Obama and Sweden
This seems significant to me from Obama’s Time interview:
So how long and how deep a recession should the American public be ready for?
I don’t have a crystal ball, and economists are all over the map on this. I think we should anticipate that 2009 is going to be a tough year. And if we make some good choices, I’m confident that we can limit some of the damage in 2009 and that in 2010 we can start seeing an upward trajectory on the economy. But this is a difficult hole that we’ve dug ourselves into. You know, Japan found itself in a somewhat similar situation in the ’90s, made some poor decisions, didn’t squarely face some of the problems in its banking system and, despite significant stimulus, still saw this thing drag on for almost a decade. On the other hand, you’ve got countries like Sweden that went through this and acted forcefully and boldly and in two years were back on track and were growing at a really healthy clip. So the decisions we make are going to have an impact on it. But next year’s going to be tough.
The Swedish, also known as Communism, involves the government just taking possession of the banks and managing them in exchange for the banks getting recapitalized. You can find a detailed discussion from one of the architects of what Sweden did here. She acknowledges that Sweden’s response was radical and not really tried elsewhere. But she observes that it worked much better than the alternatives.
Thus far, the United States has seemed averse to doing this because it’s ideological taboo. Swedish politics is much much further to the left than ours — Finnish people made fun of the Swedes for being too socialistic — but this political orientation has given Sweden a leg up in economic crises a few times over history. Basically, they’re less terrified of opting for simple, effective solutions that happen to be ideologically incorrect. In the United States we’ve mostly been grappling around trying to find a way for the government to run the financial sector of the economy while we pretend it’s really still in the hands of the private sector. And I’ve seen no real indication thus far that the Obama team was or is looking seriously at the Swedish model. But now it seems Obama’s obviously been talking about it with someone.
67 Responses to “Obama and Sweden”
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December 17th, 2008 at 12:38 pm
The contraction of ‘29-’33 lasted (quoting from memory) about 3.5 years. This time next year our current slump will officially be two years’ old. Anything’s possible, I suppose, but I don’t see GDP failing to start expanding much later than the fall of 2010.
This, too, shall pass.
December 17th, 2008 at 12:47 pm
And I’ve seen no real indication thus far that the Obama team was or is looking seriously at the Swedish model. But now it seems Obama’s obviously been talking about it with someone.
Funny, almost everything I hear coming out of Obama’s mouth with respect to the economy makes me think Krugman has managed to plant a chip in Obama’s brain, and the president-elect is now fully under the (remote) control of the good professor. So, I’m not the least bit surprised to hear yet more sensible comments from the future president. Waking up on the January 21st is truly going to be like waking up from a nightmare.
December 17th, 2008 at 12:50 pm
The biggest challenge if Obama even wanted to pursue this line of thought is that we as a nation have a system that puts great weight on precedent, and ever since the Whig Party fell apart there is a general assumption that the powers outlined in the Constitution do NOT include the ability to form a national bank. We’ve been following that assumption with a wink and a nod through the Fed for the last century or so, but if a Democrat were to transparently move to nationalizing the banking industry, I think that will be the straw that breaks the camel’s back for those still considering themselves fiscal conservatives in the Republican Party who will be loud and angry enough to make for a very difficult time (yes, I know Bush basically nationalized them in all but name only; the difference will be that it will be “the other side” doing it).
In other words, there would be NO political cover if they attempted this, and politicians don’t normally do things if they aren’t assured some political cover.
December 17th, 2008 at 12:51 pm
no Japanese recovery despite profligate Japanese consumer spending: film at 11!
December 17th, 2008 at 12:59 pm
no Japanese recovery despite profligate Japanese consumer spending: film at 11!
Cite, please backing up the absurd claim that Japan in the 1990s was an economy characterized by “profligate” consumer spending.
December 17th, 2008 at 12:59 pm
I’d look at the Swedish model. Several, even.
It’s cruel how they’re afraid of _____ism, but will spend more than the rest of the world on “defense” such as bombers (those defend?). Do they ask us in a vote? No. It’s pretty Soviet right there. Atl east we can nuke everyone, right? Or the Chinese skipping all Asian islands and losing it all for a few landings in Hawaii? *sigh*
Meanwhile real wages fall even with “growth” and million can’t get actual health CARE even with insurance, and insurance doubles.
December 17th, 2008 at 1:01 pm
Well said
December 17th, 2008 at 1:02 pm
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December 17th, 2008 at 1:03 pm
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December 17th, 2008 at 1:04 pm
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December 17th, 2008 at 1:05 pm
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December 17th, 2008 at 1:06 pm
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December 17th, 2008 at 1:07 pm
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December 17th, 2008 at 1:09 pm
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December 17th, 2008 at 1:10 pm
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December 17th, 2008 at 1:11 pm
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December 17th, 2008 at 1:12 pm
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December 17th, 2008 at 1:14 pm
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December 17th, 2008 at 1:14 pm
In the United Sates, we appear to have a strong aversion to taking emergency measures that will likely work because we are afraid people will draw the disastrous lesson that those measures sometimes work, thus setting us for many years of doing things that work – which we all know is a threat to our freedom.
