More Sweden, less tidbits

Well, I just lost a long post about the so-called Swedish model due to my own stupid carelessness the combined malevolence of Windows XP and MS Word.

Anyway, the main point was to say that the article on the subject (free for non-subscribers) in last week’s issue of The Economist was really a dishonest hack job. And my critique went roughly like this :
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Hungary’s Reform Programme

Just a bit of background info to accompany Doug’s post on AFOE:

“Everybody in Hungary knows that real income will decrease in the next two years … and very significant social groups will feel their interests hurt. If this simple rejection is transformed and mixed with national radicalism and social populism, then this is a dangerous thing,” Gyurcsany (Ferenc Gyurcsany, Hungary’s Prime Minister) said.

He has said that Hungary aims to meet eurozone criteria on the public deficit, national debt and inflation by 2009 and adopt the common currency by 2013.Last week, Hungary submitted to the European Commission a revised plan to prepare for adoption of the euro. Under the plan, the public deficit would be slashed from 10.1 percent of gross domestic product GDP) this year, the highest in the EU, to 3.2 percent in 2009. Although it is an ambitious programme, some analysts have called on the government to cut spending further in social areas such as pensions, in order to tidy up the country’s shaky finances, a recipe Gyurcsany has so far rejected.

The so-called euro convergence programme, not deemed aggressive enough for some, has also sparked protests in Hungary and led to a huge drop in the government’s popularity. The reforms include ending free public university education and overhauling the state-run healthcare system that is teetering on the edge of bankruptcy, by introducing co-payments for visits to the doctor and to the hospital, among other things. The aim of the plan is to put a greater financial burden on citizens and curtail the welfare state, which is becoming increasingly hard to finance in a society that, like much of Europe, is growing older.

This information also has some relevance to the debate which is raging on this thread about reform.

Slovakia swings left

Slovakia had elections this weekend. They don’t seem to have attracted much attention, but I think they’re worth a quick look.

Short version: a center-right government that was committed to controversial social and economic reforms got thrown out in favor of a left-wing populist.

Now, depending on what corner of the political spectrum you come from, your reaction to this may be, “Aw, shucks” or “At last!” What makes it interesting, I think, is that this is Eastern Europe, where everything is a bit rawer and the safety catches are off. PM Mikulas Dzurinda and his SDKU party, in power for the last eight years, had an economic program that would have made Margaret Thatcher go dizzy and weak in the knees. Privatization, a flat tax, brisk reorganization of social programs… it was quite something.

Especially since Dzurinda came into office after Vladimir Meciar. Remember him? An obnoxious Communist-turned-Nationalist of the Milosevic-Lukashenko sort, but without even the modest redeeming qualities (i.e., intelligence and a grasp of basic economics) of a Lukashenko. Meciar was a buffoon, a demagogue, and an incompetent; whether you like Dzurinda or not, there’s little doubt that he was the best choice available back in ’98.

Anyway. Dzurinda’s policies saw some results. Slovakia got hothouse economic growth and a surge of foreign investment that has turned it, against all expectations, into the automotive manufacturing center of Eastern Europe. But it also saw sharply increased inequality in income and wealth; and while unemployment went down, the jobs created were mostly available to the young, the urban, and those willing and able to pick up stakes. Jobs may be going begging in the capital, but a few hours west, on the Ukrainian border, the unemployment rate is over 25%.

Without getting into a debate over the merits of SDKU’s policies (though that’s very interesting in its own right), it’s clear that the Slovakian electorate has decided to swing left for a while.

Numbers below the fold.
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Germany: There’s more than the World Cup

Assuming that you, gentle readers, are not yet entirely absorbed by your preparations for the upcoming month of watching simple games of 22 men runnung after a ball before, well, Gary Lineker will hopefully be proven right again*, here’s some more interesting information about the country that is now officially run from the FIFA headquarter in Lausanne, Switzerland.

