EDITORIAL: Sweden as Japan's model

Prime Minister Naoto Kan likes to talk about Sweden as a country that has accomplished an enviable combination of "a strong economy, robust strong finances and a strong social security system," his overarching policy goal. Can this Scandinavian country serve as a model for Japan?

Sweden certainly has a remarkable economic and fiscal track record. The country has swiftly emerged from the global recession triggered by the collapse of U.S. investment bank Lehman Brothers in 2008 and is on track to achieve economic growth of 3 percent or more this year. While major European countries are all struggling to reduce their swollen budget deficits, Sweden's budget is in surplus.

Economic globalization has created myriad new growth opportunities. On the other hand, it has also left society exposed to unpredictable risks. Sweden, though, is also pulling through the sovereign debt crisis that started in Greece. The country's strong social safety net, which covers a broad range of welfare needs, including health care, childcare and job security, serves as a buffer against economic shocks.

It is generally believed that increasing public spending in areas like social welfare and education doesn't generate much in the way of economic growth. The fact is, however, income gaps have widened in Japan and the United States, which have acted on that theory, while the Scandinavian countries, which impose a heavy burden on taxpayers to sustain their high level of social welfare, are showing solid economic performances.

It is understandable that the Kan administration is trying to learn lessons from the success of these countries for Japan's economic management. But there is a flipside to this utopian picture.

First of all, citizens in these countries have to bear extremely heavy tax loads. Tax payments eat out about half of workers' wages. Consumers pay steep value-added tax at a maximum rate of 25 percent. Government employees account for one-third of the national workforce, including workers in areas like childcare and medical care. The government seldom if ever bails out a company that has fallen into serious financial trouble.

These countries also adopt thorough information disclosure rules that allow citizens to know not only policy discussions within the government but also even the income of others. Both the government and the public provide all relevant information about themselves to avoid arousing suspicion.

The "utopia" was built through years of choosing one thing over another. If so, what Japan should learn from Sweden is its way of politics, which has made it possible for the nation to make tough policy decisions constantly, rather than its system to maintain a high level of welfare in exchange for a heavy tax burden.

There have been no radical changes in the country's basic fiscal and social security policies despite power transfers. That's because of the political tradition of exhaustive debate on policy issues between political parties. An agreement on a reform of the public pension program was reached through some 10 years of debate among parties.

The country has also pushed through radical decentralization of power. There is little corruption among politicians and bureaucrats. These efforts have fostered solid public trust in politics, which has allowed the government to take measures that inflict pain on the public.

Japanese politics is also facing a raft of intractable issues, such as fiscal woes and troubled tax and social security systems. Clearly, the government needs to step up its efforts to tackle these urgent challenges, but the Upper House election in July has apparently put the brake on such efforts.

No matter what direction Japan takes, its political leaders must not flinch from rising to these challenges because of bitter disagreements among the public on what should be done. If so, what is needed most to deal with these formidable policy challenges is the people's trust in politics.

It may not be realistically possible for Japan to adopt the generous welfare system financed by a heavy tax burden of a country with a population of little less than 10 million. But Sweden does offer some good ideas on how to secure public trust in politics.

--The Asahi Shimbun, Aug. 1