When the common European currency was launched, Milton Friedman predicted with eerie foresight: “Sooner or later, when the global economy hits a real bump, Europe’s internal contradictions will tear it apart.”
In 2003, Sweden held a referendum on the issue of joining the EMU. The Swedish elite on both the left and the right virtually uniformly supported joining. The Economist at the time described the referendum as “the people versus the establishment.”
Due to a guerrilla campaign and with a help of a number of independent minded economist (most prominently Lars Wohlin and Nils Lundgren), the people defeated the establishment, saving Sweden from the Eurozone meltdown. Sweden is performing better than the Eurozone countries economically. Key economic indicators from the OECD:
GDP Growth 2008-2012:
Unemployment rate 2012:
Government finances 2011:
Sweden: +0.1% (small surplus)
Eurozone: -4.1% (large deficit)
Increase in Debt as a share of GDP 2008-2012:
Sweden: -0.6 percentage points (reduction of debt)
Eurozone +20.4 percentage points (large increase of debt)
Debt as a share of GDP 2012:
The Swedish pubic have soured further regarding the Euro as they watch the European economy burn down around us every night on the new. Here is a graph of public opinion:
(click to enlarge)
What is interesting is the reaction of Swedish establishment. Despite the disastrous consequences of the Currency Union, the elites by and large still support Sweden joining the Euro! Parties currently representing 75% of the seats in parliament officially still support Sweden joining the Euro (S, M, FP, KD). Strikingly, no Swedish political party has changed its position on the Euro following the Eurozone economic meltdown.
Opposition to the Euro is still portrayed as “populism”. Sweden’s Europe-minister Birgitta Ohlsson describes opposition to the Euro as driven by “fear”. Political scientists Sören Holmberg argues that opposition to the EU among the public is due to Swedes being ”opportunistic” and temporarily laying guilt (“skuld”) for the bad times the on the EU.
Opportunistic means selfishly taking advantage of circumstances and exploiting others. But who is exploiting whom? Sweden has always been a net contributor to the EU, paying in far in excess of what we get back.
This leads to the interesting question, of the definition of “populism” is. The definition of populism cannot simply be the view of the populous as contrasted with the view of the elite, regardless of who is right. I interpret populism as irrational views held by the public as contrasted with more scientific views held by the elite. The self-image of elites is that they have enlightened views, while the public is driven by dark and irrational emotions such as fear of The Other. The role of the elite is therefore to make decisions against the wishes of the masses, and to use its influence in academia and media to gradually alter populist views.
In the case of the Euro however, the Swedish political elite is ill-informed and wrong and the Swedish public right. The main experts on the subject, academic macroeconomists, largely side with the Euro-skeptic “populists”.
David Frum writes: “Twenty years ago the leaders of Europe agreed on a bold step: a new currency called the euro. They promised that the euro would improve life for everybody—and denounced all opposition as ignorant, xenophobic, and backward. Their words gained extra plausibility because many of the opponents of the euro really were ignorant, xenophobic, and backward. Yet the backward critics were right, and the enlightened proponents were wrong.”
Indeed, the public is more fact-driven than the emotional elites. In 2003 the public sided with the economiss such as Milton Friedman who argued that a common Currency was not good for the economy. The European elites by contrast were driven by more romantic arguments, such as the myth that without the European Union western Europe would have been engulfed in war. After witnessing that the Euro-experiment failed, the Swedish public become more negative inclined towards the Euro. Occam’s razor is that voters have become more skeptical toward the Euro as a result of the economic meltdown caused by the Euro, a reasonable and legitimate conclusion.
In order to undermine Euroscepticism, the media instead describes these rational cost-benefit concerns in a moralistic, emotional language. Critics are is described as driven by “fear” and “populism” and “scapegoating” (“skuldbelägger”) the EU. The purpose of using loaded terms such as “skuld” is to manipulate the reader by adding sinister moral dimensions to factual statements.
In contrast to the public, the Swedish political parties did not change their conclusions based on new information regarding the economic performance of the Euro. They have the same view about joining the Euro in 2013 as they did in 2003, new data be damned. Why did facts not change elite conclusions? Because their conclusions were not based on facts in the first place, they were based on emotional sentiment. The philosophy of Birgitta Ohlsson can best be summarized as “EU good, Sweden bad”.
The aim of the Swedish establishment is increasingly to move public discourse away from logic and facts and Logos (where they will lose the debate) and to emotions and morality and Pathos (where the public can more easily be manipulated). This is not being enlightened, it’s the exact opposite.