Roland Huntford, The New Totalitarians: A Terrifying Portrait of an 'Ideal' Society That Has Destroyed Democracy. New York: Stein and Day, 1971.
Roland Hunter wrote an excellent book about Swedish society that was published in 1971. In the first two chapters Hunter portrays the Swedish economy as vibrant. He insightfully describes the history of the Swedish people. The Swedes never evolved out of medieval tribalism. Like the Russians, their propensity for collectivism is linked to peasant communism and strip farming, which was not abolished until 1827. The medieval peasant culture continued unabated until the 1950s (not a typo) through the bruk, "an industrial settlement lying away from the towns, out in the countryside...In the isolation of these small colonies, there grew up a powerful sense of community...it was the cradle of the Swedish welfare state. The bruk, unlike the village, belonged to one man. He owned their houses, and tenancy was tied to the job. Until late in the nineteenth century a bruk worker could not change employers without permission...If the bruk worker was not free, he was at least looked after by his master...Within the bruks, ancient Swedish attitudes were preserved without interruption..."
The limits on monarchical power that feudalism set in England and France were missing from Sweden as they were from Russia. The Swedes were not Christianized until the twelfth century. They were never occupied by the Romans. Barbarian culture continued in rural areas until the nineteenth century, and its current culture is heavily influenced by the barbaric tradition. Sweden's remoteness served to preserve its medieval mindset. Moreover, Sweden has a long history of rule by bureaucrats. "Since the early Middle Ages, many of the Swedish nobility had been dutiful royal functionaries...The identification of aristocracy and civil service has conferred on the Swedish bureaucrat a unique supremacy." The archetypal bureaucrats were King Gustav Vasa who centralized authority by introducing the idea of the despotic prince, which he adapted from renaissance Italy; King Gustavus Adolphus who organized the Swedish military; and Oxenstierna, the Chancellor under Gustavus Adolphus who organized the centralized bureaucracy. The church also traditionally played a bureaucratic role. Although Sweden became Protestant, it was not Calvinist. The church was tightly controlled by the monarch, and it was authoritarian and intolerant. "The country has always been divided into a mass of peasantry and a thin crust of merchants and bureaucrats at the top, subservient to the monarchy." In this way it parallels Russia.
Sweden nearly conquered Europe when Gustavus crossed the Baltic in 1621, invaded Poland and Germany, and reached Munich. But he fell in the Battle of Lutzen and Swedish military ambitions came to an end at Poltava, when the Swedes capitulated to the Russians without firing a shot (p. 30). Since then, and a similar defeat in Perevelotchna, the Swedes remained neutral, pleading for neutrality in the Congress of Vienna in 1815 and siding with Germany in what they called active neutrality in World War I. Although putatively neutral, Sweden assisted Hitler in World War II by permitting German access to Sweden for movement of troops and supplies until in 1943 it was obvious that the Germans would lose. Then they switched sides.
Swedes define themselves as members of gilds or groups, and Hunter argues that this is one of the many remnants of medieval culture in their society. The Renaissance asserted individuality while the Swedes, like the Russians, abjure individuality because the Renaissance never took hold in Sweden.
Only four or five "aristocratic" families dominate Swedish economic life (p. 81), for instance the Brostroms of Gothenburg and the Johnsons of Stockholm. The most important is the Wallenbergs. Swedish capitalists "have always identified themselves with the State, even after the accession of the Social Democrats...This interplay of bureaucratic control, acquiescence and private identification with the State smooths official control" (p. 81). This would seem to parallel the ambitions of "left wing" American capitalists such as the Ochs Sulzbergers, George Soros and Warren Buffett. There is probably somewhat greater opportunism here, but the aim of establishing themselves as an entrenched elitist aristocracy through punitive taxation of non-trusted estates and high income tax rates of "commoners" who might legitimately pose competition to their inefficient businesses likely motivates them.
