Where is Sweden Heading?

I have tried to follow the development in Europe in relation to the plans of Sweden for some time. Lately there was a redevelopment of the federal European idea with the Europact that Angela Merkel got together with Nicholas Sarkozy and that Great Britain turned down.

The conclusion so far from available data in the media is that the Swedish elite is fairly Germany directed, the bulk of Swedish trade goes to Germany which also involves the business community, and EU directed whereas the population at large in Sweden is not. The people of Sweden seems to be more Swedish than European.

On the other hand, English is the first foreign language taught in Swedish schools and according to an article in Svenska Dagbladet today Great Britain and the United states takes most Swedish students of all countries in the world, 5068 and 5035, respectively. Europe as a whole takes 16,337 students, North America takes 5542. Only 948 go to Germany which could be compared with Australia with 1554. China and Japan receives 484 and 655, respectively. Insignificant amounts go to South American and Africa.

Language orientation wise Sweden is heading to AngloAmerica but in sheer numbers the Swedes visit the different European countries which should comfort the Swedish elite even if. It is a pity that the major European countries Germany and France are resistant about the English language. If not we could have formed a true Western civilization with this language. One question is if Europe is going to shift to German as a second language? My guess is that an invisible hand might actually accomplish this via the elite as well as a unification and political integration of Europe. However, this will have to happen against the intentions of the so called people.


Monetary Expansion/”Liquidity Injection”

Why is monetary expansion performed at all when it is neutral in the medium run for unemployment and output but generates inflation in the medium run?

Are the short run effects so important for expectations that it is worth it? Olivier Blanchard says among other things: “Today, most economists recognize that there is substantial uncertainty about the effects of policy. They also accept the implication that this uncertainty should lead to less active policy.”

The Central Bank should be independent since politicians would want short sighted increases in output and decreases in unemployment and don’t care so much about the inflation. The Central Banker should be conservative, ie, he or she should care more about inflation than unemployment. The ECB is only concerned with inflation and foreign exchange though in contrast to the Fed.

One reason for the use of monetary policy is to even out fluctuations. However, it seems to be an unfortunate battle between politicians that wants to run the printing press and the conservative independent Central Bank when in reality it should be the business sector that creates job and wealth. Politicians should instead of “creating jobs” secure positive vibrations, lead, as Romney puts it. There is too much talk from government in Sweden to create jobs. However, according to the Eurobarometer, the economy and jobs is what concerns people the most.

Reinfeldt says that he listens, ie, he is the psychologist of the people, rather than the leader of the business community that he should be if he wants to “create jobs”. Obama seems to have the same problem with alienating himself with the business community. Reinfeldt had called ’Svenskt Näringsliv’ a “särintresse” or special interest. The fürer concept is of course a little peculiar in Europe and carries a stigma. The other problem is that it is considered non-solidary with a current account surplus like that of Sweden, a small export oriented country.

When it comes to fiscal tools, decrease of government spending and tax reform rather than tax increase seems to be valuable as in Ireland in the 1980s where Ireland worked itself out of a budget deficit of 13%. This hike also benefitted from an increase in expectations for the future, the leadership variable again. Mario Draghi has now made a move that will aid private banks which could qualify as leadership for the business community and which seems to have created positive expectations for the future—at least temporarily.

The problem of not having a leader of the business community in the West right now is in all probability serious if you don’t trust the Hayekian individuality concept. At least, there does not seem to be a known leader—if the Central Banker has not taken over the helm.