Five Reasons for Sweden's Fast Recovery from Recession

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Sweden has recovered much faster from the recession than other countries. Its economy is growing at 5%, which is twice the rate of US growth. This article discusses five differences between Swedish policy, and that of most other states, that may be related to its faster recovery. Of course, US policy makers do not believe that there is anything that they could learn from the Nordic states, which have not embraced neo-liberal economic ideology, but it is worth looking at Sweden just to understand more about the options that are available to countries that do not allow ideology to limit their options. Perhaps the most important reason was that Sweden was running a budget surplus when the recession began. This enabled its social welfare system to put a floor on the decline in consumption without creating huge budget deficits. This contrasts sharply with the US response to the budget surpluses left by the Clinton administration (which, of course, must have resulted from policies from the Reagan administration). The Bush administration saw this as an opportunity to cut taxes, and to increase government spending, in order to get rid of the nasty budget surplus.