Swedish welfare scandals call for profit review

While the recent scandal about unfair admissions practices at Sweden's free schools may be overblown, the revelations make it clear that the involvement of private players in Sweden's welfare sector needs to be improved, argues liberal commentator Nima Sanandaji.

Swedish welfare scandals call for profit review

Another welfare scandal has hit Sweden. This time, it comes after reporters from Sveriges Television (SVT) investigative news programme Uppdrag Granskning approached publicly-financed and privately-managed free schools under the presence of being parents of two 12-year-old children. One of the fictional children was a girl with good marks whilst the other was a boy with bad marks and social problems. According to the law, students and their parents can choose schools, whilst schools cannot choose away students that they do not want. As shown by Uppdrag Granskning however, the girl received a positive admission response twice as often as the boy.

An even more shocking revelation was found when a reporter visited a school under the presence of seeking the job as a music teacher. The head of the free school exclaimed during a conversation captured by a hidden camera that children with ADHD were gangsters, comparable to rotten apples, and cancerous growths. Education Minister Jan Björklund, leader of the Liberal Party (Folkpartiet), is among many who have expressed anger over the situation.

Why are there so many scandals, centered on for-profit players in the welfare sector? One possible answer is that journalists are more prone to criticizing private enterprise rather than public sector players, and are thus perhaps not always being fair in the stories they tell. There is certainly some support for this notion. Arguably the greatest welfare scandal in recent years is the case of Koppargården, a nursing home in Järfälla near Stockholm. The private firm Carema was accused by the Dagens Nyheter (DN) newspaper of weighing diapers to use “the full capacity” of the diapers and thus save money. Hundreds of critical articles followed in various Swedish media, harshly criticizing Carema and other private firms of exploiting the elderly.

However, according to a study the National Board of Health and Welfare (Socialstyrelsen), the quality of care provided by private nursing homes is not lower than in those of publicly-run nursing homes. Dagens Samhälle, a newspaper owned by the Swedish Association of Local Authorities and Regions (SALAR), has through extensive work shown that much of the criticism against Koppargården was simply wrong. Diapers are not weighed to save money, but rather to give the best help to the elderly. Following the scandal, the nursing home in question turned public again, and one of the first actions was to buy 24 new scales for weighing diapers. An inquiry done by the request of the labour union Kommunal confirms that the scandal was to large extent based on erroneous reporting that failed to capture the nuances of an infected relationship between doctors and nurses.

Many supporters of school-choice have criticized Uppdrag Granskning for being too hard on free schools. And it is possible that they also have a point when it comes to the recent scandal. But even if media is overly critical of private firms in the welfare sector, there is reason to be concerned. Private companies tend to be good at following economic incentives and being innovative. This can be both a good thing and a bad thing. Today much of the competition for elderly care is centred on who can offer the lowest prices. And thus the market presses prices, but does not necessarily raise quality. Similarly, much good can be said about privately-run free schools. But they clearly have incentives to hand out overly generous grades as a way of attracting students, as well as discouraging students with lower initial grades, a troubled past, or with symptoms such as ADHD, from seeking admission.

The systems have to be changed so that the schools that select students are punished. Similarly, schools that admit students with greater learning difficulties should always be given extra resources, and perhaps also rewarded if they manage to encourage and enable the students to attain better results. Grading should not be done by the same schools that teach the students, but rather in a centralized fashion, and with the same criteria for schools across Sweden. These reforms would be beneficial even if free schools did not compete with public ones. In a situation where competition and profit-motives are involved, we need even more clever thinking about the best institutional framework.

Creating choice and encouraging entrepreneurship within the Swedish welfare sector is a good idea overall. The alternative, public monopolies, entails many problems. There is indeed support for the notion that competition from free schools works as it should, raising quality in nearby public schools as well. But the system is far from optimal and we clearly should change it to the better. Even if media criticism can be biased sometimes, there is nevertheless point to be made alongside the scandalous headlines.

Nima Sanandaji, a Swedish writer of Kurdish origin with a PhD in polymer technology, has written numerous books and reports about subjects such as integration, entrepreneurship, and women's career opportunities. His recent book, published by Sweden's Reforminstitutet think tank, is entitled Krympande eller växande städer ('Shrinking or growing cities'). He is a regular contributor to The Local.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


INTERVIEW: Does coronavirus mark the end of neoliberalism in Sweden?

