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The Olympics as a Tool of the New Cold War

The allegations of systematic state organised doping by the Russian authorities are founded on the evidence of three compromised individuals and have been presented in a way that denies Russian athletes their fundamental rights.

Andrey Fomin

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This article first appeared and was submitted by Oriental Review with the agreement of the author.

The 6th Fundamental Principle of Olympism (non-discrimination of any kind, including nationality and political opinion) seems to be forgotten long ago.  In ancient Greece the competition of best athletes was able to halt a war and serve as a bridge of understanding between two recent foes.  But in the twentieth century the Olympics have become a political weapon.  Back in 1980 the US and its allies boycotted the games in Moscow as a protest against the Soviet troops that entered Afghanistan at the request of that country’s legitimate government (in contrast, the 1936 Olympics in Nazi Germany were held as usual, to the applause of the “civilised” world).

On May 8, 2016 the CBS program 60 Minutes aired a broadcast about doping in Russia.  The interviews featured recorded conversations between a former staffer with the Russian Anti-Doping Agency (RUSADA), Vitaly Stepanov, and the ex-director of Russia’s anti-doping laboratory in Moscow, Grigory Rodchenkov.  That program was just the fourth instalment in a lengthy series about the alleged existence of a system to support doping in Russian sports.

A few days later the New York Times published an interview with Rodchenkov.  There that former official claims that a state-supported doping program was active at the Sochi Olympics, and that the orders for that program had come almost directly from the Russian president.

One important fact that escaped most international observers was that a media campaign, which had begun shortly after the 2014 deep freeze in Russian-Western relations, was constructed around the “testimonies” of three Russian citizens who were all interconnected and complicit in a string of doping scandals, and who later left Russia and are trying to make new lives in the West.

Yulia Stepanova née Rusanova

A 29-year-old middle-distance runner, Yulia Stepanova, can be seen as the instigator of this scandal. This young athlete’s personal best in global competition was a bronze medal at the European Athletics Indoor Championship in 2011.  At the World Championships that same year she placed eighth. 

Stepanova’s career went off the rails in 2013, when the Russian Athletic Federation’s Anti-Doping Commission disqualified her for two years based on “blood fluctuations in her Athlete Biological Passport.” Such fluctuations are considered evidence of doping.  All of Stepanova’s results since 2011 have been invalidated.  In addition, she had to return the prize money she had won running in professional races in 2011-2012. 

Stepanova, who had been suspended for doping, acted as the primary informant for ARD journalist Hajo Seppelt, who had begun filming a documentary about misconduct in Russian sports.  After the release of ARD’s first documentary in December 2014, Stepanova left Russia along with her husband and son.  In 2015 she requested political asylum in Canada.  Even after her suspension ended in 2015, Stepanova told the WADA Commission (p.142 of the November 2015 WADA Report) that she had tested positive for doping during the Russian Track and Field Championships in Saransk in July 2010 and paid 30,000 rubles (approximately $1,000 USD at that time) to the director of the Russian anti-doping laboratory in Moscow, Gregory Rodchenkov, in exchange for concealing those test results.

Vitaly Stepanov

Yulia Stepanova’s husband is Vitaly Stepanov, a former staffer at RUSADA.  He had lived and studied in the US since he was 15, but later decided to return to Russia.  In 2008, Vitaly Stepanov began working for RUSADA as a doping-control officer.  Vitaly met Yulia Rusanova in 2009 at the Russian national championships in Cheboksary. 

Stepanov now claims that he sent a letter to WADA detailing his revelations back in 2010, but never received an answer.  In 2011 Stepanov left RUSADA. One fact that deserves attention is that Vitaly has confessed that he was fully aware that his wife was taking banned substances, both while he worked for RUSADA as well as after he left that organisation. Take note that Stepanova’s blood tests went positive starting in 2011 – i.e., from the time that her husband, an anti-doping officer, left RUSADA.

With a clear conscience, the Stepanovs, now married, accepted prize money from professional races until Yulia was disqualified.  Then they no longer had a source of income and the prize money suddenly had to be returned, at which point Vitaly Stepanov sought recourse in foreign journalists, offering to tell them the “truth about Russian sports.”  In early June he admitted that WADA had not only helped his family move to America, but had also provided them with $30,000 in financial assistance.

