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Russia’s National Guard – Reasons and Consequences

The formation of Russia’s National Guard simultaneously addresses a range of political and organisational problems.

Gordon Hahn

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On April 5th Russian President Vladimir Putin signed a series of presidential decrees “transforming” the Internal Troops of the Ministry of Internal Affairs (MVD) into a new “Federal Service of the Troops of the National Guard” (Federal’naya sluzhba Voisk Natsional’noi Gvardii or FSVNG) and transferring the MVD’s 187,571 Internal Troops to the FSVNG and renaming them the National Guard or NG (www.kremlin.ru/acts/news/51648 andhttp://echo.msk.ru/programs/personalno/1742654-echo/). Putin appointed his long-time associate Viktor Vasilievich Zolotov as FSVNG director (www.kremlin.ru/acts/news/51646). He appointed Zolotov to head the MVD’s Internal Troops in October 2014. Although the formal transfer of these troops to the new FSVNG will not be completed until the beginning of 2018, the transfer is de facto already taking place with the formation of the new federal service and the requirement that the MVD coordinate with Zolotov as the transition proceeds and Zolotov now reporting directly to the president rather than through MVD chief.

In making this reorganization, Putin has addressed several problems facing him this year. I emphasize ‘several’ problems, since many analysts tend to focus on one cause to explain events, falling into a bias trap formed by their area of specialization  of study or political or interpretative prejudices or both. In particular, Putin has acquired some robust insurance against political threats both from above and from below.

Putin’s move accomplishes at least six tasks.

First, Putin both consolidated and thus strengthened the troops responsible for ensuring domestic law and order. This reduces the potential for inter-departmental tension, violent conflict, and armed clashes possible in conditions of potential greater instability.

Second, Putin has garnered more capacity to suppress any possible unrest or ‘color revolution’ being hatched around the September Duma elections. He now has more direct control for operations that might be necessary to contain public protests. Opposition forces might attempt to repeat the protests of winter 2011 against the results of the December 2011 Duma election results and spark a ‘color revolution.’ The West’s ‘dual-use’ technology of democracy-promotion aims to create critical masses within non-democratic societies capable of engineering regime change. Whether regime change occurs by way of reform ‘from above’, negotiated ‘transition’, or revolution is of secondary to no concern. Therefore, the color revolution threat in Russia is real. One can expect that in times of near catastrophic U.S.-Russian relations, the desire of many in Washington and Brussles for a color revolution in Russia is even greater. Putin knows this and is preparing to act accordingly. Of course, there is also the possibility that the Kremlin would be faced by a genuinely indigenous revolt not tied to Western patrons or models.

Third, in the FSVNG and NG Putin also has an instrument to protect himself and his loyalists from a less likely, albeit, palace coup. The pressures on the Russian economy, real and perceived foreign policy threats requiring high defense and security expenditures, massive corruption, and the resulting, slightly growing potential for a decline in Putin’s authority inside the regime could split the regime. The guard is added insurance against a regime split, palace coup, or other elite machinations.

Fourth, Putin’s reorganization wrested all siloviki located in Chechnya from the Chechen President Ramzan Kadyrov’s hands. Putin likely conditioned his renewal of support for Kadyrov’s re-election was probably conditioned on the latter’s willingness to surrender to Moscow full control over all MVD, now NG troops and Chechen presidential guard units. Although the MVD transitioned mostly federal control with Putin’s formation of federal districts in 2004 and to full federal control with Medvedev’s reforms, the reality is that in Chechnya and to perhaps some extent in some other powerful Russian regions the local authorities retained considerable control over the MVD branches in their regions. In Chechnya, Kadyrov appeared to have nearly full control over the MVD bodies there. The Kremlin had little choice to at least contain Kadyrov’s ambitions in this way, if it cannot risk attempting to remove him, given Kadyrov’s audacity, volatility, unpredictability, likely crimes, and yet stabilizing role not only in Chechnya but in many ways across much of the North Caucasus. Instability in Chechnya would likely to destabilize other regions of the North Caucasus, especially if the instability in question is jihadist or otherwise religious or supra-ethnic.

Ironically, one upshot of Putin’s move is that it might reduce stability in Chechnya. The reform could entail a purge of former Chechen militants who were brought into the MVD’s Internal Troops in Chechnya, including those brought in when the Chechen MVD incorporated into its internal troops in Chechnya some of the battalions consisting of former militants organized by Kadyrov and ostensibly subordinated to the MVD. Will some of these return to militant or criminal activity, destabilizing the region? Will Kadyrov’s removal from full control over the deployment of internal troops in Chechnya and the need to communicate with Moscow slow down deployment in an emergency counter-terrorism operation? Will Kadyrov’s weakened position allow Moscow to arrest the suspected organizer of Boris Nemtsov’s murder – Ruslan Geremeev, the head of the ‘Sever’ (North) Battalion, formerly subordinated to Kadyrov through the Chechen MVD? If so, how will local Chechens, including Kadyrov, react?

Another irony is that with the NG’s formation and MVD’s reorganization, Putin has acquired a loyal presidential guard not unlike that Kadyrov has possessed.

