Anders Behring Breivik

The Local — a Swedish English language news website — reports that four days after Breivik’s attacks in Oslo and Utøya, a South Asian man sleeping on a bench in Västerås, a city in central Sweden, was attacked and seriously injured. In a second attack, two days later, a Sri Lankan man was stabbed while delivering newspapers.

Police reports obtained by the Dagens Nyheter daily and translated by the Local, say that one of the defendants sent the other attacker the following text message shortly after Breivik’s massacre on July 22:

A Norwegian ‘Nazi’ has killed like, around 84! From the left who, like, cheered on Islam. HAHAHA!! WHITE POWER!

The accused attacker reportedly screamed “Go home” and drew a swastika on the Sri Lankan man’s bag after stabbing him.

While the two suspects may have been motivated by a broader white supremacist ideology, Breivik appears to have served as an inspiration for them in their decision to attack South Asians. The text message indicates that they shared the same anger with left wing politics, and its supposed embrace of Muslim immigrants.

Both Sweden and Norway have growing white supremacist movements, but U.S. Islamophobes and European white supremacists appear to have found common ground in stoking fears about Muslim immigration into Europe. Indeed, Anders Breivik cited U.S. “counterjihad” bloggers, such as Robert Spencer and Pamela Geller, numerous times in his manifesto.

While European white supremacists have been implicated in hate crimes against numerous ethnic and religious minorities, the growing uptick in European Islamophobia is shedding new light on the overlapping ideologies of anti-Muslim advocates and white supremacists.

For more information on Breivik and his manifesto’s references to American Islamophobes, see the Guardian’s visualization of his citations and the Center for American Progress’ new report, Fear Inc.

As you can see, the issue here isn’t that the labor market in Sweden is so much better than the labor market in Denmark. But Sweden’s recession was much milder than Denmark’s, and it seems to be on track for a faster recovery. What happened? Well, consider the exchange rates:

Pre-crisis, both Sweden and Denmark were pursuing de facto currency pegs to the Euro. Denmark and Sweden were also both prosperous high-tax high-spending countries. Denmark had, however, substantially less structural unemployment than Sweden. They have some different labor market policies and also very different immigration policies that I believe gave them a more favorable demographic. But whatever the reason, there’s a clear structural gap here. Then comes the crisis, and unemployment rises in both countries. Yet it more than doubles in Denmark, which sticks with the peg, while increasing by a smaller percentage in Sweden which ditches it. Then the recovery in Sweden is sufficiently more rapid to catch up with Danish unemployment for the first time since the Nordic Banking Crisis of the early 1990s. Resolving the sources of the underlying structural gap would be nice, but it was by no means necessary to weathering the crisis better. And unlike the Australia-America gap, I trust nobody’s going to try to tell me the Sweden-Denmark gap is all about Chinese demand for coal.

Neil Sinhababu is not a fan of haggling for cab fare:

The free market system one does see in some places, either as a legally established option or as the way things run de facto because price regulations aren’t enforced, is one where you have to haggle with the taxi driver about the price of going to your destination. I’ve done it in other parts of Thailand, and I hear it’s common in Malaysia. People’s sentiments will vary, but I don’t like this system. Haggling takes time, is unpleasant, and can result in no deal happening because somebody presented an overly ambitious ultimatum when both parties were actually willing to settle for a middle price. It also can lead to visitors who aren’t familiar with the local haggling economy getting ripped off.

The one place I’ve been where haggling for cab rides is the formal system is Stockholm, Sweden where (as is often the case) the Scandinavians combine high taxes with radical free market ideas. It was, as Neil suggests, extremely annoying. But it also made me wonder why more cities don’t do this. After all, the main impact seems to be that tourists get ripped off. But why should city governments care about stopping tourists from getting ripped off? Charging a kind of “ignorance tax” on visitors seems like exactly the kind of thing you’d expect cities to do.

(my photo, available under cc license)

Way back on August 27, 2009 the FT reported:

“Bankers Watch as Sweden Goes Negative”.