Gregory Rodchenkov

And finally, the third figure in the campaign to expose doping in Russian sports – the former head of the Russian anti-doping laboratory in Moscow, Gregory Rodchenkov. 

According to Vitaly Stepanov, he was the man who sold performance-enhancing drugs while helping to hide their traces, and had also come up with the idea of “doped Chivas mouth swishing” (page 50), a technique that transforms men into Olympic champions.

This 57-year-old native of Moscow is acknowledged to be the best at what he does.  He graduated from Moscow State University with a Ph.D. in chemistry and began working at the Moscow anti-doping lab as early as 1985.  He later worked in Canada and for Russian petrochemical companies, and in 2005 he became the director of Russia’s national anti-doping laboratory in Moscow. 

In 2013 Marina Rodchenkova – Gregory Rodchenkov’s sister – was found guilty and received a sentence for selling anabolic steroids to athletes.  Her brother was also the subject of a criminal investigation into charges that he supplied banned drugs.  Threatened with prosecution, Gregory Rodchenkov began to behave oddly and was repeatedly hospitalized and “subjected to a forensic psychiatric examination.”  A finding was later submitted to the court, claiming that Rodchenkov suffered from “schizotypal personality disorder,” exacerbated by stress.  As a result, all the charges against Rodchenkov were dropped. 

But the most surprising thing was that someone with a “schizotypal personality disorder” and a sister convicted of trafficking in performance-enhancing drugs continued as the director of Russia’s only WADA-accredited anti-doping laboratory.  In fact, he held this job during the 2014 Olympics.  Rodchenkov was not dismissed until the fall of 2015, after the eruption of the scandal that had been instigated by the broadcaster ARD and the Stepanovs. 

In September 2015 the WADA Commission accused Rodchenkov of intentionally destroying over a thousand samples in order to conceal doping by Russian athletes.  He personally denied all the charges, but then resigned and left for the US where he was warmly embraced by filmmaker Bryan Fogel, who was shooting yet another made-to-order documentary about doping in Russia.

Professor Richard H. McLaren

As this article is being written, the International Olympic Committee (IOC) is studying a report  from an “independent Person,” the Canadian professor Richard H. McLaren, who has accused the entire Russian Federation, not just individual athletes, of complicity in the use of performance-enhancing drugs. 

McLaren was quickly summoned to speak with WADA shortly after the NYT published interview with Rodchenkov.  The goal was clear: to concoct a “scientific report” by mid-July that would provide the IOC with grounds to ban the Russian team from the Rio Olympics. 

At a press conference on July 18 McLaren himself acknowledged that with a timeline of only 57 days he was unable “to identify any athlete that might have benefited from such manipulation to conceal positive doping tests.” 

WADA’s logic here is clear – they need to avoid any accusations of bias, unprofessionalism, embellishment of facts, or political partisanship.  No matter what duplicity and lies are found in the report – it was drafted by an “independent person,” period. 

However, McLaren does not try to hide the fact that the entire report is based on the testimony of a single person – Rodchenkov himself, who is repeatedly presented as a “credible and truthful” source.  Of course that man is accused by WADA itself of destroying 1,417 doping tests and faces deportation to Russia for doping-linked crimes, but he saw an opportunity to become a “valuable witness” and “prisoner of conscience” who is being persecuted by the “totalitarian regime” in Russia.

The advantage enjoyed by this “independent commission” – on the basis of whose report the IOC is deciding the fate of Russia’s Olympic hopefuls – is that its accusations will not be examined in court, nor can the body of evidence be challenged by the lawyers for the accused.  Nor is the customary legal presumption of innocence anywhere in evidence.

It appears from Professor McLaren’s statement that no charges will be brought against any specific Russian athletes.  Moreover, they can all compete if they refuse to represent Russia at the Olympics. 