Sweden's ideology was influenced both by Marx and Hitler. In particular, Gunnar Myrdal, the socialist economist who shared the Nobel Prize with Friedrich Hayek in 1974, was closely linked to Nazi academics:
"The professor was then a Nazi sympathizer, publicly describing Nazism as the movement of youth and the movement of the future. In Myrdal's defence, it must be pointed out that, whatever his other propensities, Hitler did have advanced ideas on social welfare, and that the social ideology of the German Nazis and the Swedish Social Democrats had much in common" (p. 63).
In contrast, the free market "capitalist" economist Friedrich von Hayek had to flee the Nazis for his life, moving to England and then America. The claim that capitalism is associated with Nazism is inverted. It was the socialist economist Gunnar Myrdal who was closely linked to the Nazis. The capitalist Hayek had to flee Nazism.
Hunter emphasizes that the Swedish economy is successful. He notes that
"Credit is rigorously controlled by the central authorities. Taxation is so designed that companies find it increasingly difficult to finance themselves, and investment and expansion depend on State loans. Since these, in their turn, depend on whatever conditions (and they need not necessarily be economic) the government decides to impose, there is considerable scope for direction."
The Swedish Central Bank "exercises a unique and absolute control over financial affairs" (p. 81) but this is not just due to its "extensive powers, which, in effect, make private banks its branches. It is also a consequence of the quasi-civil servant attitude of bankers."
In other words, the high tax rates that the United States has adopted since the 1960s coupled with Federal Reserve monetary flexibility fully adopted in 1971 directly but incompletely parallels the Swedish model. The Swedes tax at about 70% while the US taxes better than 50%. The Swedish central bank has greater control over private banks (picture the result of this policy on sub-prime lending and other political boondoggles. While Sweden is a small, homogeneous country, the US is a large and diverse one. The operation of special interest groups and lobbying is much greater in the US. While the Swedish finance system has resulted in a dull but operationally efficient economy, the power of special interests in the US, specifically private banks (but also a whole host of lobbies--sub-prime borrowers, Latin American governments and the like) has resulted in a corrupt, inefficient system. The relatively good results in Sweden also reflect the administrative capabilities of the Swedes and, as well, the very limited amount of democracy in Sweden. In contrast, special interest brokerage that has long been noticed in the US results from the Swedish approach to central banking, taxation and credit allocation when applied in the US. In Sweden there are high tax rates but the Swedes use inflation to allocate credit to firms to sustain jobs. In the US the credit is squandered in Wall Street investment schemes like the tech bubble. Institution of greater government intervention in the American setting would increase the extent of special interest brokerage and yield even more corrupt results.
Sweden can hardly be called a democracy. The chief decisions are made by appointed directorates who are most responsive to the Social Democratic Party. Cabinet ministers do not need to be approved by the diet, and they do not have any operational control over the directorates. Thus, "experts" run Sweden in a way that is (a) not democratic because it is not elected by nor responsive to the public and (b) socialist because most important economic decisions are made by the state. The claim that Sweden offers a third way is nonsensical. More than 70% of income is government owned. This does not include extensive state owned industries. Likely, Sweden is more socialist than either Cuba or China and almost as politically and personally suppressive as either.
Swedes do not care about politics (p. 77) but rather about efficient administration. Therefore, the diet has almost no power and almost all power is executed by the bureaucracy.
The Swedes go beyond punitive taxation levels (similar to the federal, state, local and social security taxes that punish many middle class Americans) and credit allocation in other ways. An additional feature of Swedish socialism that is missing from the American Federal Reserve-based one is that the Swedish government has representatives on the boards of banks and major corporations. One can imagine the quality and competence of Pickpocket Barack's or Bailout Bush's appointees to such jobs. Much as central planning-style Congressional pressure initiated and caused the sub-prime crisis, so would increased federal scrutiny over corporations politicize corporate decision making, as it has in Sweden but to an exponentially greater degree in the US. The absence of democracy in Sweden means that government functions more like a business.
