Scandinavia's Shift to the Right (Center)

The Scandinavian states in Northern Europe are known for their speed skaters, but more so for their high taxes and generous welfare states. Cradle to the grave benefits for all and a great deal of state involvement in the economy are staples of the economic and political systems of Norway, Sweden, and Finland. Indeed, this much vaunted social model invokes world-wide envy: having achieved the seemingly impossible, reconciling a large interventionist state with economic growth. Predictably, the left has dominated the political scene in these countries. But that may be coming to an end.

After maintaining power for 65 of the last 74 years, Sweden’s Social Democrats—one of the world’s longest political dynasties—lost last fall’s election to Fredrik Reinfeldt’s center-right coalition. Similarly, Finland’s recent election in March of this year witnessed the worst results for the Social Democrats since 1962, as the center-right National Coalition Party gained ten additional seats and now share power with the Center Party. Norway still wields a leftist government—although the Norwegian right has had a better go of it compared to its regional counterparts—yet the next election may tip the scales in favor of the right and complete the political tri-fecta.

This electoral shift may just be a coincidence. It also could just be a sign of popular dissatisfaction and boredom with the same party dominating government for all these years. More likely, however, it is a pattern, representing a change in the political landscape.

To be sure, economic growth has accompanied high taxes and big welfare states in Scandinavia. But the system is not without inherent problems. Rigid labor markets, along with disincentives for working—accepting welfare checks is often more advantageous than finding a job—foster unemployment and an insider-outsider employment system.

It is tough for new graduates and outsiders to tap into the protected labor market. Lina Soderberg, a frustrated 24 year old Swedish graduate, declared shortly before the election, after having applied for over 100 jobs: “I am starting to get desperate about money...They say the system here in Sweden gives you help, but when you need it to, it doesn’t.”[1]

Yet Swedish unemployment figures do not fully bear this out. Government statistics often conceal rampant unemployment, as new Swedish Prime Minister Reinfeldt noted throughout the campaign. James Ashley, from Barclay’s Capital, argues: “The official unemployment rate looks better than European averages, but when you look at the true rate, taking into account government schemes for example, it is much higher, and there is a lot of dissatisfaction with that.” Official data shows unemployment at just under 6%, but McKinsey Global Institute observes the true rate as more than double the figure above, at roughly 15%, and the European polling agency, Eurostat, indicates youth unemployment is over 23%.[2]

Demographic troubles also underline the fragility of the Scandinavian social model. Problems endemic to many countries across Europe, and in the United States, such as plunging birth rates and the increasing rate of retirees, haunt those dedicated to the welfare state. Too few workers are, and increasingly will be in the future, contributing to retirees’ pensions and public services--social security in the U.S. faces similar difficulties.

Potential remedies include selling state-owned enterprises to engender further economic growth, increasing the retirement age, and slashing taxes and the welfare state—the markings of a center-right agenda. Unsurprisingly, the people across the region have voted the right into power to face down these obstacles.

It is too soon, however, for free-marketers to truly claim victory. The Scandinavians, much like the French, covet their welfare state, and will likely never truly relinquish its services. This rightward shift, which this piece lays out, is potentially misleading. The fact that the region has favored more right-wing parties is unmistakable, but one has to look at where the ideological dividing lines are drawn before making conclusions.

Just as the American political system is skewed to the right—some Democrats would be considered conservatives in Europe, and certainly in Scandinavia—the political spectrum in the Nordic countries veers left. Those parties identified as rightist in Scandinavia truly represent a centrist agenda: trimming the welfare state and lowering taxes, but largely at the margins. The right is still dedicated to the Scandinavian social model. Hence, although Scandinavia has shifted to the right, it is rather a lunge to the center.



[1] Qtd. From Ibison, David. “Voters’ disquiet leaves Swedish election neck-and-neck.” Financial Times. August 17, 2006.

[2] Ibison, David. “Swedish oust Persson as right wins poll.” Financial Times. September 17, 2006.