There are obvious reasons for this selectivity.  A law professor and longstanding member of the Court of Arbitration for Sport, Professor McClaren knows very well that any charges against specific individuals that are made publicly and result in “legally significant acts” (such as a ban on Olympic participation) can and will be challenged in court, in accordance with international law and on the basis of the presumption of innocence.  All the evidence to be used by the prosecution is subject to challenge, and if some fact included in those charges can be interpreted to the defendant’s advantage, then the court is obliged to exclude that fact from the materials at the disposal of the prosecution.

As a lawyer, McLaren understands all this very well.  Hundreds of lawsuits filed by Russian athletes resulting in an unambiguous outcome would not only destroy his reputation and ruin him professionally – they could form the basis of a criminal investigation with obvious grounds for accusing him of intentionally distorting a few facts, which in his eyes can be summarised as follows:

During the Sochi Olympics, an FSB officer named Evgeny Blokhin switched the doping tests taken from Russian athletes, exchanging them for “clean” urine samples.  This agent is said to have possessed a plumbing contractor’s security clearance, allowing him to enter the laboratory.  In addition, there are reports that Evgeny Kurdyatsev, – the head of the Registration and Biological Sample Accounting Department – switched the doping tests at night, through a “mouse hole” in the wall (!).  Awaiting them in the adjacent building was the man who is now providing  “credible evidence” – Gregory Rodchenkov – and some other unnamed individuals, who passed Blokhin the athletes’ clean doping tests to be used to replace the original samples.  If the specific gravity of the clean urine did not match the original profile, it was “adapted” using table salt or distilled water. 

But of course the DNA was incompatible!  And all of this was going on in the only official, WADA-accredited anti-doping laboratory in Russia!

How would something like that sound in any court?  We have witnesses, but the defence team cannot subject them to cross-examination.  We cannot prove that Blokhin is an FSB agent, but we believe it.  We do not possess any of the original documents – not a single photograph or affidavit from the official examination – but we have sufficient evidence from a single criminal who has already confessed to his crime.  We did not submit the emails provided by Rodchenkov to any experts to be examined, but we assert that the emails are genuine, that all the facts they contain are accurate, and that the names of the senders are correct.  We cannot accuse the athletes, so we will accuse and punish the state!

To be honest, we still do not believe that the Olympic movement has sunk so low as to deprive billions of people of the pleasure of watching the competitions, forgetting about politics and politicians.  That would mean waving goodbye to the reputations of the WADA and the IOC and to the global system of sports as a whole. 

Perhaps a solution to the colossal problem of doping is long overdue, but is that answer to be found within the boundaries of only one country, even a great country like Russia?  Should we take a moment here and now to dwell upon the multi-volume history of doping scandals in every single country in the world?  And in view of these facts that have come to light, is not WADA itself the cornerstone of the existing and far-reaching system to support and cover up athletic doping all over the world?

In conclusion, we cite below the complete translation of the Russian Olympic Committee’s statement in response to the WADA report:

“The accusations against Russian sports found in the report by Richard McLaren are so serious that a full investigation is needed, with input from all parties.  The Russian Olympic Committee has a policy of zero tolerance and supports the fight against doping.  It is ready to provide its full assistance and work together, as needed, with any international organisation.

We wholeheartedly disagree with Mr. McLaren’s view that the possible banning of hundreds of clean Russian athletes from competition in the Olympic Games is an acceptable ‘unpleasant consequence’ of the charges contained in his report.

The charges being made are primarily based on statements by Grigory Rodchenkov.  This is solely based on testimony from someone who is at the epi-centre of this criminal scheme, which is a blow not only to the careers and fates of a great many clean athletes, but also to the integrity of the entire international Olympic movement.

Russia has fought against doping and will continue to fight at the state level, steadily stiffening the penalties for any illegal activity of this type and enforcing a precept of inevitable punishment.

The Russian Olympic Committee fully supports the harshest possible penalties against anyone who either uses banned drugs or encourages their use.

At the same time, the ROC – acting in full compliance with the Olympic Charter – will always protect the rights of clean athletes.  Those who throughout their careers – thanks to relentless training, talent, and willpower – strive to realise their Olympic dreams should not have their futures determined by the unfounded, unsubstantiated accusations and criminal acts of certain individuals.  For us this is a matter of principle.”

