There are, we’re often told, no atheists in fox holes. I don’t know if that’s true but I would say that there are no purist free market Hayekians during a global economic meltdown. As we stare into the abyss created by decades of deregulation and lax oversight, of cheap credit as a substitute for social policy, of central bankers cheering on the ballooning of each fresh new financial bubble until the very moment of popping, we find that surprising sources are now calling on the strong arm of the state to save the system from its self-generated implosion.
One noteworthy sign of the times is an essay by David Rosenberg, chief economist of Merrill Lynch, which argues that the USA should look to Sweden, which dealt with a similar crisis in the early 1990s swiftly and efficiently using “heavy doses of government intervention.” Rosenberg’s analysis is very informed and detailed; I hope it gets widely read in policy circles. (The essay is courtesy of the all-seeing Doug Henwood, a veritable Argus_Panoptes on economic matters).
There is one problem with the Swedish model. As free market ideologue Tyler Cowen confesses: “There are many things we do not do as well as the Swedes.” I’m not exactly sure what Cowen means by that. Surely there is no Swedish gene that gives these admirable Nordics the ability to govern themselves with greater skill than other nations. Isn’t America the can-do nation? It’s unlikely that the United States will ever give birth to a filmmaker as great as Ingmar Bergman, but still I think that the economic and political lessons of Sweden are more portable than its stellar cultural achievements.