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New Swedish Model: How to Save the Old Swedish Model

March 14, 1996

STOCKHOLM, Sweden (AP) _ The ``Swedish Model″ used to be a happy medium between socialism and capitalism, between taking care of people and taking care of business.

Soviet leaders openly praised Sweden’s welfare state, and some U.S. presidents even gave it grudging respect.

But today, Swedes are deep in debt, taxed to the limit, edgy about unemployment and cynical about the model in which they once took pride. The welfare dream is in crisis, along with the Social Democratic Party that built it.

So the party now is trying to invent a new model: How to save the old one, and itself at the same time.

``Their vision now is to back out of the old vision,″ said entrepreneur Peder Johnson.

As the party meets this weekend to appoint Goeran Persson to succeed retiring Ingvar Carlsson as prime minister, its leaders will carefully push for a balanced budget, tighter welfare rules and entrepreneurship _ decidedly conservative themes.

``There is a growing insight that ... you can’t tax a society into equality,″ said Greger Hatt, speech writer for Carlsson.

That will be tough to sell to rank-and-file members, some of whom have been defecting to other parties. The Social Democrats are struggling just to hold the party together.

``It has no big plan for the future, but only lots of little plans to get through the week,″ said Johan Hakelius, a conservative editorial writer.

Sweden’s problem is that its welfare system simply grew faster than the industrial base it was built on.

Production soared after World War II, and by the 1970s, Sweden was among the most competitive, literate and healthy nations in the world.

``The finance minister was expected every year to produce another idea for social reform: What could we spend more money on? And if he didn’t, there was disappointment,″ Hatt said.

Then came the mid-1970s oil crisis. By the late 1980s, the Swedish model was deep in debt.

``There was no awareness in the Social Democratic Party that you couldn’t go further,″ said Olof Ruin, a Stockholm University political scientist.

In recent years, almost all private-sector growth has been from small businesses. But ``that has not sunk in yet politically,″ said Johnson, the entrepreneur.

Lamenting what he calls distrust of entrepreneurs, Johnson said the system ``always wanted everybody to have an equal start, to take care of everybody. ... We were not brought up to take care of ourselves.″

Party leaders insist that will change.

``Social Democrats are portrayed in public debate as something between Neanderthals and dinosaurs,″ Hatt said, ``but you’d be surprised today how much they understand.″

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