 

The author is the Editor of Oriental Review.

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“I’m Not A Racist, But I’m A Nationalist”: Why Sweden Faces A Historic Election Upset

Sweden is set to have a political earthquake in September.

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Via Zerohedge


“Trains and hospitals don’t work, but immigration continues,” Roger Mathson, a retired vegetable oil factory worker in Sweden, told Bloomberg on the same day as the violent, coordinated rampage by masked gangs of youths across five Swedish cities.

We noted earlier that Swedish politicians were quick to react with anti-immigrant party ‘Sweden Democrats’ seeing a surge in the polls ahead of the September 9th election.

“I’m not a racist, but I’m a nationalist,” Mathson said. “I don’t like seeing the town square full of Niqab-clad ladies and people fighting with each other.”

Is Sweden set to have its own political earthquake in September, where general elections could end a century of Social Democratic dominance and bring to power a little known (on the world stage), but the now hugely popular nationalist party often dubbed far-right and right-wing populist, called Sweden Democrats?

Sweden, a historically largely homogeneous population of 10 million, took in an astounding 600,000 refugees over the past five years, and after Swedes across various cities looked out their windows Tuesday to see cars exploding, smoke filling the skies, and possibly armed masked men hurling explosives around busy parking lots, it appears they’ve had enough.

Over the past years of their rise as a political force in Swedish politics, the country’s media have routinely labelled the Sweden Democrats as “racists” and “Nazis” due to their seemingly single issue focus of anti-immigration and strong Euroscepticism.

A poll at the start of this week indicated the Sweden Democrats slid back to third place after topping three previous polls as the September election nears; however, Tuesday’s national crisis and what could legitimately be dubbed a serious domestic terror threat is likely to boost their popularity.

Bloomberg’s profile of their leader, Jimmie Akesson, echoes the tone of establishment Swedish media in the way they commonly cast the movement, beginning as follows:

Viking rock music and whole pigs roasting on spits drew thousands of Swedes to a festival hosted by nationalists poised to deliver their country’s biggest political upheaval in a century.

The Sweden Democrats have been led since 2005 by a clean-cut and bespectacled man, Jimmie Akesson. He’s gentrified a party that traces its roots back to the country’s neo-Nazi, white supremacist fringe. Some polls now show the group may become the biggest in Sweden’s parliament after general elections on Sept. 9. Such an outcome would end 100 years of Social Democratic dominance.

The group’s popularity began surging after the 2015 immigration crisis began, which first hit Europe’s southern Mediterranean shores and quickly moved northward as shocking wave after wave of migrants came.

Jimmie Akesson (right). Image source: Getty via Daily Express

Akesson emphasizes something akin to a “Sweden-first” platform which European media often compares to Trump’s “America First”; and the party has long been accused of preaching forced assimilation into Swedish culture to be become a citizen.

Bloomberg’s report surveys opinions at a large political rally held in Akkeson’s hometown of Solvesborg, and some of the statements are sure to be increasingly common sentiment after this week’s coordinated multi-city attack:

At his party’s festival, Akesson revved up the crowd by slamming the establishment’s failures, calling the last two governments the worst in Swedish history. T-shirts calling for a Swexit, or an exit from the EU, were exchanged as bands played nationalist tunes.

Ted Lorentsson, a retiree from the island of Tjorn, said he’s an enthusiastic backer of the Sweden Democrats. “I think they want to improve elderly care, health care, child care,” he said. “Bring back the old Sweden.” But he also acknowledges his view has led to disagreement within his family as his daughter recoils at what she feels is the “Hitler”-like rhetoric.

No doubt, the media and Eurocrats in Brussels will take simple, innocent statements from elderly retirees like “bring back the old Sweden” as nothing short of declaration of a race war, but such views will only solidify after this week.

Another Sweden Democrat supporter, a 60-year old woman who works at a distillery, told Bloomberg, “I think you need to start seeing the whole picture in Sweden and save the original Swedish population,” she said. “I’m not racist, because I’m a realist.”

