• Sweden edition
 
'Sweden needs laws against politicians' reckless spending'

'Sweden needs laws against politicians' reckless spending'

Published: 28 Mar 2012 13:56 GMT+02:00
Updated: 28 Mar 2012 13:56 GMT+02:00

After the 2008 financial crisis, there was much talk about the failure of markets. However, with the growing worry about government debt, the focus has shifted to politicians’ failures.

It is clear from the situation in Greece, the United States and other countries that governments are far from perfect. A new report from the Moderate Youth League (MUF) investigates this.

We conclude that the reasons for the debt crisis are a number of government failures that cause politicians to run larger budget deficits than anyone really wants – economists call this phenomenon deficit bias.

In some cases, such as in southern Europe, this eventually results in a loss of investor confidence and a deep crisis.

One reason for deficit bias is that voters may have better information about spending and taxes than about deficits.

Hence they fail to perceive that politicians run too large deficits that will need to be repaid in the future. A second reason could be that politicians commit to future austerity policies rather than implementing immediate cuts.

But because these politicians may not be in power when the policies are due, the commitment is not credible.

Lastly, deficit bias could be caused by a failure of interest groups to agree on cuts. Each interest group wants to appear willing to bring the economy close to a crisis to improve its bargaining position and so have to face a smaller share of the burden.

If all interest groups behave in this way it will be difficult to agree on austerity measures before it is too late.

Because the political system is far from perfect, checks and balances are needed to counteract populism and myopia.

Although Sweden's current Moderate Party-led government pursues responsible fiscal policies, we do not know which politicians will be elected in the future.

Therefore we propose strengthening the Swedish political system by amending the constitution with a prohibition of government debt default.

We also propose that binding limits on the deficit – e.g. at most three percent of GDP in peacetime – are made into law.

Overall we conclude that the risks of high government indebtedness are substantial while the benefits of fiscal stimulus are small.

Therefore we recommend all countries that are currently in deficit to implement immediate cuts in government spending in order to return to a balanced budget as soon as possible.

Jacob Lundberg

Member of the Moderate Youth League working group for economic policy

Your comments about this article

03:42 March 29, 2012 by samwise
It's a good start I guess. Politicians spend other people's money to buy votes, there is no simple way to fix that. It boils down to the spirit of the citizens. Are they willing to be bribed into some temporary easy welfare in exchange for independence, freedom and long term prosperity? The problem is much deeper than politics. The solution has to be spiritual.
12:53 March 29, 2012 by RobinHood
The Moderates seem to be thinking about putting some protective measures in place to prevent future Social Democrats and Left Party governments from spending and borrowing Sweden into destitution and/or bankruptcy; similar to what happened in Britain and Greece. I expect the Brits and Greeks wish they had had something like this in place before Tony Blair, Gordon Brown and a succession of Greek socialist governments spent, borrowed and spent again, their countries into terminal debt and recession.

Now we know that a policy of borrowing and spending other peoples' money is unsustainable and ultimately ruinous, (but that socialist governments do it anyway), these seem sensible measures to keep the left in check. The sensible governments that follow, won't have such a huge financial deficit to clean up, and can actually get down to making the world a better place, instead of paying down the previous government's ruinous debts.

Having said that, the last Social Democrat govenment of Sweden declined the ruinious path, taken by Britain and Greece. But that's not to say the next one will.
22:34 March 29, 2012 by RasmusL
Considering that the Social Democrats have proved that theory different over many, many years, no.. Or with that logics, why wouldn't the next Moderate government do reckless spendings?

Actually, they already did.. The infrastructure investments for the past few years has been unsustainable, going against EU and OECD guidelines for a sustainable development. If you would see society investments (Healthcare, working infrastructure and education) as "borrowing and spending other people's money", then I'll just laugh..
08:07 March 30, 2012 by RobinHood
@RasmustL

"why wouldn't the next Moderate government do reckless spendings?"

Because they would be constitutionally prevented from doing so by the measures described above. That's the whole point; no future government, left or centre, or right will be able to bankrupt the nation with reckless spending and borrowing. This is what socialist governments have done in Greece, Britain, and probably a whole bunch of other EU countries. As you say, there is nothing to stop a centre government from doing the same thing. These measures will stop them all. How can that be bad?
13:49 March 30, 2012 by minzi
This is a good idea tos strict any government to spend recklessly.
15:09 March 30, 2012 by RasmusL
@RobinHood

That criticism isn't againt the article, it was against your first comment that pointed that it would only be leftwing parties that would put on deficits that are too high..