Punitive taxes and fast monetary growth in the United States make capital formation largely a function of Federal Reserve Bank policy as it does in Sweden. But instead of allocating credit to functioning corporations, the Federal Reserve Bank has over many decades recklessly allocated credit to various bubbles--the Mexican debt crisis, Long Term Capital Management, the stock market bubble of the 1920s, the technology bubble of the 1990s, and on and on. It has done this by electing to allocate most reserves to money center banks that are closely linked to Wall Street. This is a policy choice of the Federal Reserve Bank. The Fed could allocate credit to all Americans or to state governments. It chooses to allocate it to special financial interests instead. This results from the functioning of special interest groups in the US that do not operate in a small nation like Sweden. Even so, Hunter points out that in Sweden economic decisions are frequently made for political rather than efficiency reasons, resulting in an economy that is less productive than it could be. If the United States and England had not existed, I would venture to guess that Sweden primarily would be engaged in strip agriculture to this day.
Left-wing advocates of the Swedish model might be surprised to learn that the current United States financial system pretty well mirrors Sweden's already. Credit allocation is governmentally determined and, although taxes are not as punitive as in Sweden, they are punitive in the US to a smaller degree. The difference in taxation in the two countries is the difference between the American stock and the Swedish burning at the stake. The socialist Federal Reserve Bank approach has repeatedly failed, caused economic dislocation, inflation and drastic misallocation of wealth since 1913 because of the same kind of corruption which President Jackson attributed to the Second Bank of the United States in the 1830s.
The point of Hunter's book is not to discuss the Swedish economy but rather to show how a nation with medieval, communistic values and centralized planning has repeatedly violated civil liberties and become a totalitarian state. I am only up to page 70 at this point.
Wednesday, March 18, 2009
Tuesday, March 17, 2009
Sweden Is A Backward, Authoritarian Land
Someone brought up Sweden recently. The socialist American media is biased in its reporting on Sweden so it is difficult to find factual information. You won't find it in the New York Times, written on the sixth grade level of the American left. A number of years ago Roland Hunter's book entitled The New Totalitarians described the suppressive nature of the Swedish government. In 2006 the sadly now-defunct New York Sun, commenting on the lies and propaganda that appeared in the Economist Intelligence Unit about Sweden, noted:
"Dissent is powerfully discouraged. In Sweden, whose murder rate is currently twice that of America...the Swedish press routinely depicts America as crime-ridden. Polls show that the majority of Swedes are deeply disturbed by their country's dramatic social changes and highly critical of the policies that brought them about. Yet the crime and violence generally go unreported, so only rarely does any of the criticism seep into the press."
In other words, Sweden is a country run like New York City, where lies are taken for truth and school children are indoctrinated in left wing propaganda (as in the New York City school system) and, I add, new ideas are forbidden.
Moreover, Sweden is not immune from the nationalist hatred and bigotry that frequently characterizes socialism:
"Instead of reporting on such worrisome findings, politicians and the press alike focus on the evils of America and Israel."
Similarly, the book publishing industry in Sweden serves as a mouthpiece for the authoritarian state:
"Swedish book publishing is similarly unbalanced. Recently Michael Moynihan, an American writer based in Stockholm, toted up the English-language political books that had been translated into Swedish since September 11. His long list included several works apiece by Noam Chomsky and Michael Moore, plus volumes by the communist historian Eric Hobsbawm, the anti-American journalist John Pilger, and the 'Holocaust industry' critic Norman Finkelstein. On the entire list, only one author was not a leftist."
There is only one independent television station, and the Swedish government has attacked it for failing to adopt the government's views:
"When voices of dissent do break through in Sweden, they're often punished. During the runup to the Iraq war, the Swedish government censured the independent TV channel TV4 for running an "Oprah" episode that presented both pro- and anti-war arguments. TV4 was charged with violating press-balance guidelines when in fact its offense was being too balanced — it had exposed Swedish viewers to ideas from which journalists had otherwise shielded them."
