Coffee House

Anders Borg: Europe’s best finance minister

17 April 2012

In the current issue of The Spectator "">I interview Sweden’s Anders Borg, perhaps the most successful conservative finance minister in the world
— both in his economic track record, and the accompanying electoral success. His response to the crash was a permanent tax cut to speed the recovery. At the time, everyone told him it was
madness. But Borg is unusual amongst finance ministers, in that he is a trained economist. To him, madness lay in repeating the formula of the 1970s and expecting different results. Last year,
Sweden celebrated the elimination of its deficit. It’s perhaps worth mentioning a few other points which I didn’t fit into the interview.

1. Revenge of the nerds. Borg and Fredrik Reinfeldt, the Swedish Prime Minister, have no interest in being interesting. Reinfeldt is incredibly dull, and Borg is a numbers man. In
opposition, Borg was famed throughout the party for his ‘macro emails’ — dense arguments for tax cuts, studded with graphs and complicated maths, which filled some 30 pages when
printed. Borg, a former SEB chief economist, has a mastery of detail such that he can defeat any opponent in Swedish debate.

2. Borg’s sense of mission. In Sweden, the joke now is that the conservative government’s only idea is even further tax reductions (through what they call the
‘jobbskatteavdrag’, increasing the ‘earned income tax credit’). But an over-taxed Swedish electorate seem to forgive them for it. The Swedish election message is not
‘Do you like us? Would you like to go for lunch with us?’ No one would. The message is: ‘We are the new workers’ party. If you’re in a job, we’ll make you better
off by cutting your taxes.’

3. Good politics means making and winning the argument. When things got messy, Borg didn’t hide. His own ‘Fiscal Policy Council’ — which the new government
established when they took office — was very critical of Borg for not doing debt-fuelled stimulus like everyone else in Europe. Borg then started an extraordinary public row with the chairman
of the committee, and even started
a blog to argue against that Council’s report in 2009. Rather than crave the approval of external agencies to hide
behind, saying ‘I must be right because the ABC and DEF say so’, Borg was alone — with enemies the world over, and even in Stockholm. But he had complete faith in the strength of
his argument, which he had rigorously researched.


4. This is about a ‘supply of workers’ not a ‘supply of jobs’. In Britain, the argument remains Keynesian insofar as it’s all about how government can
create more jobs. Borg saw it differently: if welfare pays more than work, why work? He wanted to increase the incentive to work by cutting in-work taxes (using a Clinton/Gingrich style tax credit,
not the Brown-style mutation of it) and in so doing, create more workers. That is to say, people looking for jobs. This is part of his supply-side logic, a thoroughness that is unthinkable in
Britain where Brown’s logic is still studded into the way the Treasury thinks. Borg published a massive book explaining how his reforms will adjust the labour market and lower structural
unemployment. Again, such a document is unthinkable in Britain.

5. Borg changed the terms of debate. Now, all opposition parties in Sweden (apart from the former communists) back profit-making schools (a victory from the 1994 Swedish
conservatives) and none say they’d repeal Borg’s tax cuts if they were in power. Borg has also sought to downplay the radicalism of his reforms, presenting them as a continuation of the
tax cuts made by his Social Democrat predecessors, who were nudged into fiscal reform by the aftermath of Sweden’s 1990 financial blowup. It’s interesting that those countries stung in
the early 1990s — Sweden, Canada, Australia — are far better-off now because they adopted austerity and proper bank regulation.

6. Making people better off is a strong electoral proposition. My fellow Scots are "">being teased right now for a "">Social Attitudes Survey suggesting they’d vote for independence if it made them £500 better off, and vote against it
if it made them £500 worse off. But for the average voter, on £23k, these sums matter. I suspect a good many voters across Europe will support the party that will make them better off:
it’s a clear, retail electoral proposition. The Swedish conservatives won re-election for the first time by saying they’d cut taxes giving the average low-paid worker an extra
month’s salary every year. And that, if re-elected, they’d do more.

7. Only Brits would see Borg as Thatcher in a ponytail. In Sweden, Borg and Reinfeldt are seen by many on the Swedish right as being pathetically wet — and some Swedish
right-wingers have defected to other parties. Like Cameron and Osborne, Borg and Reinfeldt have positioned themselves as centrists and picked fights with the old guard of their own parties to
emphasise their new modernising credentials. Borg’s focus is on tax cuts is the low-paid and he is seen as the main source of resistance to cutting the 57 per cent marginal rate on income
above about £51,000 a year. His party is also not very interested in deregulation of the labour market, a cause that Osborne has championed. Like Cameron and Osborne, both Borg and Reinfeldt
have a weakness for green initiatives, which business loathes. But overall, I really don’t see what a Swedish conservative could complain about. Reinfeldt and Borg are cutting taxes, doing
well economically, and making historical electoral success.

8. Borg’s tax cuts almost entirely paid for themselves. Even Borg, with his macro emails, did not quite expect the stimulatory effect of his tax cuts. Subsequent "">studies suggested that the money saved — in lower dole costs, and extra VAT receipts from people spending their
newly-earned money — recouped up to 85 per cent of the cost of the tax cut. The UK Treasury will assume that any tax cut will simply lose money, as is still programmed with Brownite
assumptions about zero dynamic effect. Osborne has previously spoken about the need to address this.

