Thursday, January 05, 2006

Three parts of the jigsaw

Three unconnected pieces in today's Guardian on themes of economic growth and policy -

First up, Nicolas Watt from Sweden, with a sceptical look at the economy now being mooted as the model for a social democratic Europe.
Britain, the champion of flexible Europe, and Jacques Chirac, an opponent of the "Anglo-Saxon" economic approach, believe Scandinavia combines the best of both worlds: relatively low unemployment, at 5.8%, and generous social provision.[...] But even admirers of the system in Sweden, where the top tax rate is 55%, have their doubts. The country has the highest absentee rate of any in the developed world, with 14% of the working population on sick leave or disability benefit at any time. Critics say this contributes to a "hidden unemployed" figure of about 20%.
The criticisms are the usual orthodox ones. But as Joakim Palme, author of a recent EU paper on the Nordic model, concludes: "We should take the criticisms seriously. But the alternatives are not necessarily better."

Next to West Bengal, where Randeep Ramesh reports on the local Communist government's new enthusiasm for foreign investment and privatisation.
The ruthless purge of inefficient industries is unheard of in India, where bloated public companies swallow a fifth of the country's revenue. Economists say that the reasons for such industrial failure lie mainly with the country's ill-conceived pursuit of economic self-sufficiency in the 1970s. When an industry was rendered sick, it was taken over by the government to protect jobs, not so much to contribute to the economy. West Bengal, with powerful communist unions, ensured that the situation was made much worse here than anywhere else.
It's a principled restructuring however, according to chief minister Buddhadeb Bhattacharjee: "I met with Wal-Mart. They wanted to set up a big shopping mall here in Calcutta but I said that we have farmers, fishermen, consumers and lots of small vegetable markets in the city. All would be out of business if Wal-Mart came in." Instead the state will allow the German company Metro to set up shop to provide wholesale produce to five-star hotels and haute cuisine restaurants. "We are not categorically against retail investment but we need to build up a market mechanism. We have to be selective."

Finally, op-ed from Timothy Garton Ash on human rights in the emerging economic superpowers. It's an area rich with ironies:
A perfect example of the wrong way to approach it was given recently by Sir John Bond, the chairman of HSBC, in an interview for Radio 4's Today programme. He made an apologia for the Chinese communist regime worthy of Sidney and Beatrice Webb's whitewashing of Stalinist Russia. China, he said, would probably remain under "one-party leadership" for longer than most commentators expected. He had worked under all sorts of regimes, and he'd seen economies thrive under a one-party system. So much for democracy. As for human rights: if you had a Chinese leader here, observed Sir John, he would probably say that they had first to fulfil the basic human right of people being clothed and fed, before going on to more advanced, western-style human rights. HSBC for communism!

Three angles, or parts of the jigsaw, on one of the big questions of the time. As ever, no easy answers.



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