The opposition party, Sweden Democrats, are repeatedly attacked by the Swedish government and their speech suppressed:
"Earlier this year, for example, the government closed down the Sweden Democrats' Web site because it had published a cartoon of Muhammad. Stig Fredriksson, head of the free-speech organization Publicistklubben, complained bitterly. But the incident was hardly reported in Sweden — and, of course, barely caused a ripple abroad. If the Bush administration had closed down a Democratic Party Web site¸ there would be scare headlines and editorials thundering about dictatorship — and rightly so. But when Sweden's rulers did it, it was apparently acceptable — because they did it in the name of political correctness."
Opponents to the Swedish government's policies are routinely fired from their jobs:
"a few weeks ago, a junior diplomat was dismissed when it became known that he was a member of the party and had criticized his country's immigration policy. On several occasions, thugs loyal to the ruling parties have broken up Sweden Democratic meetings and beaten up party leaders. And this is a nation in which a party led by an admitted communist was, in recent memory, part of the ruling coalition."
Moreover:
"Swedish elections aren't really secret — other people at the polling place can look at your ballot and see which party you support."
I have not looked at Swedish banking practices but if the banking system is state controlled, I wonder how open to new and innovative ideas it might be. Sweden has never been an innovative country. Its industries are imitative. It is able to survive on small beer because it has a small population. Should the world adopt a Swedish model, suppression and stagnation would follow.
"Dissent is powerfully discouraged. In Sweden, whose murder rate is currently twice that of America...the Swedish press routinely depicts America as crime-ridden. Polls show that the majority of Swedes are deeply disturbed by their country's dramatic social changes and highly critical of the policies that brought them about. Yet the crime and violence generally go unreported, so only rarely does any of the criticism seep into the press."
In other words, Sweden is a country run like New York City, where lies are taken for truth and school children are indoctrinated in left wing propaganda (as in the New York City school system) and, I add, new ideas are forbidden.
Moreover, Sweden is not immune from the nationalist hatred and bigotry that frequently characterizes socialism:
"Instead of reporting on such worrisome findings, politicians and the press alike focus on the evils of America and Israel."
Similarly, the book publishing industry in Sweden serves as a mouthpiece for the authoritarian state:
"Swedish book publishing is similarly unbalanced. Recently Michael Moynihan, an American writer based in Stockholm, toted up the English-language political books that had been translated into Swedish since September 11. His long list included several works apiece by Noam Chomsky and Michael Moore, plus volumes by the communist historian Eric Hobsbawm, the anti-American journalist John Pilger, and the 'Holocaust industry' critic Norman Finkelstein. On the entire list, only one author was not a leftist."
There is only one independent television station, and the Swedish government has attacked it for failing to adopt the government's views:
"When voices of dissent do break through in Sweden, they're often punished. During the runup to the Iraq war, the Swedish government censured the independent TV channel TV4 for running an "Oprah" episode that presented both pro- and anti-war arguments. TV4 was charged with violating press-balance guidelines when in fact its offense was being too balanced — it had exposed Swedish viewers to ideas from which journalists had otherwise shielded them."
The opposition party, Sweden Democrats, are repeatedly attacked by the Swedish government and their speech suppressed:
"Earlier this year, for example, the government closed down the Sweden Democrats' Web site because it had published a cartoon of Muhammad. Stig Fredriksson, head of the free-speech organization Publicistklubben, complained bitterly. But the incident was hardly reported in Sweden — and, of course, barely caused a ripple abroad. If the Bush administration had closed down a Democratic Party Web site¸ there would be scare headlines and editorials thundering about dictatorship — and rightly so. But when Sweden's rulers did it, it was apparently acceptable — because they did it in the name of political correctness."
