[ExI] Belief in Market Efficiency

[painlord2k at libero.it]

Il 04/02/2009 23.38, Stathis Papaioannou ha scritto:
> 2009/2/5 painlord2k at libero.it<painlord2k at libero.it>:

> You've ignored my original point, which is that Sweden has one of
> the highest per capita GDP's in the world, higher than that of the US
> in 2007 according to the Wikipedia article above,

I got different numbers for the
  PPP GDP per capita

United States 	6 	45,725 	4 	45,790 	8 	45,800 	2007
Sweden 	16 	36,578 	10 	36,365 	15 	37,500 	2007

Nominal GDP per capita

Sweden 	8 	49,603 	7 	48,584 	9 	50,415
United States 	12 	45,725 	10 	45,790 	12 	45,959


Are the number before or after the taxes? I don't know but it is 
important to know not only what you earn nominally, but how much you 
keep for yourself.
Then I know many nurses travel from Sweden to the UK to work (and many 
go in the US) so I suppose many of them prefer the US to Sweden so much 
they decide to leave family and homeland to go there. This don't speak 
well to the Sweden model, if people leave. They also leave for Denmark.


> despite a century
> of mostly socialist government. How do you explain this?

This is like comparing apple and steaks.
First Sweden didn't have many immigrants until the '70. Now they are 
importing immigrant like crazy. If you import immigrants, usually this 
lower your per capita GDP (but why the GDP is now a good indicator of 
success?). Keep in mind that any service or products produced by the 
government is imputed to the GDP at the price it was sold, whatever 
could be his price in a free market. So, when the government run so much 
of the economy, the GDP is not a very precise measurement.

Without immigrants (and with a heavy eugenic program) the criminality 
was lower than in the US. Also, Sweden was very ethnically homogeneous 
(this help much with trust and for maintaining social norms) intelligent 
(101 -104) against a US of (98 very inhomogeneous) (this help with 
income), so the deviation from the standard were very limited and needed 
much more time to manifest than in the USA (or in Italy).

Many politics that would fail in a few years in the US and in Italy 
(also very inhomogeneous place for population and ethics) or that would 
never be enacted appeared viable in Sweden (in the short term).

What was not considered was the consequences in the long terms.
Today, a few economist argue that the true unemployment in Sweden is as 
far high as 25% if you add people in disability list that are not really 
disabled (for a bureaucrats is easier to put people in a list of 
disabled than to help them to find a job or a good job).

But, the greater error is considering the US an example of free markets.

The wikipedia have an interesting page about Sweden and

> Following the war, Sweden took advantage of an intact industrial
> base, social stability and its natural resources to expand its
> industry to supply the rebuilding of Europe.[28] Sweden was part of
> the Marshall Plan and participated in the Organisation of Economic
> Co-operation and Development (OECD). During most of the post-war era,
> the country was governed by the Swedish Social Democratic Party (in
> Swedish: Socialdemokraterna). Social democrats imposed corporatist
> policies: favoring big capitalist corporations and big unions,
> especially Swedish Trade Union Confederation, affiliated with Social
> Democrats.[29] The amount of bureaucrats rose from normal levels in
> the 1960s to very high levels by the 1980s.[29] Sweden was open to
> trade and pursued internationally competitive manufacturing sector.
> Growth was good until 1970s.

Note that socialists in Sweden favoured big corporation and big unions.
And enlarged the bureaucracy a lot.
They also made something right, like being open to trade.

> Between 1970 and 1990 the overall tax burden rose by over ten
> percentage points and the growth was very low compared to most other
> countries in Western Europe. The marginal income tax for workers
> reached over 80%. Eventually government spent over half of the
> country's gross domestic product. Sweden steadily declined from its
> perennial top five GDP per capita ranking. Since the late 1970s,
> Sweden's economic policies were increasingly questioned by economists
> and Ministry of Finance officials.[29]

Note this. 25 years after the war people and politicians change 
behaviour (the people didn't experience the war and the problem and have 
not learned something useful).

> A bursting real estate bubble caused by inadequate controls on
> lending combined with an international recession and a policy switch
> from anti-unemployment policies to anti-inflationary policies and was
> resulted in a fiscal crisis in the early 1990s.

If they force an anti-inflationary politics this imply that they were 
inflating their money mass. So the previous growth was apparent and 
guided by malinvestment.


> [32] Sweden's GDP declined by around 5%.

Say "crisis". GDP -%5 is a very big crisis.
Like the current one. Only the social-democrats did it.

> In 1992, there was a run on the currency, the
> central bank briefly jacking up interest to 500% in an unsuccessful
> effort to defend the currency's fixed exchange rate.[citation needed]

> Total employment fell by almost 10% during the crisis.[citation
> needed]

> The response of the government was to cut spending and
> institute a multitude of reforms to improve Sweden's competitiveness,

Call it "market reforms"? Or "common sense reform"?

> among them reducing the welfare state and privatizing public services
> and goods.

Whoever did these (social democrats or conservatives), he did marked 
reforms not socialist reforms.




> Much of the political establishment promoted EU
> membership, and the Swedish referendum passed by 52–48% in favour of
> joining the EU on 13 November 1994. Sweden joined the European Union
> on 1 January 1995.

Mirco