9. Borg doubts that Osborne can do the same. Tax cuts need to be credible to be effective, he says, and Osborne’s deficit is so big that people would just save any money from
a tax cut, dulling its stimulatory effect.

10. Borg was a rebel — but of the type we don’t really have in Britain. He was a libertarian, and in Sweden there is famous "">YouTube clip from the late 1980s when he was on the telly saying that a country’s wealth comes from its people, not its government. And, when asked what
he’d do if elected, he replies: ‘If I was prime minister I would not do a damn thing — then people would be free to decide for themselves’. His views have moderated, but his
sense of urgency has not. Anyway, CoffeeHousers, the denim-clad guy in the video was recently
voted by
the FT
the most effective finance minister in Europe, and has reminded his peers that good politicians are never confined by the parameters of public debate. They can shape these parameters

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  • Mentat57

    The best finance minister in Europe and still they lost the election. This is inexplicable to anyone who has not seen the media smear for the past 8 years.

    The Swedish media leans very hard to the left.

  • Francis Flynn

    You are wrong when you say Borg is a trained economist, he did only a few courses in economics in Stockholm University he never finished his degree. You should also look into Swedish Governments juggling of unemployment figures with the controversial Fas 3 work program. Sweden is not as it seems, but they are good at PR.

  • Frank P

    ‘Ere chaps! He may be askin’ for it by constant references to Sweden, but don’t attack a man by using his missus as a bludgeon – even though he does appear to be pussy-whipped.

    Below the belt, that … Queensbury rules, please!

  • Colin Cumner

    If only the UK Government would seriously tackle the problem of over-generous social welfare benefits together with adlopting tougher laws on immigration then maybe Britain would be on the way to reducing its massive national debt. I am firmly of the belief that if the ‘free money’ so many immigrants and asylum seekers regard as synonymous with the British way of life were to dry up, those still planning to get into into the country by fair means or foul might well reconsider the idea. Then perhaps both the deficit and unemployment figures would show some marked improvement.

  • Andy Leeds

    What we need in the UK is a radical reduction in the size of the State and in the amount of money it steals from us. The Cameroons have been a disappointment – they have not cut public expenditure at all. And that remains the root of our problems.

  • Baron

    Fraser, why haven’t you mentioned what the level of taxation was before the genius began cutting, ha? and forgive the barbarian from the East, but if your marriage to one of the Britts is skewing your judgment that much should you not find another profession for expressing it?

  • Wilhelm 1

    Nelson ” I have my own Britt Eckland back at home.”

    You mean you’ve got an actual blow up doll of her ? I wouldn’t boast about that if I were you.

  • Archimedes

    It’s disappointing to consistently see commenters here talking about the negative effects of immigration on UK employment. There are plenty of situations where immigration is causing socioeconomic issues, but they are not on the availability of jobs to natives. We have, quite consistently, in the UK, had a highly fluid labour market, and we have also, quite consistently, had one of the lowest unemployment levels. Immigration is not causing a drag on employment for UK born workers, at least not directly, and not for any valid reason of complaint.

    If we are having temporary issues in this area, because of the recent economic crisis, then it is more likely to do with deeper rooted issues related to the work ethic of the UK born population – otherwise these issues would have been present prior to the economic crisis, which they were not. Trying to remedy this by capping immigration, even though there may be other valid reasons for doing so, will, at best, lower our productivity per person, whilst failing to solve the underlying issue in the labour market.

  • daniel maris

    Sadly that wasn’t Britt writhing against the wardrobe.

    It is difficult to extraplate from Sweden to the UK, but equally it’s pretty clear our Chancellor lacks any real imagination and little grasp of economics. If he had had any understanding he would not have created an austerity panic, which sucked demand out of the system.

  • Trapped

    @ Peter of Maidstone
    April 17th, 2012 2:14pm

    Except a lot of those people out of work don’t fit your description. Britain in particular is a shining example of what happens when you let hypercompetitiveness dominate the bottom rungs of the workforce ladder. Constant downward pressure on wages, thus forcing them below benefits which to be blunt aren’t even close to living wage even when you factor in housing and council tax support (and I’m not referring to the cases you see in the Daily Mail, but more the vast majority you don’t see). Sweden has a much stricter immigration policy, and their work, even at menial levels, pays substantially better than the benefits received not because benefits are low, but because the country has a vague notion that you can’t employ good people on peanuts. A concept Britain discarded when Labour opened the doors.

    • Francis Flynn

      Sweden has a much stricter immigration policy?? Sweden has a very much an open door policy and takes in the most asylum seekers as percentage of its population…you no nothing about Sweden.

  • Fraser Nelson

    Austin Barry, I ought to have declared an interest – I have my own Britt Ekland back home.

