Swedish government crises and how to measure well-being in society

by Jörgen Eriksson on December 4, 2014

lofven-crises talkYesterday, the recently elected social democrat-green government in my native Sweden collapsed after two months in power and a snap election was announced to take place on March 22nd 2015.

The crises comes after the new government tried to rule in minority in the parliament, as a populist party won 13% of the vote in the September elections. With this situation, Sweden followed a trend with rising public support for populist parties across Europe.

Recent gains in public opinion by the populist party makes the outcome of the snap election highly uncertain, and this brings instability to the country with a period for at least six months when political decisions will be hard to make and implement.

In United States the rise of the tea party movement has been a similar trend. These populist movements in the advanced economies follows from reduced economic growth in the “recovery” after the great recession and they are a dangerous sign of a disconnect between the public and the political leaders. Because of most countries political systems with representative parliaments, the populist movements gain influence beyond their number of voters, as the more responsible parties in hung parliaments depends on them for implementation of mainstream government, as the crises in Sweden now shows.

Last week we saw a similar action in the European Parliament, when the populist parties called for the newly elected  president of the European Commission, Jean-Claude Juncker to resign, on the same day he presented his ambitious new deal to boost investments in Europe. The new deal can really make a difference for recovery in Europe, but when not even the parliamentarians can stand up and support such a bold initiative, how will it then go down with the general public, and most importantly with investors confidence for Europe?

PopulismHow come we see this trend and is it good or bad for the future? I think we must reject it firmly. Populism has taken left-wing, right-wing, and even centrist forms, as well as forms of politics that bring together groups and individuals of diverse partisan backgrounds on on simple, clearly one-interest views that simplify reality. The populist parties go to elections on one-issues programs (in Sweden the fear of immigration) and they reject proper analysis and sometimes also basic human rights, as they appeal to the electorates feelings instead of their intellects.

Populism appeals to the self-interests, hopes and fears of the general people, especially contrasting those interests with the beliefs and interests of the educated most often more rational minority. Historically,  Populist sentiment contributed to the American Revolutionary War, the rise of Mussolini and Hitler, the political instability in Latin America in the 1970s and 1980s and today to a simplification of complex questions that will shape our future.

I think to a large extent, the populist movements gain traction because of a disconnect between the abstract concepts and explanation models that explain economic growth, unemployment, recessions and in general the complexities in modern society. To counter this, more responsible politicians will need new concepts and tools to describe reality in ways that can be understood by the general public, and we also need to look at development and government more on the smaller scale, in the regions, cities and towns where the mayors and other elected leaders can have a more personal connection with their electorates.

Power and decisions that influence our lives needs to be more local, and the tools for such power can be provided from the abstract level of the EU, the federal government in the United States and international organisations like OECD, The World Bank and the International Monetary fund, who are run by appointed, rational experts. Those abstract levels of government cannot be accepted to be run by populist movements. Throughout history such influence by populists has shown to be disastrous.

How then, can the tools for dialogue with the general public be developed? Let us take one abstract measure as example, GDP, short for gross domestic product, or the value of all products and services produced in a year. GDP estimates are commonly used to measure the economic performance of a whole country or region, but can also measure the relative contribution of an industry sector. This is possible because GDP is a measure of ‘value added’ rather than sales. It adds each firm’s value added as the value of its output minus the value of goods that are used up in producing it.

This measurement is an abstract proxy for the well-being of a society and even though growth in GDP is essential in a society with population growth and important in a society with a need to replace worn infra-structure, very few people in the general public understands this. Few people study economics and even of those few who do, even fewer really understands it.

Currently, no global consensus exists regarding alternatives to GDP. However, there is growing agreement that the continued use of GDP as a proxy for overall well-being is not appropriate. A range of national indicators exist and are being used around the world. On December 1st, there was an article on www.theconversation.com, where the table below was included. It gives food for thought of how to measure well-being, at least in advanced economies.

well being

About Jörgen Eriksson :

Jörgen Eriksson is the founder of Bearing and is the Chairman of the firm since it was created. He has successfully expanded Bearing into covering projects on four continents. He is also Adjunct Professor of Innovation Management at the International University of Monaco and at Universitat Politècnica de Catalunya in Barcelona and he is an active member of the Founders Alliance organisation.

Working with consulting engagements across Bearings practices, he has over the past fifteen years participated in and supervised a large number of client projects, from innovation system development and place development and branding, to merger and acquisition assignments and leading edge research and business development activities for key clients.

His new book, Branding for Hooligans, will be published in 2015. It is about how innovation and branding are key survival factors in our modern times of hyper competitive markets.

Prior to Bearing, he was Director of Europe, Middle East, and Africa for Trema Treasury Management, a technology and consulting services provider, supplying financial software solutions for the global financial industry, Clients included The European Central Bank, Citibank, SEB, South African reserve Bank, Deutsche Bank, Abu Dhabi Investment Authority (ADIA), as well as many other large financial institutions and Fortune 500 companies.

Early in his career Eriksson was educated at the Stockholm School of Economics, where he studied economics, financial economics and philosophy. He then worked in Scandinavian investment banks and also for the Swedish Institute of National Defense Research.

You can contact Jörgen on e-mail jorgen.eriksson@bearing-consulting.com, connect on LinkedIn on http://fr.linkedin.com/pub/jörgen-eriksson/0/38/8a0/ and follow him on twitter on joreri508.

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