(edit title) Why does Sweden's economy seem so healthy? Everybody else is basically going down the drain Options

[rty777-NL]

Does someone here know why the Swedish economy seems to be so vibrant and healthy these days? And also, why has it been so successful in many ways for the past decade or two? I don't completely understand it. I'm trying to get some basic understanding of what the hell is going on there, especially in these current turbulent times, when the rest of Europe seems to be on the verge of basically burning to the ground.

First, Sweden has (or has had) all the many successful companies we all know about (IKEA, Electrolux, Skype, Clas Ohlson, Spotify, etc.)

Even more interestingly, Stockholm seems to be one of the hottest startup cities in Europe these days.

Why is this? Is this just a coincidence, or does it have something to do with economic policy, such as lower tax rates?

Why do Norway and Finland seem completely dead in comparison? I thought they had basically similar tax rates.

[PDX]

Hundreds of years of plundering other European countries does result in substantial wealth .

See:
http://en.wikipedia.org/wiki/History_of_Sweden

This has resulted in the possibility to finance the wealthfare state, so that people do not need to be too concerned to barely survive, but can instead obtain the best educaction and go on to be succesful in their lives.

The tax rates are higher than elsewhere, but this isn't relevant to startup success as startups generally burn money first, then they would tend to relocate to more attractive places.

What is it that you see in Norway as being "dead" ? They have extremely solid economy with lots of industry, just not in consumer space as Sweden, but more in the heavy industry. As to Finland, it has only existed as a country for 95 years having been a "kommun" of either Sweden or Russia in times before that . Still a bit of a "kommun" actually, as Swedish is an official language.

