In Sweden there is a long-lived myth that we are a rich nation. Is Volvo and IKEA paying for the welfare state? Unfortunately not, the former was bought by the Chinese back in 2010 and the latter hasn’t paid extortionate Swedish taxes for decades.
According to Cornucopia the answer is debt
He assumes that Swedish household debt goes straight into GDP in the form of consumption or investments. If he is correct (and I wouldn’t bet against him) all Swedish GDP/growth since 2001 is thanks to the housing bubble and households debt.
In 2006 GDP grew nominally by 175 billion SEK simultaneously households private debt increased by 190 billion SEK and that means that if households didn’t increase their debt, Sweden would be in a recession right now.
Many followers of the dismal science claim there is a multiplier effect which increases the GDP more than growth but in Sweden that is not the case. Here GDP increases less than the increase in household debt.
I am no economist and I don’t pretend to be but it worries me that the combined debt of the households, the government and companies in Sweden is larger than that of Greece.
Simultaneously our politicians constantly repeat the cliché “Sweden is a rich country” when defending the fact that they have decided to donate 1% of the GDP in foreign aid each year and that immigration costs up to 7% of our GDP per year.
8% of the Swedish GDP is equivalent to 285 billion SEK per year.
If by rich our politicians mean in fresh air I agree, but fresh air doesn’t pay taxes.
Perhaps Cornucopia is right when he says we have a Pippi Longstocking economy?
A wise man once said:
Blessed are the young for they shall inherit the national debt
Herbert Hoover (1874-1964)
Would you like to know…