Fifth, by removing the Internal Troops so it might concentrate on standard police functions, Putin has taken another step in reforming the MVD first begun during Dmitrii Medvedev’s reforms, which have produced a slight improvement in the conduct of police in relation to citizens. Indeed, according to Novaya gazeta, the currently ongoing recertification of MVD personnel will be completed by 2018, whereupon all remaining personnel will be transferred permanently to the FSVNG (www.novayagazeta.ru/politics/72605.html). Simultaneously, Putin compensates the MVD by abolishing the Federal Migration Service (FMC) and Federal Service for State Control of Narcotics and transferring their functions to the MVD. This also involves a certain streamlining, since the MVD staff managing state control of narcotics will be 30 percent less than that under the abolished department (www.kremlin.ru/acts/news/51649). Transferring the migration control to the MVD also makes sense since monitoring immigrants and visitiors to Russia has long been a function shared by the MVD and FMS.

Sixth, by promoting Zolotov, one of his most faithful and long-time associates, into the very top ranks of the siloviki organs, Putin further consolidated his control over the siloviki and overall state apparatus. In 1991 Zolotov worked in the personal protection service in the Kremlin under Putin’s predecessor Boris Yeltsin and can be seen wearing the dark jacket standing behind and above Yeltsin’s chief bodyguard Aleksandr Korzhakov in the famous photograph of Yeltsin atop a tank declaring national resistance to the August 1991 hardline Soviet coup against USSR President Mikhail Gorbachev.

parked-russian-federation-picture-410

Zolotov then served in the body guard service of then St. Petersburg mayor and Putin mentor Anatolii Sobchak before becoming St. Petersburg deputy mayor Putin’s bodyguard. The well-informed editor-inchief of Ekho Moskvy radio, Aleksei Venediktov describes Zolotov as “extremely influential, extremely”—a person who “is not simply a member of his (Putin’s ) team but one who is personally loyal to him,… with whom (Putin) spends his free time, personal time. They played pool and went to meetings about which no one is to know, and answered directly for (Putin’s) safety in particular when he flew to Chechnya” (http://echo.msk.ru/programs/personalno/1742654-echo/).

Putin not only appointed Zolotov to head the new FSVNG and NG, but he also signed a decree making Zolotov a permanent member of Russia’s powerful Security Council (www.kremlin.ru/acts/news/51647). This was a personal, not an ‘ex officio’ appointment—that is, Zolotov was appointed to the Security Council; the position or officeholder of FSVNG director will not have the automatic status as a Security Council permanent member that several other high-ranking positions have. In addition, the FSVNG and Zolotov will be working closely with MVD and its chief Vladimir Kolokoltsev, and Zolotov now reports directly to Putin without, even just in theory, having to go through Kolokoltsev. Among the the FSVNG’s functions are the preservation of public order and security and implementing emergency situations. The decree stipulates that these two functions are to be carried out jointly with the MVD. Also, “operational subordination” involving the deployment of the mobile special OMON forces, the rapid response forces, special operations forces and aviation formerly belonging to the MVD will now be “established by the MVD with the agreement of the FSVNG director” (www.kremlin.ru/acts/news/51648). Two years ago there were Moscow rumors and Western analysts predicting that Kolokoltsev, who is considered a moderate reformer, was soon to be fired and replaced by Zolotov. Thus, Putin has moved one of his most loyal clients into the important Security Council and simulataneously into functions where he can keep an eye on MVD chief Kolokoltsev, a functionary who is not from Putin’s Petersburg and siloviki circles.

~~~~~~~~~~~~~~~

Details from the Decrees on the FSVNG and NG

The presidential decree transfers the Internal Troops from the MVD to the FSVNG. These Internal Troops are now called the National Guard or NG. The FSVNG is part of the executive branch, which is headed by the president of Russia. It is led by a “Director,” and the service’s director is simultaneously the commander of the NG’s troops. The director will have six deputy directors, including a first deputy director who will simultaneously be Chief of Staff of the NG and a “state secretary/deputy director (www.kremlin.ru/acts/news/51648).

The NG comprises just a part of the FSVNG and its troop formations. Also transferred under the FSVNG are the departments of the MVD formerly carrying out the functions now transferred to the FSVNG, including: the rapid reaction forces of the MVD’s territorial sununits; the MVD’s OMON (mobile special forces); the MVD’s Center for special operational response forces and aviation; the MVD administrations and other sub-departments exercising federal oversight over weapons trafficking, personal protection and government personnel security guard service, including the MVD’s Center for Specially Designated Government Personnel Security Protection, and the federal state unitary enterprise ‘Okhrana.’ The rapid reaction forces and special operational forces and aviation remain under the MVD’s operational command, however. The FSVNG’s functions include: preserving public and security and implementing emergency situations jointly with the MVD; counter-terrorism and securing the legal regime counter-terrorist operations; counter-extremism; territorial defense; protection of important state sites and special convoys; assisting the Border Troops of the FSB in protecting the Russia’s borders; monitoring compliance with Russian laws on weapons, private security activity, and extra-departmental protection (www.kremlin.ru/acts/news/51648).

More information on the new service and Guard should be forthcoming once the Cabinet of Ministers determines the number of national guardsmen and drafts a statute as it has been instructed to do in Putin’s decree (www.kremlin.ru/acts/news/51648).

Submitted by Russian and Eurasian Politics Gordon M. Hahn
https://gordonhahn.com/2016/04/14/putins-golden-ticket-the-new-national-guard/

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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.

The Duran

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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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