I have nothing against the article, except. that EU already have measurements against thus, The Stability and Growth Pact. The problem is that the countries can, obviously, go around it without consequence.. To to ahead and implement stricter rules in Sweden would just be good :-)
11:20 April 2, 2012 by sometimetoquestion
Is this not impunity. I mean they, our representitives point much fingers at orruption elsewhere so we the electorate may not notice the theiving under our noses. Well thats politis and it clear cut design to make seen market liberalism is not ultra communism. Monoplies own governments and thereby through mainstream media work on branding folks to one of the products or the other to maintain this minimalistic paradigm. The politicians get paid therefore or theif outright.

Blessup
15:33 April 2, 2012 by Michael Whitfield
Reckless spending by politicians!! Hmmm. Where have we seen this before? Oh yes, here in the USA. Hope America is not becoming a bad influence on Sweden.
12:56 April 3, 2012 by engagebrain
Whether a deficity is good or not, depends on what is being done with the money. Much of the population has a major deficit when mortgages are included, but we regard this form of borrowing as productive. For a government it depends on what is being accomplished - in my opinion the cost the lowering the servant tax in Sweden was and is reckless.
Today's headlines
Ebola crisis
Sweden pledges new aid to UN Ebola fund
Photo: TT

Sweden pledges new aid to UN Ebola fund

Sweden has offered a new sizeable contribution to the fund set up by UN chief Ban K-moon to fight the Ebola outbreak. READ  

Society
'Dark forces' target refugee hunting scheme
Photo: Lars-Göran Thuresson/Älgriket

'Dark forces' target refugee hunting scheme

The Swedish hunting association runs a project to encourage young asylum-seekers to learn about hunting, a move which has proved controversial among some far right groups. READ  

Business & Money
American sales squeeze Ericsson profits
Ericsson CEO Hans Vestberg presents the third-quarter earnings report at the company's headquarters in Kista. Photo: Janerik Henriksson/TT

American sales squeeze Ericsson profits

Swedish telecoms equipment maker Ericsson reported a decline in net profit in the third quarter despite an increase in sales, boosted by business in emerging markets. READ  

Interview
'Too many concerts feel the same'
Sofar hosts secret gigs in Swedish apartments. Photo: Sofar

'Too many concerts feel the same'

Kattis Bjork founded Stockholm's secret gig scene - Sofar - a year ago. The Local caught up with her as she prepared to celebrate the project's anniversary this weekend and revealed the concept will spread to other Swedish cities in 2015. READ  

Stockholm 'sub hunt'
Sweden calls off suspect submarine search
Ships are returning to shore in Sweden. Photo: TT

Sweden calls off suspect submarine search

The core search for a suspected foreign vessel in Swedish waters has been called off. The armed forces said they remained convinced foreign underwater activity had taken place but had not identified an intruder. READ  

Business & Money
US and Japan fuel surge for Volvo trucks
Ed Carbaugh prepares to install parts on a truck engine on an assembly line at Volvo Trucks' powertrain manufacturing facility in Hagerstown, Maryland, March 2014. Photo: Patrick Semansky/AP

US and Japan fuel surge for Volvo trucks

Sweden's Volvo, the world's second-largest maker of trucks, said Friday it saw a spike in profits in the third quarter, boosted by thriving sales in the US and Japanese markets. READ  

Inspectors attacked at rogue doc’s surgery
Cigarettes and beer photo: Shutterstock

Inspectors attacked at rogue doc’s surgery

Inspectors who were sent to shut down a doctor’s surgery in Gothenburg were physically attacked and fled the premises to get help from the police. READ  

Police turn Swede’s vodka into water
A Swede loads a car with alcohol in northern Germany. File photo: Drago Prvulovic/TT

Police turn Swede’s vodka into water

Swedish police say they will pay a man 16,000 kronor ($2,200) in damages after much of the alcohol they confiscated from him was stolen, while many of the bottles they returned were filled with water. READ  

Diplomacy
US to get first female ambassador in Sweden
File photo: Athena Center for Leadership Studies