Throw in neutrality during World War II and the monarchy as other positively contributing reasons. Monarchy brings with it a sense of pride and cultural independence that prevents people from supporting the Euro or selling Djurgården to property developers .

~~~PDX~~~

[rtharper]

It helps that they already had a banking crisis in the 90's and had less inflated financial sector as a result =)

[VargasGray]

Yeah, we had it tough under the 80s and 90s. We had to force a reformation of our financial system and put down lots of demands on the banking sector or else we would experience the same crisis again. We had also to reform our welfare state to be more rational and efficient then before when the welfare state could literally spend millions on badly constructed programs.

Also we didn't wish to enter the Euro because we knew that as a nation we would not have the same ability to influence the financial and political world because of our size. In short: we would lose some of our international importance. We also knew that some nations might be so corrupt that their membership would hurt the Euro and of course the others would be forced to bail them out.

To be honest: this question is hard to answer. The answers I've given so far might not be the main reasons why our economy seems to be so healthy but surely they might be a part of it all. But one of the most important reasons I can think of is education and support to start your own business.

Question directed to PDX: why would we want to develop Djurgården? Really. Djurgården houses important Swedish history and it also contains wildlife areas that, far as I know, are protected. Secondly would it add anything to develop Djurgården? Seriously. Added apartments to be rented and/or sold to rich peoples? Because it wouldn't help our students and peoples that just got their first job, often one with low wage. Perhaps it would be more sensible to develop the area of Stockholm that's already developed, like building higher housing estates then ones with only three or four floors.

I can report that they're building like hell in Huddinge, the entire central area of Huddinge is being exploited. Look at Kvarnbergsplan how it is being developed and so is the field that is situated close to Ekdalsvägen, or why not the entire area above Lännavägen on the other side of Balingsnäs. This actually adds something of value because even young peoples can afford them, also old and/or sick peoples.

just one small profit of being a truck driver: you'll see how Stockholm and all the municipalities develop over time. That and you meet so many interesting peoples to talk to ! !

[Localer]

Norway is NOTHING if not because of the Oil, so does Finland is Nothing without the Nokia(partly correct)

[Gamla Hälsingebock]

@PDX,

You overlook the fact that a lot Swedes left Sweden because of poverty and hardship...yes that's true!

In my own family my Fathers brothers would go to America for work and, thankfully come home with a few bucks(circa 1890-1900?) some others never returned.

Sweden was in bad shape then, but nobody remembers the bad times.

Wisconsin, Minnesota, The Dakotas and Illinois, are full of Swedes that never made it back.

Glad that Sweden is so good today.

[Man2012]

so does Finland is Nothing without the Nokia(partly correct)

You must be kidding. It's true that Nokia is/was (Used to be - To be specific) a big company but don't be a goon and consider it as the main pillar which Finland relies its economy upon.

I wonder if you really know anything about Finland (Apart from Nokia), But, Finland has a better life standards than Sweden itself.

[TheMoose]

Hundreds of years of plundering other European countries does result in substantial wealth .

Not only completely historically inaccurate, but also really truly pathetic. The guilt complex of Western leftists is caused by having it far too good.

In answer to the original posters' question, it's a complex one. Here are some thoughts:

- All economies that have undergone industrialisation are vastly better off than they were 100 years ago.

- Why some are richer than others is down basically to good regulation and a culture of honesty and hard work.

- Norway and Finland aren't "completely dead" in comparison. The IMF expects growth for Sweden, Norway and Finland of 0.9%, 1.8% and 0.6% respectively this year, so not much difference. All three are extraordinarily wealthy and successful economies.

- Not all of the rest of Europe is "on the verge of basically burning to the ground". Northern Europe is doing rather well; in fact Germany is doing much better than Sweden.

- The PIGS are suffering from debt crises caused by the euro. The best solution would be for Germany and other rich northern European countries to exit the euro. Either that or start paying for the south ... no monetary union without fiscal union.

One other thing to bear in mind is because we have fiat currencies and the money supply is created by the banks in the form of ever-rising debt, financial crisis is becoming the norm, and just because Sweden is currently escaping the worst consequences, there's no reason to get complacent as a black swan can strike any time.

[skogsbo]

I think those northern european countries who are currently weathering the storm better also have a greater percentage of technical industries, the sort of stuff that hasn't been instantly farmed out to the far east. Not to mention the fact the less debt you have at the start of this crisis, the more of a buffer you have.

If like many nations you are at your credit limit for borrowing, then you are stuffed, you can't spend or build you way out it.
If Germany didn't have Merkel they might well have jumped ship already, but Germany isn't daft, their biggest export is to European, so if they lend these failing countries E600m, they know it will come straight back to the Germany economy(either through loan interest payments to banks or retail), thus keeping the Germany population in employment.
Greece, Spain, Italy can't escape this debt trap, just lending them enough to pay their interest isn't going to create money to pay off the actual loan, or restart industry. The EU and IMF could fund Greece for a decade and it won't be any better off. It needs to escape the Euro, devalue its currency and start again, they are just a big money pit right now.