Sweden’s two biggest parties, the Social Democrats and Moderates, are now feeling the pressure as Swedes increasingly worry about key issues preached by Akesson like immigration, law and order, and health care – seen as under threat by a mass influx of immigrants that the system can’t handle.

Bloomberg explains further:

But even young voters are turning their backs on the establishment. One potential SD supporter is law student Oscar Persson. Though he hasn’t yet decided how he’ll vote, he says it’s time for the mainstream parties to stop treating the Sweden Democrats like a pariah. “This game they are playing now, where the other parties don’t want to talk to them but still want their support, is something I don’t really understand,” he said.

Akesson has managed to entice voters from both sides of the political spectrum with a message of more welfare, lower taxes and savings based on immigration cuts.

With many Swedes now saying immigration has “gone too far” and as this week’s events have once again thrust the issue before both a national and global audience, the next round of polling will mostly like put Sweden’s conservative-right movements on top

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The Turkish Emerging Market Timebomb

Turkish President Recep Tayyip Erdoğan’s populist economic policies have finally caught up to him.

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Authored by Jim O’Neill, originally on Project Syndicate:


As the Turkish lira continues to depreciate against the dollar, fears of a classic emerging-market crisis have come to the fore. Turkish President Recep Tayyip Erdoğan’s populist economic policies have finally caught up to him, and sooner or later, he will have to make nice with his country’s traditional Western allies.

Turkey’s falling currency and deteriorating financial conditions lend credence, at least for some people, to the notion that “a crisis is a terrible thing to waste.” I suspect that many Western policymakers, in particular, are not entirely unhappy about Turkey’s plight.

To veteran economic observers, Turkey’s troubles are almost a textbook case of an emerging-market flop. It is August, after all, and back in the 1990s, one could barely go a single year without some kind of financial crisis striking in the dog days of summer.

But more to the point, Turkey has a large, persistent current-account deficit, and a belligerent leader who does not realize – or refuses to acknowledge – that his populist economic policies are unsustainable. Moreover, Turkey has become increasingly dependent on overseas investors (and probably some wealthy domestic investors, too).

Given these slowly gestating factors, markets have long assumed that Turkey was headed for a currency crisis. In fact, such worries were widespread as far back as the fall of 2013, when I was in Istanbul interviewing business and financial leaders for a BBC Radio series on emerging economies. At that time, markets were beginning to fear that monetary-policy normalization and an end to quantitative easing in the United States would have dire consequences globally. The Turkish lira has been flirting with disaster ever since.

Now that the crisis has finally come to pass, it is Turkey’s population that will bear the brunt of it. The country must drastically tighten its domestic monetary policy, curtail foreign borrowing, and prepare for the likelihood of a full-blown economic recession, during which time domestic saving will slowly have to be rebuilt.

Turkish President Recep Tayyip Erdoğan’s leadership will both complicate matters and give Turkey some leverage. Erdoğan has  constitutional powers, reducing those of the parliament, and undercutting the independence of monetary and fiscal policymaking. And to top it off, he seems to be reveling in an escalating feud with US President Donald Trump’s administration over Turkey’s imprisonment of an American pastor and purchase of a Russian S-400 missile-defense system.

This is a dangerous brew for the leader of an emerging economy to imbibe, particularly when the United States itself has embarked on a Ronald Reagan-style fiscal expansion that has pushed the US Federal Reserve to raise interest rates faster than it would have otherwise. Given the unlikelihood of some external source of funding emerging, Erdoğan will eventually have to back down on some of his unorthodox policies. My guess is that we’ll see a return to a more conventional monetary policy, and possibly a new fiscal-policy framework.

As for Turkey’s leverage in the current crisis, it is worth remembering that the country has a large and youthful population, and thus the potential to grow into a much larger economy in the future. It also enjoys a privileged geographic position at the crossroads of Europe, the Middle East, and Central Asia, which means that many major players have a stake in ensuring its stability. Indeed, many Europeans still hold out hope that Turkey will embrace Western-style capitalism, despite the damage that Erdoğan has done to the country’s European Union accession bid.

