only during the last twelve months, 66,000 jobs vanished net. Growth has been practically zero, and the standards of living has been lowered for the vast majority of people in this country. In this situation, Erik Åsbrink is "happy".
For twenty years, governments have been competing with each other how to wreck the Swedish economy, and very successfully too. No other country west of the Iron Curtain has produced such an extraordinarily miserable economic development during the last twenty-year period. Unemployment has virtually exploded, to one of the highest levels of the OECD. Consumption and production has lagged behind, no matter which country is used for comparison. We have had a higher rate of inflation and a weaker real wage development than other countries.
It is no exaggeration to say that the Swedish economy is run to the bottom. The Persson administration's "budget consolidation programme" stamped the last breath of the once so powerful Swedish economy. The recovery passably under way in 1994 was broken by the forceful austerity measures in 1995, and 1996 was entirely in the spirit of stagnation. 1997 does not look much better. The only subject for rejoicing is (as usual) the exports, which are stimulated by the increased foreign demand, and by the timely, and tacitly Riksbank supported, weakening of our currency.
But who cares about the economy today? Every day, programmes like "A-Economy" are and "The Economic Club" are broadcast. But there is no discussion of the economy, only of the finances. Short- and long-term interest rates, budget deficits, equity quotes and whatnot are discussed, but not the economy.
The "economy" is not the same thing as the "finances". The economy is human activities, the way we create value by using our knowledge and talents. Today's waste of human resources has no place in the cynical world of finance.
It is in this environment, in this mortal conception of life, that Erik Åsbrink and his cabinet colleagues reside. So far, far away from the harsh reality experienced by the young and the immigrants.
In the world of the decision-makers there are only columns of debit and credit, columns that are to be made equally long, no matter what it costs. The real-world economy must comply to being cut short in order to fit this financial Procrustes' bed. To Erik Åsbrink's mind, the map is the reality. The length of the columns is beginning to harmonise, which makes Erik Åsbrink "happy". The whole of the Cabinet is "happy". The debit and credit of government finances match.
But the map which the government uses to navigate has not got the slightest connection with the real economic terrain. "Government debt", as brought out in media, has no economic meaning as such. It simply does not matter if the "government debt" is 400 billion, or 1,400 billion, or 4,000 billion kronor.
On the contrary, the government's ambitions to "consolidate the budget" has a colossal impact on the economy. By restricting public activity, people are directly thrown into unemployment, simultaneously deteriorating the service provided to the citizens. Still worse are the indirect effects spreading like a polio virus through the economy, paralysing the private sector as well.
By damaging the economy, the "economy" (i.e. the public finances) are to be brought to balance! The very foundation of the government's economic policy is a self-contradiction. The goal of a balanced budget has been made an end it itself, an end by which the government will end up shooting the ball into their own goal.
The government's Spring Proposition is a truly extraordinary document. It is a monument on the complete victory of financial narrow-mindedness over the Swedish political elite.