Just before Christmas, Sweden's finance minister Magdalena Andersson declared that the coronavirus crisis marked "the end of the era of Neoliberalism". But for Daniel Suhonen, the leading ideologue of the Social Democrats' left flank, the party needs concrete policies as well as words.

INTERVIEW: Does coronavirus mark the end of neoliberalism in Sweden?
Daniel Suhonen at the launch of his Reformisterna group of Social Democrats last year. Photo: Henrik Montgomery/TT
The rhetoric Andersson has been using, both in a long interview in the Dagens Nyheter newspaper, and elsewhere, marks a definite shift in tone for the leadership of the centre-left Social Democrats. 
“I think that this marks the end of the era of neoliberalism which was established under Thatcher and Reagan,” Andersson said.
“Going forward, we're going to realise that we need more politics, more collective solutions. My expectation is that the 2020s will be a decade where there is a growing call for collective solutions. This is a paradigm shift.” 
The Social Democrats are seeking to frame the high death rate in Swedish elderly care and the shortages of equipment and staff problems faced by healthcare, as the result of tax cuts, privatisation, and under-investment, arguing that this is the chief message to come from the first report of the Coronavirus Commission. 
Magdalena Andersson is mooted as a potential future leader for the Social Democrats. Photo: Amir Nabizadeh/TT
For Suhonen, who leads Katalys, a left-wing Social Democrat think tank, this is very welcome. 
“She wants to have Socialism a week from now. I'm very happy. She sounds like I have done for the last 15 or 20 years,” he told The Local. 
But he complains that Andersson, in her six years as finance minister, had done almost nothing to counter these problems. 

“Who is guilty of this? In September 2019, one year ago, she was bragging about how she had saved so much money that we were well prepared for the next crisis.  
“But she was only thinking about economic crises. It's a bit of a sad story, because she didn't let the public sector expand when when it could have. We were poor in every sense that mattered in this crisis. We didn't have what we needed to have.” 
What worries him, he said, is that while Andersson is ready to hail the shift in public mood against privatisation, and in favour of higher taxes and higher public spending, she has never followed up with any details of what the Social Democrats might do. 
“In three to four interviews, almost all on the same theme, she says the public mind has changed: no one's wants more privatisation, people want a stronger society, people would maybe accept rising taxes,” Suhonen complained.   
“But she gives no sign that the Social Democrats have those policies. She says, 'the people would like to end privatisation', but she doesn't say, 'we want to end privatisation” .  
Are Social Democrats to blame for starving the state of funds? 
Suhonen pointed out that almost half of the tax cuts over the past 30 years had been carried out under Social Democrat-led governments. 
“During the last 30 years, Sweden has gone from a very clear Social Democratic structure and society, with public monopolies in health care, education and all that, to a very diverse market-oriented neoliberal system,” he said. 
“If what what the state took out from the economy was at the same level today as it was in the year 2000, the public sector would have had 300bn Swedish kronor (€30bn) more every year for public spending.” 
But centre-right Alliance government which ruled from 2006 to 2014 was responsible, he claimed, for just 160bn kronor of those reductions. The rest of the cuts had been carried out under Social Democrats. 
Not a left-wing Social Democrat
Suhonen said his fear was that Andersson was simply positioning herself for a coming campaign to succeed Sweden's current prime minister Stefan Löfven.  
“What you're seeing with Magdalena Andersson is that she knows that this critique is coming. She's maybe one of the ones that want to be the new leader on that day that Stefan Löfven resigns.” 
“She's not a left-wing Social Democrat. She wants to like, have those kind of words in the history of what she has been saying.”
He said that the situation during the past two years, when the Social Democrats have agreed to weaken labour laws and cut taxes for the richest in return for the support of the Liberal and Centre parties, risked undermining the foundations of democracy. 
“It's not the Social Democrats' mission to rule on a neoliberal agenda,” he said. “That destroys how the the political and democratic system works.” 
A historic chance
Where he agrees with Andersson, though, is that the Social Democratic party in Sweden do now have a historic chance to seize control of the political narrative, as their counterparts have successfully done in Denmark. 
Doing so, however, will require bold political action the party has as yet shown few signs it is willing to take. 
“Maybe you can double the number of people that work in elderly care, and maybe you can stop all presentations, maybe you can stop the privatisation of schools,” he said.  
“Of course, I know that the Social Democrats don't have a majority in parliament, but for God's sake start doing this!”
“If the liberal parties don't want this, then call a snap election and make it a referendum about the welfare state and privatisation.”