US to get first female ambassador in Sweden

The United States Embassy in Stockholm is set to get its first female ambassador after the White House announced it was nominating the Iranian-American ex-investment banker Azita Raji to take over from Mark Brzezinski. READ  

Neo-Nazi attacks
Neo-Nazis cleared of knife attack on Nigerian
Police intervene after neo-Nazis attack an anti-Nazi rally in Kärrtorp, December 2013. Photo: Hampus Andersson/TT

Neo-Nazis cleared of knife attack on Nigerian

A Stockholm court has cleared three neo-Nazis of stabbing a Nigerian man in an unprovoked attack. But two of the men will face jail after they were convicted of racial agitation at a riot. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Lifestyle
What's On in Sweden: October 24th - 31st
Gallery
People-watching: October 22nd
Gallery
In Pictures: Prince Carl Philip and Sofia Hellqvist
Lifestyle
Eight things to love about renting a Swedish apartment
National
Vasa ship cannon blasted in Sweden
Blog updates

24 October

Editor’s blog, October 24th (The Local Sweden) »

"Hi readers, Get ready to read our weekly digest of Swedish news in less than 60 seconds. The..." READ »

 

24 October

Is darkness weather? (Blogweiser) »

"I try very hard not to talk about the weather. This has come after a decade..." READ »

 
 
 
National
Sub hunt: Day-by-day
National
Sub hunt: Stockholm islanders share their fears with The Local
Sponsored Article
The best options for oversea transfers
National
Get 20% off unique Swedish homeware
National
Dentist gives free care to Roma beggars
Business & Money
Get your own office in Gothenburg or Stockholm - free for a day
Gallery
Property of the week: Malmö
Gallery
PHOTOS: 'Foreign activity' in Swedish waters
Gallery
People-watching: October 19th
TT
Society
QUIZ: How good is your Swedish?
Lifestyle
What's on in Sweden: October 17th - 24th
Society
The nudity... and nine other things expat men notice in Sweden
Gallery
People-watching: October 15th
Gallery
Your views: Should outdoor smoking be banned in Sweden?
Business & Money
Sweden has 'large hole' in finances
Sponsored Article
Introducing... Finding a job in Stockholm
Society
Monster salmon caught in northern Sweden
Gallery
Property of the week: Lorensberg
National
Scandinavia's child bride
National
Ebola crisis: How is Sweden preparing?
Business & Money
How Sweden is becoming a cashless society
Gallery
Stockholm Burlesque Festival 2014
National
How a little red horse became a symbol for Sweden
Gallery
People-watching: October 12th
Business & Money
The hottest start-ups from southern Sweden
National
What's on in Sweden: October 10th - 17th
National
Stockholm is 'best' region for well-being
Gallery
People-watching: October 8th
National
Five facts to know about Patrick Modiano
Society
My Swedish Career: A French fashionista in Sweden
Society
Swede's anti-bully Facebook tale goes viral
Society
Have you seen Sweden's viral subway cancer campaign?
National
Isis: Swedes linked to Turkish prisoner swap
National
Should Swedes be banned from buying sex abroad?
Gallery
Fredrik Reinfeldt's leaving presents
National
Five Swedish TV shows you shouldn't miss
Gallery
A tool belt, a casserole, and a book. Fredrik Reinfeldt's parliament gifts
TT
Lifestyle
Top five winter festivals in Sweden
TT
National
Sami reindeer herders win mine reprieve
Gallery
Property of the Week: Gamla Enskede
Sponsored Article
How to catch the first lobster of the year
Team SCA
Sponsored Article
All-female SCA team takes off on Volvo Ocean Race
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

985
jobs available
Swedish Down Town Consulting & Productions
Swedish Down Town Consulting & Productions is an innovative business company which provides valuable assistance with the Swedish Authorities, Swedish language practice and general communications. Call 073-100 47 81 or visit:
www.swedishdowntown.com
PSD Media
PSD Media is marketing company that offers innovative solutions for online retailers. We provide modern solutions that help increase traffic and raise conversion. Visit our site at:
http://psdmedia.se
If you want to drink, that’s your business.
If you want to stop, we can help.

Learn more about English-language Alcoholics Anonymous in Sweden. No dues. No fees. Confidentiality assured.
AA-EUROPE.ORG/SWEDEN