“God fortsättning” in the New Year — that’s doubtful…

In Sweden, my old home country, we used to say “God fortsättning” after the holidays — “good continuation” in the New Year. That’s not an expression you hear in America, which is perhaps as well, particularly in these times of the financial cliff, the debt ceiling, and the political disharmony in Washington.

Yes, the cliff was avoided but at what price? Was it worth it?

New York Times columnist Paul Krugman recently wondered if the deal was a “Pyrrhic victory,” a tactical victory that could pave the way for a major defeat later this year. Yes, the victory was tactical in the sense that the Republicans in Congress for the first time since 1993 voted for a tax increase. But what else? It did nothing to resolve the country’s major economic problems, the debt, budget deficit, unemployment. The settlement contained no new stimulus money to invest in the woefully neglected infrastructure or to create new jobs. Remember, the U.S. still has almost eight percent unemployment. Last Friday’s figure of 155,000 new jobs during December was certainly acceptable, but not more. Many more jobs are needed, every month, to seriously tackle the unemployment crisis.

In the deal, President Obama had to give up on his campaign pledge to raise taxes for everyone earning more than 250,000 dollars per year. Instead, the limit was set at 450,000 dollars, meaning than less than one percent of American tax payers will see their taxes increase. Those are not middle class figures. These are high income earners, who will now be exempted from paying their fair share at the same time as more revenues are needed but when Americans are paying less in income tax than the populations of other developed countries. As Stephan Richter pointed out in The Globalist:

“In all the other countries that come to mind, protecting such levels of income is the sole preserve of conservative parties. In the United States, it is a matter of bipartisan consensus.”

Yes, America IS different from Europe –it’s certainly more conservative. In America, taxes are toxic in a way they don’t seem to be in Europe, maybe because Europeans feel that they get something for their taxes, like universal health care, good public transportation, and affordable education all the way through college?

Washington is also similar to Brussels, if you read The Economist, which called the cliff deal an “abject failure” — “Washington’s pattern of dysfunction is disturbingly similar to the euro zone’s.”

But Europe has also made progress, averted disaster and come together around the euro, as Floyd Norris recently wrote in the New York Times, wondering: “Will the United States follow the European path in 2013? Let’s hope so.”

That’s not likely to happen. With the debt ceiling crisis and the resolution of the automatic spending cuts looming in a couple of months, the Republicans seem primed for revenge after the cliff deal, which could make the cliff deal negotiations come to seem like child’s play.

“Good continuation…” well, the New Year actually doesn’t look that good.

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“Solidarity” behind the success of the Nordic model

Here is a good read about the economies in Sweden and the countries in northern Europe, where, “befuddling Americans, economic growth is robust, and unemployment is lower than in most other European countries.”

So writes Stockholm-based businessman Daniel Sachs under the headline “The Nordic Model’s Economic Appeal” in the latest issue of “The Globalist.”

“The Nordic model leads to one great benefit: it promotes adaptability and openness to change…Openness to change is a core aspect of the competitiveness of the Nordic economies.”

Sachs, who was educated in Sweden and at the Wharton School at the University of Pennsylvania, writes that he believes in “incentives” but then uses a word seldom, if ever, used in the U.S. debate — “solidarity.”

“What the Nordic experience shows is that ‘individual’ incentives can be soundly balanced by solidarity on a ‘societal’ level. Solidarity makes good economic sense. Solidarity — that is, risk-sharing — is a key ingredient in being open to change…These aspects of the Nordic model — the relationship between state and individual, generous social protection, freedom of the individual and high levels of trust — all help foster risk-taking and openness to change.”

In turn, he ends, this has led to high levels of trust, fairness and transparency, low transaction costs and low corruption – all reasons why he as a businessman likes the Nordic model.

Anything to learn here?