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12 January 2005

Neoliberal vs. re-distributionist theories - a case study

George Monbiot's blog has an excellent article titled "Punitive - and it works" which attacks the received wisdom that neo-liberal economic policies work better than those old outmoded social democratic ideas with their "punitive taxes" and "grandiose projects of public spending". He does this in the simple, straightforward way of comparing various economic and social welfare indices for two fully developed "post-industrial" countries, one of which (the UK) follows neo-liberalism in an exemplary fashion and one of which (Sweden) is "one of the last outposts of distributionism". The results are telling: GDP is slightly higher in Sweden, and has been for all but seven of the years between 1960 and 2000. Sweden's national balance sheet shows a $10bn surplus, while the UK's shows a $26bn deficit.

Even by the neoliberals’ favourite measures, Sweden wins: it has a lower inflation rate than ours, higher “global competitiveness” and a higher ranking for “business creativity and research”.
In terms of human welfare, there is no competition. According to the quality of life measure published by the Economist (the “human development index”) Sweden ranks third in the world, the UK 11th. Sweden has the world’s third highest life expectancy, the UK the 29th. In Sweden, there are 74 telephone lines and 62 computers per hundred people; in the UK just 59 and 41.
The contrast between the averaged figures is stark enough, but it’s far greater for the people at the bottom of the social heap. Perhaps unsurprisingly, the Economist does not publish this data, but the United Nations does. Its Human Development Report for 2004 shows that in Sweden 6.3% of the population lives below the absolute poverty line for developed nations ($11 a day). In the United Kingdom the figure is 15.7%. Seven and a half per cent of Swedish adults are functionally illiterate – just over one third of the UK’s figure of 21.8%. In the United Kingdom, according to a separate study, you are over three times as likely to stay in the economic class into which you were born than you are in Sweden. So much for the deregulated market creating opportunity.
It's interesting that I read this today; this morning, on the radio, I heard a story about Sure Start, the eminently neo-liberal programme for lifting families and children out of poverty. A think tank had evaluated the results and found them almost too small to measure and had predicted that far better results could be attained by simply giving the parents the money. Sort of a no-brainer when you hear that the programme, with all its overheads and bureaucracy, costs £100K per year per child.

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