[Bender B Rodriquez]

Norway is NOTHING if not because of the Oil, so does Finland is Nothing without the Nokia(partly correct)

Not really true. Norway, Sweden and Finland all heavily rely on their natural resources, i.e. oil, wood, paper, steel, and the technology and machinery that surrounds those industries. Without those neither of the three countries would be where they are today.

[skogsbo]

True, I know Sweden exports some very high tech laser scanning equipment for sawmills, even countries which you would consider to be also high tech like Japan, buy this equipment from here, with a support package too. (great staff perk there!)

[sometimesinsweden]

Is it that healthy???

Sure, it's far healthier than Southern Europe and the UK for the reasons mentioned...but the cuts in the service and civil sector have been huge the past couple of years - not really the actions of a country whose economy on the up.

Majorna, in Gothenburg, budget is being continually slashed, my son's school has lost 2 teachers who aren't being replaced, one of whom was a special support teacher, and his class size has increased by 2. Care assistants for the disabled in the region are being 'let go' as their overall budget is cut and various other outreach support workers are having contracts ended....or in the case of my missus, being expected to work 40 hour weeks when they're being paid for 25 hour semi part-time...!

Perhaps if the likes of the H&M founder and TetraPak owner (and many more) paid their taxes to the country that brought up them and their ancestors with the wealth of history and pride it has and gave them their start in life, rather than take advantage of the non-domicile tax advantages in the UK and hoard their fortunes, that they can never hope to spend, in small principalities, these cuts across the board wouldn't have to be so severe and the country could stay one of the world's most successful and pleasant.

[Bender B Rodriquez]

Is it that healthy???Sure, it's far healthier than Southern Europe and the UK for the reasons mentioned...but the cuts in the service and civil sector have been huge the p ... (show full quote)

Is it that healthy???

Sure, it's far healthier than Southern Europe and the UK for the reasons mentioned...but the cuts in the service and civil sector have been huge the past couple of years - not really the actions of a country whose economy on the up.

Majorna, in Gothenburg, budget is being continually slashed, my son's school has lost 2 teachers who aren't being replaced, one of whom was a special support teacher, and his class size has increased by 2. Care assistants for the disabled in the region are being 'let go' as their overall budget is cut and various other outreach support workers are having contracts ended...or in the case of my missus, being expected to work 40 hour weeks when they're being paid for 25 hour semi part-time...!

Perhaps if the likes of the H&M founder and TetraPak owner (and many more) paid their taxes to the country that brought up them and their ancestors with the wealth of history and pride it has and gave them their start in life, rather than take advantage of the non-domicile tax advantages in the UK and hoard their fortunes, that they can never hope to spend, in small principalities, these cuts across the board wouldn't have to be so severe and the country could stay one of the world's most successful and pleasant. ... (hide full quote)

Cuts in civil services is mostly because Swedes are tired of outrageous taxes. Remember that during the last 6 years the government has lowered the income tax from about 32% to 24% on an average salary, along with other tax cuts.

Btw, Stefan Persson of H&M paid 850 MSEK in taxes last year.

[carterhayes]

One of the reasons Sweden seems to be doing so well is that our nations growth the last 5 years is based almost entirely on private borrowing. Swedes are now the highest indebted population in Europe. So state finance is rather solid where the private debts are disturbingly high.

This has been caused by a deduction of 30% of the interest up to 100000,- i think (yes, in Sweden you get tax relief for indebting yourself!). The banks have been very happy and eager to borrow out money to citizens (Just like USA before Lehman). The banks have borrowed out 100% of the needed ammount for a flat (this has now changed). The low interest has damaged the international economy.

I have many friends who are now debtslaves for the rest of their LIFES! Just think of a young couple that borrows 3 million for a flat in Södermalm, each one has to pay say for example 4% interest of 1.5 million a year. Thats 60000 or 5000/ Month only for interest on the loan, lose the job and only get 2.5 million for it when selling after a divorce, and you have another 250000,- in debt per person..

In short, it has been made too easy to place yourself in debt in this country, and when the price of money = interest goes up as it must because there is so little cash and so much debt, lifes will be ruined also in Sweden.

[sometimesinsweden]

Cuts in civil services is mostly because Swedes are tired of outrageous taxes. Remember that during the last 6 years the government has lowered the income tax from about 32% t ... (show full quote)

Cuts in civil services is mostly because Swedes are tired of outrageous taxes. Remember that during the last 6 years the government has lowered the income tax from about 32% to 24% on an average salary, along with other tax cuts.

Btw, Stefan Persson of H&M paid 850 MSEK in taxes last year. ... (hide full quote)

It depends how you look at it and view economic life. The polarisation of wealth in Sweden has hugely increased in past 15 years, mirroring the rest of the world - I'm not singling out Sweden - if you put several 10s of billion kronor into the pockets of a few individuals, the state as a whole loses out and that's not counting the Swedes/Swedish businesses that relocate elsewhere.

The fact is that the Swedish education system, social system and overall wealth of the country accumulated over decades allows certain talented people to focus their skills on high-earning business and they should rightly pay something back. To avoid this is unpatriotic, greedy and selfish