Opponents to the Swedish government's policies are routinely fired from their jobs:
"a few weeks ago, a junior diplomat was dismissed when it became known that he was a member of the party and had criticized his country's immigration policy. On several occasions, thugs loyal to the ruling parties have broken up Sweden Democratic meetings and beaten up party leaders. And this is a nation in which a party led by an admitted communist was, in recent memory, part of the ruling coalition."
Moreover:
"Swedish elections aren't really secret — other people at the polling place can look at your ballot and see which party you support."
I have not looked at Swedish banking practices but if the banking system is state controlled, I wonder how open to new and innovative ideas it might be. Sweden has never been an innovative country. Its industries are imitative. It is able to survive on small beer because it has a small population. Should the world adopt a Swedish model, suppression and stagnation would follow.
Monday, March 16, 2009
Socialism in Action
Socialism is such an inspiration. The AP's Eliane Engeler's description of North Korea on Yahoo! reminds me of the New York City subway system under Mayor Ed Koch.
>GENEVA – A U.N. human rights investigator accused North Korean authorities Monday of committing widespread torture in prisons that he called "death traps."
Life in the reclusive communist-ruled country is "dire and desperate," said Vitit Muntarbhorn, adding that people are denied enough food to survive.
Muntarbhorn told the 47-nation Human Rights Council that whole families are routinely sent away for the crimes of one member. Once imprisoned, they suffer greatly.
>GENEVA – A U.N. human rights investigator accused North Korean authorities Monday of committing widespread torture in prisons that he called "death traps."
Life in the reclusive communist-ruled country is "dire and desperate," said Vitit Muntarbhorn, adding that people are denied enough food to survive.
Muntarbhorn told the 47-nation Human Rights Council that whole families are routinely sent away for the crimes of one member. Once imprisoned, they suffer greatly.
The Concept of Fiduciary Duty in Business Administration
Business schools have been in existence for more than a century, but they have failed to articulate a meaningful explication of the concept of fiduciary duty as it applies to managers. This omission is striking because the primary duty of management is to serve shareholders. The subject of economics, specifically information economics, has developed an attenuated image of fiduciary duty as alignment of two utility functions--that of manager or agent and that of principal or stockholder. However, the practical ramifications of such alignment are not explicit and remain a sphinx-like riddle.
Do managers owe a duty of disclosure to shareholders, and if so, what competencies are required to exercise such disclosure?
Do managers owe a duty to act in good faith toward shareholders? If so, what is the ethical make up required of managers?
Must managers be capable of explaining bad news in a balanced way? If so, what competencies are required?
Are managers expected to act on behalf of shareholders? If so, to what degree does an understanding of economics, incentives and accounting serve as a pre-requisite to competent managerial action?
How far are boards expected to go in assessing personnel standards and systems?
These questions are not asked in management courses. Nor are they answered. They are not asked in business schools at all, nor are they answered.
It is not surprising that American business has become a spectacle of bad ethics, incompetence, mismanagement and waste. Corporate boards have not been required to develop standards of competence. Little is expected of boards. Managers are compensated on the basis of stock market trends that do not reflect managerial skill.
Do managers owe a duty of disclosure to shareholders, and if so, what competencies are required to exercise such disclosure?
Do managers owe a duty to act in good faith toward shareholders? If so, what is the ethical make up required of managers?
Must managers be capable of explaining bad news in a balanced way? If so, what competencies are required?
Are managers expected to act on behalf of shareholders? If so, to what degree does an understanding of economics, incentives and accounting serve as a pre-requisite to competent managerial action?
How far are boards expected to go in assessing personnel standards and systems?
These questions are not asked in management courses. Nor are they answered. They are not asked in business schools at all, nor are they answered.
It is not surprising that American business has become a spectacle of bad ethics, incompetence, mismanagement and waste. Corporate boards have not been required to develop standards of competence. Little is expected of boards. Managers are compensated on the basis of stock market trends that do not reflect managerial skill.
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