Volatility of Swedish politics to be on full display Sunday

When former Estonian President Toomas Hendrik Ilves once wished for his country to become “just another boring Nordic country,” it was a way of praising the stability and predictability the world has always seen as the foremost strength of Sweden and its Nordic neighbors.

But whatever the exact outcome of the Swedish national election Sunday, it won’t be boring.

{mosads}The approximate outcome has been known for a long time. The center-left government bloc will get around 40 percent, the Alliance of four center-right parties that governed Sweden 2006-14 will get another 40 percent, and the anti-immigrant Sweden Democrats will hold the balance with around 20 percent.

So for months, all eyes have been on the political chaos that will break out on Monday, when no one has the majority in parliament needed to form a government. Despite Sweden’s reputation for consensus-oriented politics, the two blocs are by tradition angry rivals and would hate to cooperate too closely.

And none of them want to negotiate with the Sweden Democrats. Unlike other European populist parties, it has a recent background in the neo-Nazi movement. And despite the best efforts of its more moderate leader, Jimmie Åkesson, party candidates have to be purged on a regular basis for racist and anti-Semitic ideas.

Anyway, they want to tax like the right and spend like the left and would not be reliable allies of any bloc. So the only thing we know is that Sweden will go without a government for a long time.

How did this happen in boring Sweden? Because the country has never been as stable as the outside world thinks, as I explain in my forthcoming documentary, “Sweden: Lessons for America?”

In fact, Sweden’s history of homogeneity and consensus has often resulted in us being more extreme in applying the ideas of the season, because there are fewer contrarians and fewer speed bumps.

But after having gone too far for far too long, we often retreat and go much further in the other direction than other countries. Swedish politics are not a slow, reliable Volvo car, they are more like a rollercoaster ride.

Our famous Socialist “third way” is a case in point. Even though many Americans still think of Sweden in this way, it was actually just a brief period in the 1970s and 80s. Until then, Sweden had an open economy and lower taxes than most other European countries. This resulted in rapid growth and made it possible for politicians to build big government.

However, this growth in government, increased taxes and heavy regulation took its toll. Kjell-Olof Feldt, the Social Democratic minister of finance 1983-90, admitted later that some of the government’s program was “unsustainable,” some of the policies “absurd” and the tax system “perverse.”

Sweden started to lag behind other countries. Real wages were stagnant for 20 years, and Sweden fell from being the fourth-richest country in the world to the 13th.

At that point, in the middle of an economic crisis, Swedes turned in the other direction. Both center-right and center-left governments moved faster than other countries did to open markets, reduce taxes, reform pensions and introduce choice and competition in the public sector, for example, with school vouchers.

Sweden still has high taxes and public spending, but if you trust the rankings from The Heritage Foundation and The Wall Street Journal, Sweden is now overall more economically free than the United States.

This has removed some economic issues from the campaign. Their place has been taken by immigration and national identity. It’s the same thing all over Europe, but the numbers are bigger here. During the migration crisis of 2015, 163,000 refugees asked for asylum in Sweden, more than in any other European country per capita.

The problem is that Sweden’s welfare state presupposed a homogenous workforce with high education and language skills. High taxes and high de facto minimum wages (due to collective bargaining) make it difficult for less productive workers to get a job.

Unemployment is close to 4 percent for Swedish natives, but over 15 percent for foreign-born residents. Around half of the unemployed are born outside Europe.

The fear that the immigrants would become an unbearable burden on the welfare state, combined with a perception of increased crime, mostly due to gangs fighting over the cannabis market, turned Swedes against generous asylum policies.

The Sweden Democrats, which got less than 13 percent in the 2014 election, increased to 20 percent in the polls.

Since the Social Democrats blocked further reforms of the welfare state, something else had to give. This resulted in the latest radical twist in Swedish politics. After being much more open and generous than others, the Swedish government suddenly closed the borders in late 2015 in agreement with the opposition.

Just months after loud rhetoric about how welcome the refugees were and that the Social Democrats would never build walls, the party launched a public relations campaign about how it kept Sweden safe — by keeping asylum seekers out.

It was an attempt to neutralize the whole issue, but it has left lingering doubts in many voters’ minds about an establishment that seems to make it up as they go along.

The two big parties, the Social Democrats and the center-right Moderates are close to historic lows in the polls. Outsiders are growing, not just the Sweden Democrats, but also the post-communist Left Party and the more libertarian Center Party.

Political polarization and populist insurgents; unpredictability and instability; Sweden is not as boring as we would like any more.

Johan Norberg is a senior fellow at the Cato Institute.