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Class warfare: Successful economic strategies

“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” —Warren Buffett

Many countries in Europe are suffering through what can only be called economic conditions equivalent to the Great Depression of the 1930s. The so-called PIGS – Portugal, Ireland, Greece and Spain – suffer from high levels of unemployment, increasing poverty and decreasing access to public services. In order to pay for government debt incurred for suspect reasons (these countries spend less on average than other countries on the so-called welfare state), under orders from the European financial authorities, pensions and salaries have been slashed along with cuts to public spending on health, education and welfare, while public assets like water, hospitals, hydro are sold off to for-profit enterprises.

Where do these “savings” go? First and foremost the money goes to the banks in France, the UK and Germany.

Meanwhile right next door…

The World Economic Forum (WEF) is a Geneva-based foundation whose Annual Meeting of chief executives and political leaders, held in Davos, Switzerland, is a gathering of the truly rich and powerful. The WEF is a think tank funded by 1,000 corporations. Member companies must have annual revenues of more than $1 billion. Every year the WEF produces its Global Competitiveness Report, which ranks the competitiveness of the world’s economies.

The top ten countries of World Economic Forum Growth Competitiveness Index Rankings for 2005 (the list does not vary much from report to report) in rank order are: Finland, the United States, Sweden, Denmark, Taiwan, Singapore, Iceland, Switzerland, Norway, and Australia. What is most interesting about this list is how few of these countries follow a conservative economic strategy.

The countries that dominate the top ten list are the so-called Nordic countries, better known disparagingly by conservatives for their welfare states. It seems the quality of their public institutions, budget surpluses, low levels of corruption and high degree of technological innovation trump their high taxes and strict regulatory framework so that they are characterized as having “excellent macroeconomic management overall,” according to Augusto Lopez-Claros, chief economist at the WEF.

“Integrity and efficiency in the use of public resources means there is money for investing in education, in public health, in state-of-the-art infrastructure, all of which contributes to boost productivity. Highly trained labor forces, in turn, adopt new technologies with enthusiasm or, as happens often in the Nordics, are themselves in the forefront of technological innovations. In many ways the Nordics have entered virtuous circles where various factors reinforce each other to make them among the most competitive economies in the world, with world class institutions and some of the highest levels of per capita income in the world.” (Lopez-Carlos, 2005)

In these nations, historically strong labour movements and other civil actors have been able to challenge the power of business and successfully develop a broad network of policies that alleviate, to a certain extent, many of the inequitable, environmentally damaging economic outcomes of modern capitalism.