December 17th, 2008 at 1:18 pm
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December 17th, 2008 at 1:19 pm
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December 17th, 2008 at 1:25 pm
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December 17th, 2008 at 1:26 pm
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December 17th, 2008 at 1:27 pm
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December 17th, 2008 at 1:28 pm
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December 17th, 2008 at 1:29 pm
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December 17th, 2008 at 1:30 pm
Great Blog post. I am going to bookmark and read more often. I love the Blog template
December 17th, 2008 at 1:31 pm
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December 17th, 2008 at 1:32 pm
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December 17th, 2008 at 1:38 pm
Well said
December 17th, 2008 at 1:40 pm
Well said
December 17th, 2008 at 1:40 pm
Calling Sweden a communist country is laughable. You should visit Sweden sometime and hear what they have to say about the Fins…
December 17th, 2008 at 1:45 pm
Nice writing style. I look forward to reading more in the future.
December 17th, 2008 at 1:49 pm
Hello.
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December 17th, 2008 at 1:49 pm
How come my comments get moderated, but Jamie Holts rolls right through?
December 17th, 2008 at 1:55 pm
Hi,
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December 17th, 2008 at 1:58 pm
Thanks for posting the article, was certainly a great read!
December 17th, 2008 at 2:00 pm
Hello. I was reading someone elses blog and saw you on their blogroll. Would you be interested in exchanging blog roll links? If so, feel free to email me.
Thanks.
December 17th, 2008 at 2:22 pm
@Jamie Holts,
Enough already, we get the idea…
By chance I learned today that unlike say, Illinois or Taiwan, Sweden has virtually no corruption. Also Italy has long had a ton of corruption and make Illinois pols look like pikers.
December 17th, 2008 at 2:51 pm
we’ve mostly been grappling around trying to find a way for the government to run the financial sector of the economy while we pretend it’s really still in the hands of the private sector
Really? They must be pretending well, cuz I see far too little control — even oversight — being exercised over those in the financial sector that have received big bailout/stimulus bucks.
Maybe you’re right that the government runs the financial sector. Maybe you forget who runs the government.
December 17th, 2008 at 2:55 pm
Has anyone coined the term “blog stalking”?
December 17th, 2008 at 3:03 pm
where did you get that communism means taking possession of something in exchange for recapitalizing it? I tought thats exactly the reason companies issue stock in the first place. I remind you as well that Sweden is a democracy, admittedly slanted toward socialism, but very, very far from communism, although to you, mainstream all-ologists, it may look almost sovietic.
I stopped reading you years ago, today I was kind of giving you a second chance, but I still don’t understand how you get away with all these imprecisions and pretended mid-of-the-spectrun attitude, when all you do is echo conventional wisdom yadda-yaddas.
Sorry about being so harsh but I’m really disappointed in a steppenwolf-at-the-speech kind of way.
December 17th, 2008 at 3:08 pm
In summary:
Jamie Holt gives the post and blog a thumbs up.
caputxeta give them an emphatic thumbs down.
December 17th, 2008 at 9:40 pm
Try telling a Swede that Sweden is communist or socialist.
“No, we are Vikings and we are good capitalists! How did we buy so many or your companies that were going broke, and then make money from them when you American could not. We don’t like to live like animals, so maybe that is the difference you mean.”
Well that is the reaction I got from some Swedish friends when I playfully raised that issue. This was at a bar and that paraphrase was from a particularly drunk and belligerent Swede. But that was the consensus opinion.
December 17th, 2008 at 10:28 pm
i cannot even begin to describe my love for sweden.
December 18th, 2008 at 9:26 am
Aren’t we pretty much halfway to communism already, if communism just means gov’t takeovers? If we do that minus the rhetoric about the impending dictatorship of the proletariat, and avoid the word “comrade,” maybe people will look the other way.
December 18th, 2008 at 3:15 pm
Trust me – everybody who programs in any language is a monkey. Have you actually used any software lately? It all sucks rocks – even most of the OSS stuff. but you see for home http://www.liginmaclari.blogcu.com
December 18th, 2008 at 4:51 pm
Oh I now see how you get away with it. Your readers think it must be some really sharp sarcasm, and then tell themselves they “get it”. Dime con quien andas, y te diré quien eres…
December 21st, 2008 at 3:23 am
Wow. great post. Thanks. I’ve added you to my blogroll. I have 100 readers now. Thanks. I’ve added you to my blogroll. Well written. Thanks. Great post.
January 21st, 2009 at 11:33 am
Obama ho in the fuck is That???????????
heard he was a fuckin muslim??? they will be eraised one day anyway, obama and sweden, dont want anymore muslims in this country, specially not a gay with teh name off Obama, must bee a yoke
Nils
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