A Coup d'Etat in Sweden?

Read carefully the following article from Johnny Munkhammar of the Swedish trimbo think tank as published in the WSJ. The careful reader will recognise quite some similarities with our "Belgian" situation. The enemy is within. It might be your neighbour.

STOCKHOLM—In Sweden’s general elections on Sunday it seems possible that voters will end 12 years of Social Democratic rule. As a matter of fact, the Social Democrats have been in power for 65 of the last 74 years, so a government change would really be historic.

A group of four center-right parties known as the Alliance has been leading in opinion polls by three to five percentage points for weeks, but the race has tightened and appears too close to call now.

The Social Democrats, led by Prime Minister Göran Persson and his would-be successor, Pär Nuder, are hiding problems and campaigning on a non-reform agenda. The party is locked up with special interests and abuses its power, which has put a halt to further reform and created a democratic deficit.

The Social Democrats have not always opposed free markets and limited government. Before the 1970s, Sweden remained a low-tax country despite decades of Social Democrats in power. In the late 1980s, they cut marginal tax rates, proposed EU membership and deregulated the financial markets. But now, the Swedish Social Democrats are one of the least reformist parties in Europe.

Leading up to the elections, they have presented no vision or ideas for the future other than to increase taxes and labor-market regulations, and prohibit private competition in traditional public services, such as health care. Instead of new ideas, they want to get re-elected on their past record. But Sweden still has the highest taxes in the West, a highly regulated labor market and public welfare monopolies with growing problems.

McKinsey Global Institute estimates Sweden’s total unemployment rate to be 15%. That may surprise as Eurostat puts the official unemployment figure at 7.8%. But when you add jobless people in temporary government programs, as well as those parked in early retirement and disability schemes, the figure roughly doubles. During the last 15 years, Sweden has decreased the size of the work force more than any other European country. But is has doubled the number of early retirees, who now total 550,000, outnumbering entrepreneurs. There are 22,000 early retirees under the age of 30, up from 13,000 in 1999. Youth unemployment is 22%, the fifth-highest rate in the European Union.

So why hasn’t the opposition already wrapped up the election? And why, over the years, have there been so few shifts of government in Sweden?

The main reason is that the Social Democrats have become one with the state. They use and abuse public power to remain in government. Half of the taxes are hidden and people are not fully aware of the total tax burden. Labor-market regulations make it in practice mandatory for workers to belong to trade unions—which, in turn, support the Social Democrats.

The law forces employers to pay full-time wages to people even when they are engaged in trade union activities instead of working. During an election year, that means thousands of employees are working almost full time for the Social Democrats. The number of elected representatives for the biggest trade union, LO, is about 35,000. That is, they are party workers whose wages are paid by private employers, campaigning at the facilities of the companies. In addition, public authorities spent last year some Œ200 million on activities to shape public opinion, called “information” by the government. The boards of universities are filled with Social Democrats. And so are the boards of civic organizations that are supposed to be independent from the state. They even installed the former deputy prime minister as the chairman of Swedish Public Television. All of this makes it harder for countervailing arguments to gain credence in the public debate. The Social Democrats’ grip on power is so strong and has been so long-lasting that it seems almost abnormal to have a shift of government. A coup d’état is what the tabloid Expressen, only slightly tongue-in-cheek, called it last year—indeed the same words once used by Social Democrat Party Secretary Marita Ulvskog.

The Allliance recognizes the problems facing Sweden, particularly in the labor market, and proposes some deregulations, and cuts in welfare benefits and taxes in order to increase employment and get people from welfare to work. The program is not radical, but every long journey starts with a few steps. Swedish voters face a choice between a relaunch of reforms of the kind that have been successful in the past or standstill and worsening economic problems.

Mr. Munkhammar is program director for Timbro, a free-market think tank in Sweden.