At issue was Sweden’s embrace of unorthodox monetary policy, specifically their decision to cut the interest rate paid on bank reserves below zero. In other words, they were charging a penalty. In the USA, by contrast, the Federal Reserve actually raised the interest rate paid on reserves.

Yesterday, the FT reported:

“Sweden records fastest quarterly growth”

That’s the fastest growth Sweden has ever recorded. Ever. They’ve already tightened monetary policy from where it was in the depths of the crisis and, naturally, are poised to do some additional tightening. So are bankers actually watching this? It seems to me they’re not. When Sweden did something unorthodox, people said the world’s central bankers were going to watch. It worked. It worked really really well.

But is anyone paying attention? Here in the United States, inflation continues to be well below the trend level, we have tons of idle workers, and yet all you ever hear about is the possible need for tightening. Why not at least cut the interest on reserves back to zero?

(my photo, available under cc license)

Scott Sumner, discussing Sweden, overlooks something that I find to be common when right-of-center Americans talk about Swedish education: “Their vouchers for education don’t require you to live in Milwaukee, or enter a lottery. Everyone in the country is eligible, and their kids are free to go to any approved school; public, not-for-profit, or for-profit.”

This is accurate, but it’s important to note that there are crucial caveats around what kind of school can get approved. Anders Böhlmark and Mikael Lindahl have a good brief explanation in “Does School Privatization Improve Educational Achievement? Evidence from Sweden’s Voucher Reform”* (PDF):

Third, the most radical reform was that starting in 1992 municipalities had to provide private schools with a grant, equivalent to (most of) the average per-pupil expenditure in the public school system, for each pupil residing in the municipality who choose to enroll in a private school. Thus, the recourses devoted to public schools are directly affected by the choices of pupils. To be eligible for public funding, private schools have to be approved by the National Agency for Education (NAE). These schools then have to follow the national curriculum and are not allowed to select pupils by ability, socio-economic characteristics or ethnicity. If a school is oversubscribed, three selection criteria for admittance are allowed: proximity to the school; waiting list (where each child’s place in line is determined by the date of the parents’ application); priority to children who have siblings already enrolled in the school. Private schools are not allowed to charge any fees. Hence, top-up funding over and above the voucher is not allowed.

This is obviously not identical to American practice. But the schools Swedish kids can attend are essentially what we call “charter schools” in the United States, rather than true private schools with selective admissions. In effect, Swedish practice is like what exists in American states (Arizona, for example) with lots of charter schools and it’s quite similar to what the Obama administration (and I) are pushing. The big difference is that for-profit operators are allowed to run schools in Sweden, which I’d be for allowing.

* Their answer? It does in the short-term, but the gains fade. All else being equal I favor more choice, so I’d regard the reform as a good thing but I assume the architects of the reform were hoping for something more.

Instead, Sweden blessed with a small open economy and a floating currency has had one of the mildest recessions in the developed world and seems to be galloping toward growth:

The result was essentially the worst result ever for the Social Democrats and the first re-election for a center-right Swedish government in many, many decades. But a far right party called the Sweden Democrats got into parliament for the first time and thereby caused the Alliance to lose its majority. Prime Minister Frederick Reinfeldt is trying to push the Greens to support his government and give him a working majority but they don’t seem to like this idea, even though they cooperate with liberal parties in some localities.

Minority governments are common in Swedish history, however, so there’s no reason to think Reinfeldt can’t simply proceed without the greens. What’s more, the Social Democrats are indicating that they have no intention of trying to topple the government. Sweden also has an unusually procedural rule (thanks to David Weman for pointing this out) that allows a minority government to pass a budget unless the opposition can muster a majority behind a single alternative proposal. That means an Alliance government can carry the day unless the leftwing opposition unites with the far-right, which isn’t going to happen.

This all has limited relevance to Americans, but I do think part of the lesson is simply that monetary stimulus can work. As the crisis hit, the SEK went down relative to the dollar and the Euro which bolstered growth and employment and when the situation stabilized the currency began to recover. This all seems pretty uncontroversial when it comes to small countries, but it’s possible for big countries to make this work too.

