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Friday, September 24, 2010

A short comment on the Swedish 2010 election

The 2006-2010 Reinfeldt government undertook a lot of supply side reforms, mainly of taxes and insurance systems.

These reforms take time to generate results. More importantly, the crisis in the short term dominated the long term effect of the reforms. Thus a lower share of Swedes are employed now than in 2006, not because Reinfeldt and Borg's reforms don't work, but because of the global crisis.

Even of the government does nothing major new for 4 years (and it will), it will still reap the benefits of the stuff it did before. In 2014, several hundred thousand more Swedes will be employed than now.

If the Social Democrats had won, they would get the benefit of all of the Alliance reforms, which would unfairly be seen as a sign that Social Democratic economic policy generates more jobs than free-market economic policy.

In this sense it matters less that Reinfeldt did not capture a full majority.

It is generally a major problem that voters confuse the effects of the business cycle with the effects of economic reforms.

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