  • Michael

    While one can understand Brit ‘Wicker Man’ Eckland, I cannot understand the reason for trying to extrapolate any policies from a country with only 4Million people, and those mainly concentrated in 4 or 5 cities, but also having a large geographical area full of natural resources.

  • Hexhamgeezer

    Re Hexhamgeezer @3.43 & ‘pymgmies’

    Apologies. I meant to type ‘people of stunted moral and mental capacity’ ….or something similar

  • Austin Barry

    Poor old Fraser seem obsessed with Sweden. Schools, finance ministers probably Britt Ekland in his fevered youth.

  • In2minds

    “Most of us……..”, while some of us speak only for ourselves.

  • Cynic

    [Borg] was on the telly saying that a country’s wealth comes from its people, not its government. And, when asked what he’d do if elected, he replies: ‘If I was prime minister I would not do a damn thing — then people would be free to decide for themselves’.” Can we clone him? The government doesn’t have any money, only what it takes from the taxpayer and there is no problem which govt intervention cannot make worse. If only our politicians would wake up to those home truths.

  • Hexhamgeezer

    Economically the Swedes seem to be far braver and imaginative than the pymgmies who lord it over us. However, when it comes to standing up to their Islamic immigrants’ anti-semitism they are as pusillanimous as the rest of Europe’s body politic.

  • Frank Furter

    Borg is a very unusual character. His individualism is shown by the fact that although he is throughly knowledgeable about modern economics (both theory and applied), he never completed his degree at Stockholm. Contrast with Balls who is academically orthodox but, as his hero Keynes would say, is the slave of a defunct economist (Keynes himself). In some respects Borg resembles that great swedish economist of the inter war years: Gustav Cassel. Cassel was one of the most ferocious critics of Keynesianism (he also had a side sweep at the Austrians also). If I remember correctly, one of his students was later a leader of the Moderate Party of which Borg is a member.

  • Heartless (Romantic) Curmudgeon

    If he’s any good – he’s done for!

    There’s is NOTHING like aptitude to ruin a person’s career in the dumbed-down topsy-turvy world we live in, – especially regarding EUSSR issues or those that come close. May Sweden cherish and preserve what little independence it really has.

  • Peter of Maidstone

    Most of us are truly horrified by the racial outbursts triggered by this perfectly legitimate post. Most of us are also glad of the industry and expertise of our immigrant workforce which contrasts well with the bloated welfare dependent indiginous population. How the Swedes differ from us is the industrious commitment of both indiginous and immigrant groups. We could learn a lot from Borg and his fellow Swedes.

  • Bill Brinsmead

    Oh I don’t know Fraser, I guess your personal attachment to Sweden is clouding your already faulty political judgement.

    Sorry, but its increasingly clear that you were over-promoted, by Andrew Neil?, into the Speccie chair.

    Come back Alexander Chancellor – I think.

  • daniel maris

    Wilhelm –

    All real men had pony tails or wore wigs in the 18th century.

  • Sean Haffey

    And, yet, we could do the same thing in the UK. Easily.

    Cut the price of petrol and diesel by 50p and the economic stimulus would be dramatic and long-lasting – and it would put the Conservatives ahead politically, too.

    It’s described more here:

  • Wilhelm 1

    ” Anders Borg is the best finance minster.”

    He’s 43 and has a pony tail. So much for Nelsons sage like wisdom.

  • Trapped

    @ Peter

    Sweden has much lower issues with immigration, generally if anything they actually have too little, as opposed to too much inflow, there’s been a few isolated approaches where they’ve said if you can fund building a house, we’ll provide you land and citizenship. The key thing to note is that Sweden doesn’t see a lot of economic migrants come in, because the state doesn’t subsidise low wage jobs. There’s living wage and there’s unemployment and sick below that, and whilst you can -survive- on unemployment out in Sweden better than in the UK, it’s not defined as a long term option because it’s clearly better to work.

    Our problem is threefold :

    1) Unemployment barely covers the essentials now, and with inflation going up, it’s actually harming people’s ability to find a job by depriving them of the funds needed for transit, clothing, etc. For people who actively seek work, JSA is now inadequate.

    2) We have hypercompetition in the low skill/low paid sectors. Due to high levels of inward economic migration combined with the idiotic policy of subsidising low income jobs with tapered benefits and tax credits, we’ve somehow managed to create a situation where work barely pays above the benefit line for quite a while, until you hit living wage. The worst part is that all the pressure is still downward, because the migrants coming in are quite happy to live 3-4 to a 2 bed social flat and send the profits of their labour back home, which means there’s a constant and reliable supply of “underpriced” labour.

    Sweden lacks the problems associated with these factors, this helps immeasurably with tackling their spending and improving facilities.

  • Paul Danon

    “Borg’s focus is on tax cuts is the low-paid” needs a rewrite.

  • Peter From Maidstone

    You didn’t appear to ask him about the effect of mass immigration in the UK on the prospects of doing anything similar to Sweden.

    There are lots of people looking for jobs in the UK, but most of the jobs are going to immigrants. How does that compare to Sweden?

    • Francis Flynn

      20% of swedens population is born abroad, when were you last in Sweden?

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