Sweden’s Pirate Party picked up a couple of seats in the European Parliament at the next election and seems to have come up with a clever gambit for trying to secure one or two for the national parliament:

Sweden’s political Piratpartiet (Pirate Party) and the operators of The Pirate Bay have always stressed their independence from each other, but they are now lashed tightly together—and could soon be much tighter. If Piratpartiet has its way, The Pirate Bay won’t be using secret servers anymore. The servers will be quite public and located… inside the Swedish Parliament. [...]

Piratpartiet knows this. In a new editorial published in Swedish newspaper Aftonbladet (English translation), the party says that it hopes to host the Bay from servers located within the Swedish Parliament to take advantage of parliamentary immunity. The plan relies on 1) The Pirate Bay agreeing to it and 2) Piratpartiet’s performance in the upcoming September elections.

Piratepartiet is best known for its work on basic copyright stuff regarding copying digital movie and music files, but the actually important part of their policy agenda concerns efforts to find a viable alternative to government-granted monopolies (i.e., patents) as a means of financing pharmaceutical research.

In most of the developed world, politics revolves around a central left-right axis of conflict that’s basically about how high taxes should be. In many European countries, however, the main parties are no longer very far apart on these issues. Consequently, the political scene is more open to parties focusing on different kinds of topics. That’s most prominently manifested itself via a series of anti-immigrant parties, but parties pushing for IP reform also fit the bill.

Because Sweden has been living within its means it is one of the member states that has weathered the crisis best. In Britain, on the other hand, the new coalition government has inherited the largest budget deficit of any EU country.

Sort of. But as I’ve said before “My rule of thumb for thinking about the global recession is that whenever you hear claims that some country has weathered it unusually well because of Favored Policy Initiative A, you ought to first ask yourself if it’s not really just an exchange rate issue.”

And indeed we see that Sweden weathered the crisis in large part because its currency declined in value relative to major world currencies:

That’s not to say that Reinfeldt is totally wrong. Running responsible budgets during non-crisis times, as Sweden did, is far superior to the way George W. Bush governed the USA. And Sweden’s crisis-time policies have in fact succeeded for Sweden. It’s just that these are not policies that can be adopted across the board. And the main thing Swedish people should probably be congratulating themselves over is that they rejected the euro in 2003 thus avoiding getting sucked into the mire of the European Central Bank’s misguided tightfistedness.

Katrin Bennhold in the New York Times takes a look at one aspect of this, the large number of Swedish dads who take time off to take care of the kids:

From trendy central Stockholm to this village in the rugged forest south of the Arctic Circle, 85 percent of Swedish fathers take parental leave. Those who don’t face questions from family, friends and colleagues. As other countries still tinker with maternity leave and women’s rights, Sweden may be a glimpse of the future. [...]

Swedish mothers still take more time off with children — almost four times as much. And some who thought they wanted their men to help raise baby now find themselves coveting more time at home.

But laws reserving at least two months of the generously paid, 13-month parental leave exclusively for fathers — a quota that could well double after the September election — have set off profound social change.

Walking around the United States you’re not necessarily actively conscious of how rare it is to see fathers alone taking care of young children (at least I’m not) but when I went to Stockholm I was quickly struck by how common it was there. In general Swedish family policy is driven by an interesting form of feminist natalism that’s pretty alien to American political culture, but the result is an unusually high female labor force participation rate and also an unusually high total fertility rate for a developed country.

I can’t see the United States doing anything like this, but countries like Germany and Italy might address some of their demographic problems through these kind of measures.

Fishback tries to account for this, but as Kenworthy explains he gets it wrong:

In his paper, Fishback cites similar numbers from the OECD. He cautions, though, that “One advantage the poor Americans would have had in spending their disposable income is that they face consumption tax rates in the 4 to 7 percent range, while consumption taxes in the Nordic countries are above 20 percent.” Actually, consumption tax rates are incorporated in the purchasing power parities (PPPs) used to convert incomes to a common currency, so these income figures already adjust for differences in consumption taxes.