Among the regional powers, Russia is sometimes mentioned as a potential savior for Turkey. There is no doubt that Russian President Vladimir Putin would love to use Turkey’s crisis to pull it even further away from its NATO allies. But Erdoğan and his advisers would be deeply mistaken to think that Russia can fill Turkey’s financial void. A Kremlin intervention would do little for Turkey, and would likely exacerbate Russia’s own .

The other two potential patrons are Qatar and, of course, China. But while Qatar, one of Turkey’s closest Gulf allies, could provide financial aid, it does not ultimately have the wherewithal to pull Turkey out of its crisis singlehandedly.

As for China, though it will not want to waste the opportunity to increase its influence vis-à-vis Turkey, it is not the country’s style to step into such a volatile situation, much less assume responsibility for solving the problem. The more likely outcome – as we are seeing in Greece – is that China will unleash its companies to pursue investment opportunities after the dust settles.

That means that Turkey’s economic salvation lies with its conventional Western allies: the US and the EU (particularly France and Germany). On August 13, a White House spokesperson confirmed that the Trump administration is watching the financial-market response to Turkey’s crisis “very closely.” The last thing that Trump wants is a crumbling world economy and a massive dollar rally, which could derail his domestic economic ambitions. So a classic Trump “trade” is probably there for Erdoğan, if he is willing to come to the negotiating table.

Likewise, some of Europe’s biggest and most fragile banks have significant exposure to Turkey. Combine that with the ongoing political crisis over migration, and you have a recipe for deeper destabilization within the EU. I, for one, cannot imagine that European leaders will sit by and do nothing while Turkey implodes on their border.

Despite his escalating rhetoric, Erdoğan may soon find that he has little choice but to abandon his isolationist and antagonistic policies of the last few years. If he does, many investors may look back next year and wish that they had snapped up a few lira when they had the chance.

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Why Scandinavia Isn’t Exceptional

Scandinavia is entirely unexceptional.

The Duran

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Authored by Per Bylund via The Mises Institute:


[From the Quarterly Journal of Austrian Economics.]

The Scandinavian countries, and primary among them Sweden, are commonly referred to as anomalies or inspirations, depending on one’s political point of view. The reason is that the countries do not appear to fit the general pattern: they are enormously successful whereas they “shouldn’t” be. Indeed, Scandinavians enjoy very high living standards despite having very large, progressive welfare states for which they pay the world’s highest taxes.

As a result, a large and growing literature, both propagandist and scholarly, has emerged that tries to identify the reasons for this Scandinavian exceptionalism—especially as pertains to their welfare states. I have myself contributed to this literature1 and have previously reviewed others’ contributions to it in this journal.2 But what has been missing is a summary analysis that is accessible to non-scholars. It was therefore a delight to read Nima Sanandaji’s Scandinavian Unexceptionalism: Culture, Markets, and the Failure of Third-Way Socialism, published by British Institute for Economic Affairs.

Dr. Sanandaji is a political-economy analyst and writer, well known in both Sweden and Europe, and as expected does an excellent job summarizing the state of scholarship. He also uses examples and quotes from articles published in Scandinavian news media to illustrate the narrative. The result is a short and informative but easy to read answer to both how and why the Scandinavian welfare states seem to work so well.

The short book provides the reader with insight into Scandinavian culture, an explanation of the causes of the nations’ exceptional rise from poverty, an overview of their recent political-economic history, the distinct structure and evolution of the Scandinavian welfare state, the origins of their egalitarianism and gender equality, and the effect of immigration. I will briefly touch on three of these areas.

First, Sanandaji makes clear that the rosy story of the Scandinavian welfare state, as it is usually told, is at best incomplete. The Scandinavian countries were among the European continent’s poorest by the end of the 19th century and were largely unaffected by the industrialization that had started centuries earlier in the United Kingdom. A combination of classical liberal reform and the adoption of industrialized production created a century-long “golden age,” as Bergh (2014) denotes the period approximately 1870–1970 in Sweden, of economic growth and rapidly rising standards of living.

This growth was partly also made possible by a distinct Scandinavian culture, which is characterized by the “[h]igh levels of trust, a strong work ethic and social cohesion [that] are the perfect starting point for successful economies” (p. 7). As Sanandaji points out, the market-aligned virtues of Scandinavian culture also explain the limited impact of the welfare state as it was erected and ballooned in the 1930s and beyond. Cultural change takes time, and thus old values lag in the face of political change. So it took time for the Scandinavian virtues to give way to the destructive incentives of the welfare state.