Yesterday, the German statistical office published the 2005 microcensus, which includes some interesting numbers that are the result of a partly changed methodology. First of all, as Die Zeit online explains in more detail (in German), the statisticians finally decided to explain to the public that politicians are indeed prone to using numbers only based on political context, not on their factual one.
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Saving The Euro

Do you want to save the Euro? Well one idea for how to do it has been proposed by University of Missouri-St Louis history professor John Gillingham: reissuing the 12 national currencies that were replaced with just one, while at the same time retaining the euro as a parallel currency that finds its market value in competition to reissued national currencies (podcast here).
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Wolfgang Lutz and the Low Fertility Trap

Back in July I published a post about Austrian demographer Wolfgang Lutz’s hypothesis that those countries which sustain total fertility rates below 1.5 for any length of time may have fallen into a self-reinforcing low-fertility trap. Old Rottenhat (Ray to his friends) argued in comments that I had explained the reasons for the existence of low fertility but that I had not justified the idea that this was a ‘trap’. Old Rottenhat was right, and taking advantage of the fact that Lutz himself has now given a fuller outline of the hypothesis at the recent Postponement of Childbearing in Europe Conference (see presentation) I will now try and remedy this lacuna.

So here finally Ray, is your reply: I hope it is something which indeed goes beyond the obvious.
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The Postponement of Childbirth in Europe

At the present time some 66 countries have fertility rates which are below the level necessary for population replacement (TFR 2.1). Within the next decade the number of counries in this group is set to grow to the point where a majority of the world’s population will be living in regions where the existing population no longer replaces itself. This development in an of itself is no disaster – many countries arguably suffer from excessive rates of population increase – but equally reducing fertility too rapidly can lead to economic and social ‘imbalances’ that may well turn out to be, in and of themselves, ‘undesireable’.

Understanding why this is happening has begun to present an important challenge for many areas in contemporary social science as there are evidently factors involved in the process which embrace areas as diverse as demography, sociology, anthropology, psychology, political science, economics and of course biology.

One of the characteristic features of this most recent fertility decline is that it is driven largely by a delay in childbearing: couples (and obviously in particular this means women) wait longer and longer before taking the decision to have a child. Understanding the dynamics behind this ‘delay syndrome’ is the key to developing a social policy to address the consequences, so it is particularly timely that the Vienna Institute of Demography was host last week to a Conference on this very topic: The Postponement of Childbearing In Europe. A number of interesting and important papers were presented, and I will be looking at a number of them between now and xmas. Indeed I have opened a page on my website which will be dedicated to the Conference.

But, just as a taster, why is postponment so important?
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The Danish Job

This is really a hybrid post, although perhaps the unifying theme – for reasons which should be clear by the end – is Denmark.

In the first place Danish journalist Kjeld Hansen has a hard-hitting article in EU Observer about just what does actually happen to all that money paid-out in the form of agricultural subsidies (hat tip New Economist), whilst in the second one there is news today that the Commission is preparing a position paper on the EU’s social model for discussion at the October 27/28 summit.
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Economic Adjustment Dutch Style

All is not well in the Netherlands. That was obvious in the June referendum vote, and it is also obvious in the recent economic data. The Dutch economy has been struggling to gain traction of late with poor growth and an actual contraction of 0.5% in the first quarter of 2005. Unemployment too has risen alarmingly for an economy which is often regarded as fairly open and ‘liberal’, from 2% or so at the end of the 90s to around 7% today.

Poverty is also on the rise:

The most recent preliminary figures from the government’s Bureau for Social and Cultural Planning indicate that at least 11 percent of the Dutch population, or between 700,000 and 800,000 households, lived in poverty in 2004, after the figure had declined steadily in the late 1990s to a low of 10.1 percent in 2000.”

Perhaps not the alarming and dramatic increase the AP writer wants to suggest, but hardly encouraging. Actually I’m not sure I buy the entire slant our journalist/author wants to place on the story either:

It’s all a sign of economic troubles in a country that is shifting from a traditionally strong social welfare system toward a more free-market approach, with rising health insurance premiums and housing costs. Premiums for health insurance have risen by more than 50 percent on average in the past three years, and are expected to rise by around 10 percent in 2006.

Those trends, combined with government cuts in social spending, have led experts to predict that poverty will worsen in coming years“.

The suggestion here would seem to be that the increase in poverty is a result of the reforms. But don’t demographic factors play a part? If all-over the OECD poverty and old age have a strong correlation, and we now have more old people as a percentage of our society, shouldn’t we, unfortunately, expect poverty to rise? Mightn’t it be that without the reforms things would be worse, not better? And didn’t I read something in the Economist about a soft-landing to the housing boom in the Netherlands, might this not be connected (or be becoming harder)? Any Dutch readers got anything to add?