Two important things to further note about this. One is that as Fishback himself notes “[p]ublic services not counted in disposable income, like health care and education, likely are better for the very poor in the Nordic countries than in the United States.” The other is simply that Denmark and especially Sweden have per capita GDPs that are lower than America’s in PPP terms (Denmark I think is close at market exchange rate, and Sweden is lower either way). So for better or for worse, the Nordics are clearly putting a lot more effort into helping the poor. Conversely, America is doing much more than Denmark (and I think a bit more than Sweden) to help poor people born in foreign countries by letting them come live and work here, though again the Nordics have more foreign aid.

China’s growth has been accompanied by some stark increases in inequality, but it seems noteworthy to me that one area in which the People’s Republic is a real laggard is the development of mega-rich individuals. For example, according to Forbes’ authoritative list the world’s top 100 richest individuals includes zero citizens of mainland China. The richest man in the country, Zong Qinghou, clocks in at number 103. Probably given Chinese growth and the continued economic weakness in the developed world he’ll be able to crack the top 100 soon. But his $7 billion fortune is dwarfed by other developing world tycoons like Carlos Slim (Mexico, $54 billion) Mukesh Ambani (India, $29 billion) or Eike Batista (Brazil, $27 billion).

Part of the issue here is the existence of Hong Kong as a separate jurisdiction which contains a number of mega-billionaires. But the basic reality is that China’s state-led model of economic growth has created huge increases in per capita income and led the PRC to surpass Japan as the #2 economy in the world without creating much in the way of really big really successful new firms. Instead China’s largest companies are basically controlled by the state.

As a bonus fun counterpoint fact, egalitarian Sweden has a wildly disproportionate number of mega-rich citizens. With only 9 million people and an overall GDP less than ten percent the size of China’s, Sweden boast two of the fifteen richest people on the planet—the heads of Ikea and H&M. That’s in part just a coincidence, but I also think it reflects the reality that high taxes and high public spending aside the modern-day Nordic countries actually have a very neoliberal underlying economic structure whereas China is very much the reverse.

Stockholm, Sweden (my photo, available under cc license)

The Atlantic has a new “The Future of the City” site edited by Conor Friedersdorf and it contains a Q&A with yours truly:

Q. You’ve observed before that Americans are curiously averse to seeing what policy solutions have succeeded in foreign countries. Is this true in urban affairs? What innovations have you seen abroad that are worth considering here in the United States?

Definitely. Many foreign countries don’t have the “only left-wing people live in the city” phenomenon discussed above. Consequently, places like Oslo and Stockholm have implemented congestion pricing schemes that many American metro areas could learn from. The Bush administration actually deserves credit for pushing this idea to a degree, which Michael Bloomberg tried to implement in NYC only to be stymied by the state legislature.

Once Friedersdorf sent me the link to our Q&A I saw the site for the first time and noted that it’s sponsored by IBM. IBM is, among other things, the main corporate creator/operator of the Stockholm congestion pricing scheme. So I think in the future IBM should be giving me large sums of money, right? As veteran readers will know, there’s actually nothing I like better than droning on endlessly about Scandinavian traffic management.

(her majesty's publick domaine photougraphe or something)

Tyler Cowen says spending cuts will be necessary in the UK and asks “what is the U.S. ‘progressive’ take on this question. Is it admitted that spending cuts are necessary?”

According to the Guardian when Labour took over in 1997, total public spending in the UK was something like 38.2 percent of GDP. That slowly-but-steadily rose over time until it stood at 43.3 percent of GDP in the 2008-2009 budget. I wouldn’t say that cuts from that level are “necessary” but it’s generally advisable for countries to have political coalitions alternate in power and after more than a decade of center-left spending hikes some center-right spending cuts could play a useful role in clearing out dead wood and such. Alternatively, a responsible center-left government could shut down bad programs of its own accord while perhaps continuing to boost overall spending. Then the crisis budget of 2009-2010 pushed public spending up to 48 percent of GDP (or probably more likely, the decline in GDP pushed the public share up).