It should also be noted, though Sanandaji fails to make this point clearly, that after the welfare state was established, and during its several decades of expansion, it’s growth rate tended to be lower than that of the overall economy. The increasing burden was therefore, in relative terms, marginal. That is, until the radical 1960s and 1970s when Scandinavian governments, and the Swedish government in particular, adopted very expansionist welfare policies. (This political shift is analyzed in detail in, e.g., Bergh.)3

Sanandaji also presents interesting data with respect to Scandinavian gender equality. His discussion begins with the internationally enviable women’s labor market participation rate in Scandinavian countries, and especially Sweden. The background, however, is that Sweden’s government had adopted a radical agenda for population control formulated by Gunnar and Alva Myrdal (yes, the same Gunnar Myrdal who shared the 1974 economics prize with Hayek). The gist of this reform was to enforce a shared responsibility between parents and “the community” for children’s upbringing. By raising taxes on income while offering government-run daycare services, families were incentivized (if not “forced,” economically speaking) to secure two full-time incomes.

Interestingly, while this indeed rapidly increased women’s participation in the labor market, Sanandaji notes that “few women in the Nordic nations reach the position of business leaders, and even fewer manage to climb to the very top positions of directors and chief executives” (p. 102). Part of the reason is that jobs that women typically choose, including education and healthcare, are monopolized in the vast public sectors. As a result, women at trapped in careers where employers do not compete for their competence and many leadership positions are political.

This development is indirectly illustrated in a terrifying statistic from Sweden’s labor market: “Between 1950 and 2000, the Swedish population grew from seven to almost nine million. But astonishingly the net job creation in the private sector was close to zero” (p. 33).

Finally, Sanandaji addresses the issue of immigration and shows that the Scandinavian nations were exceptionally good at integration, with greater labor participation for immigrants than other Western nations, prior to the radicalization of the welfare state. Thereafter, due to rigid labor regulations and vast welfare benefits, immigrants were more or less kept out of Scandinavian job markets.

The literature identifies two potential explanations. First, the anti-business and job-protection policies practically exclude anyone with a lack of work experience, highly sought-after skills, or those with lacking proficiency in the language or limited network. This keeps immigrants as well as young people unemployed (the very high youth unemployment rates in Scandinavia illustrate this problem). Second, the promises of the universal welfare state tend to attract people who are less interested in working their way to the top and thus have a lacking work ethic.

This explains the recent problems in Scandinavia with respect to immigration, which is essentially an integration and policy problem — not a foreign-people problem.

Overall, Sanandaji’s book provides plenty of insights and a coherent explanation for the rise of the Scandinavian nations and their welfare states. Their impressive standard of living is a free-market story, which is rooted in an economically sound culture. This culture also supported the welfare state, until decades of destructive incentives eroded the nations’ sound values. The welfare state, after its radicalization, was soon crushed under its own weight, and Scandinavia has since undergone vast free-market reforms that again have contributed to economic growth and prosperity.

Considering the full story, Sanandaji summarizes the example of the Northern European welfare states simply and bluntly: “Scandinavia is entirely unexceptional.”

  • 1.Bylund, Per L. 2010. “The Modern Welfare State: Leading the Way on the Road to Serfdom.” In Thomas E. Woods, ed., Back on the Road to Serfdom: The Resurgence of Statism. Wilmington, Del.: ISI Books.
  • 2.2015. “Book Review: Sweden and the Revival of the Capitalist Welfare State by Andreas Bergh,” Quarterly Journal of Austrian Economics 18, no. 1: 75–81.
  • 3.Bergh, Andreas. 2014. Sweden and the Revival of the Capitalist Welfare State. Cheltenham, U.K.: Edward Elgar.

Per Bylund is assistant professor of entrepreneurship & Records-Johnston Professor of Free Enterprise in the School of Entrepreneurship at Oklahoma State University. Website: PerBylund.com.

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