That seems advisable as a crisis measure. The Tory-proposed austerity budget would have been a disaster. But 48 percent is at the very Scandinavian Bleeding Edge of what we’ve seen in terms of a sustainably-sized public sector and I think it’s perfectly reasonable to fear that one’s country can’t pull it off. So while I doubt cuts are strictly speaking necessary, they’re probably advisable once GDP is growing (which I believe was Gordon Brown’s position) which I believe is currently the case. The good news for Britain is that even in coalition mode it’s relatively easy for a UK government to act decisively.

Meanwhile at the moment both Denmark and Sweden are in the hands of center-right governments, but that’s likely to change in the near future. It will be interesting to see if one of those countries attempts to devise an economically and politically sustainable approach to getting over fifty percent.

(cc photo by Lars Ploughman)

David Brooks has a Moynihanish column in which he says people overrate policy and underestimate the role of culture in determining outcomes. “The influence of politics and policy,” he writes “is usually swamped by the influence of culture, ethnicity, psychology and a dozen other factors.” In the course of making the case he writes:

If you combine the influence of ethnicity and region, you get astounding lifestyle gaps. The average Asian-American in New Jersey lives an amazing 26 years longer and is 11 times more likely to have a graduate degree than the average American Indian in South Dakota.

Brad DeLong replies:

If you wanted to find a stupider example to try to support the claim that “differences in policy really do not matter very much” than comparing American Indians in South Dakota and Asian-Americans in New Jersey, I suppose you probably could.

But it would take a really long time to find one, and you would have to work really hard to do so.

I think that’s an unfair reading of Brooks’ point. Consider his example of the kind of policies that do make a difference later in the column:

Therefore, the first rule of policy-making should be, don’t promulgate a policy that will destroy social bonds. If you take tribes of people, exile them from their homelands and ship them to strange, arid lands, you’re going to produce bad outcomes for generations.

I’m not certain that’s the right analysis of poor outcomes among South Dakotan Native Americans, but it seems like a credible account.

My problem with Brooks’ argument is something else. He notes that Asians do well not only in rich states like New Jersey, but also in economically distressed areas. But obviously Asians living in South Korea and Japan (or New Jersey) do much better than Asians living in North Korea. That’s policy. Chinese people living in San Francisco or Hong King or Singapore do much better than Chinese people living in Jiangxi. That’s policy. And the China disparity is much smaller in 2010 than it was in 1980, which is also policy.

Brooks counters by noting that Swedish-Americans and people in Sweden have similar outcomes, which he characterizes as “two groups with similar historical backgrounds living in entirely different political systems.” I think the real lesson here is that Sweden and the US (especially the parts of the US where Swedes tended to settle) actually don’t have entirely different political systems. North Korea and South Korea have entirely different political systems. Sweden and Zimbabwe have entirely different political systems. The United States and Uzbekistan have entirely different political systems. The United States and Sweden are both stable democracies with market economies, substantial welfare states, and relatively low levels of public corruption. I think the real lesson of Brooks’ story is that the policy differences between stable market/welfare democracies are not that large and especially that controversies about tax levels are overblown in terms of their consequences.

For example, Casey Mulligan seems to think that tax cuts and reductions in the size of the social safety net explain why Sweden’s unemployment rate hasn’t increased as much as Denmark’s. A different theory would note that though Denmark and Sweden are both small, open economies with generally high taxes and generous social expenditures, Sweden’s currency floats whereas the Danish Kroner is pegged to the euro. Consequently, the outbreak of the recession was associated with a substantial reduction in the price of the Swedish Kroner relative to the DKK/euro, the dollar, or the yen:

I think this is about what you need to know about it. Running a small, open economy with a floating currency has some problems. Among other things, events totally outside your control can throw your economy into recession. But it does leave you with a convenient way to adjust to the recession via devaluation. I think that’s about all that’s really happening here.

Central Station, Stockholm (my photo, available under cc license)

Meanwhile, I’m always a bit surprised by things like the raw tribalism involved in American libertarians’ eagerness to embrace things like the Swedish center-right. It’s true that the government of Frank Reinfelt has been pursuing tax cuts, but they’re reductions to a level that’s stupendously higher than anything I’ve ever heard an American politician in a competitive election embrace. The current government states that “The objective of welfare policy is to reduce the gaps between different social groups while giving people security, the opportunity to develop and an acceptable economic standard.”

On the specific issue of health care, no politician in Sweden wants to eliminate universal coverage. Nor does any politician in Sweden want to introduce anything resembling the level of private health insurance that Barack Obama’s plan features. The right-wing government is introducing such radical free market reforms into the system as allowing for the existence of private-sector drug stores. Their health ministry (PDF) tells us that “Swedish health and medical care is based on the principles that care should be provided on equal terms and according to need, that is should be under democratic control and financed on the basis of solidarity.”

If these guys showed up in the United States, in other words, Mitchell would be calling them socialists.

Charles Lemos at MYDD has me reconsidering my position on the role of Poland’s odd political institutions in its disappearance as a state at the end of the 18th century. Lemos’ point is that while the fix may have been in for geographic and strategic reasons by the time of the Partitions of Poland, the Liberum Veto played a big role in Poland’s decline in the mid-17th Century, the series of events that set the stage for the later extinguishment of the state:

It is true that Poland’s geography, not just its location but the fact that the country is a flat hard to defend plain, made it ripe for invasion. Nonetheless, Poland had historically been able to fend off successive foreign invaders including the Mongols (three times), the Teutonic Knights, and the Russians without much difficulty before 1650. The country, however, had a harder time throwing off the Swedes. This was due to the introduction of the Liberum Veto in 1652 just three years before the start of the seven decade on and off war with Sweden. [...]

Based on the assumption that all members of the Polish nobility were absolutely equal politically, the Liberum Veto meant, in practice, that every bill introduced into the Sejm had to be passed unanimously. The political system found itself in a prolonged crisis that prevented Poland from developing a fiscal-military state, the model that allowed other European countries to wage war and defend themselves. The paralysis that enveloped the Polish state made it easy prey for rising powers who had developed centralized fiscal-militarty states to take advantage of Poland’s weakness.

Obviously, I’m not really well-versed in these events but that seems cogent enough to me. The story of Sweden’s 17th century moment in the sun as a great power is pretty interesting. I’ve read C.V. Wedgewood’s old book on The Thirty Years War but don’t know of much else on the subject that’s accessible.

King Carl Gustaf XVI of Sweden, Actual Head of State

Carl Bildt is Foreign Minister of Sweden. In the 1990s he was Prime Minister of Sweden. Today, he has an op-ed on internet freedom that opens with an anecdote:

A decade and a half ago, when I was prime minister of Sweden, then-President Bill Clinton and I had the first e-mail exchange between heads of state. Already our two nations were at the forefront of the technological revolution about to transform our world.

I don’t necessarily expect Americans to grasp the distinction, since our President is both head of state and head of government, but Sweden’s prime minister is not a head of state. The King of Sweden is the head of state and when he dies Crown Princess Victoria will take over.

As for his take on Internet freedom, I’m all for Internet freedom. But what does something like “We should now forge a new transatlantic partnership for protecting and promoting the freedoms of cyberspace” really amount to? I wish I could say that this nitpicking distracts from Bildt’s real point, but I’m not sure what his real point is.

In that light, it’s interesting to note that if you look at the world’s fastest cities the United States actually dominates. Here’s a list I made of the top ten cities:

The difference is that these are all relatively small places. The fifth, sixth, seventh, eighth, ninth, and tenth fastest internet cities in Asia are all in South Korea and they include places like Seocho-gu and Masan that have many more residents than Sandy or Charlottsville.

Also note that the generally prevailing speeds in the Northeast are higher and comparable to the faster European countries, though not to the fastest Asian countries:

And just to reiterate, if population density and/or urbanization is the reason the US needs to be slower than Japan and Sweden you need to explain why internet speed in the District of Columbia is also slower than the internet in those countries.