IT'S NOT LIKE THEY MADE THE MESS OVERNIGHT EITHER:

Stockholm Syndrome : Western Europe’s most famously socialist country is slowly plodding toward free-market reforms. (Michael Moynihan, October 4, 2007, The American)

[W]hat drives the opposition socialist coalition and its media allies into fits of apoplexy is the supposed “privatization” of the country. To hear Reinfeldt’s critics, one could be forgiven for thinking that the George Mason University economics department had invaded Stockholm and occupied parliament. Left Party leader Lars Ohly recently thundered that, after a year in office, “Reinfeldt continues with policies of tax reduction, privatization, and anti-feminist politics.” A columnist for the country’s most prominent tabloid recently told an interviewer that the biggest threat to Swedish democracy is “the extensive privatization of the country’s public sector.” Noted author and journalist Maria-Pia Boëthius crowed that the government is “on a mission to submit Sweden (Sweden!) to a Milton Friedman-type program of shock therapy.”

If only.

Johnny Munkhammar, program director at Timbro, a free-market think tank in Stockholm, explains that, even with its piecemeal approach, the Reinfeldt government is swimming against the tide of public opinion. “This government plans to sell a number of companies,” he says, “but because they have failed in communicating how and why, public opinion is not behind the measures.” Recent polling data show that a plurality of Swedes are opposed to offloading state companies (which could add some $22 billion to the government’s coffers). Given such public hostility, few expect Reinfeldt to engage in an aggressive privatization campaign.

Fredrik Erixon, a Swedish economist with the Brussels-based European Center for International Political Economy (ECIPE), laments that, despite reforms of income taxes, social security, and school policy, “nothing much has happened yet” on privatization. “The government has prepared for privatizing six companies,” he says, but “that’s not much considering the government’s portfolio of 55 companies.”

To its credit, the Reinfeldt government has sent a clear message to voters by targeting for privatization six well-known Swedish brands: the telecom giant Telia Sonera, the banking group Nordea, the alcohol manufacturer Vin & Sprit (makers of Absolut vodka), the stock market operator OMX, the mortgage lender SBAB, and the real estate company Vasakronan. Minister of Financial Markets Mats Odell has previously indicated that the government’s stake in the airline SAS might also be put up for auction.

But for now, two of the state’s biggest assets have avoided deregulation and privatization: the country’s monopoly control of alcohol and over-the-counter prescription drugs. (Unlike its British counterparts, the Swedish right is largely, though not uniformly, positive towards the European Union, in part because these alcohol and drug monopolies frequently run afoul of EU antitrust regulations.) When, in June, the European Court of Justice ruled that a portion of Sweden’s alcohol policy violated EU statutes, Swedish health minister Maria Larsson paid the court no heed, declaring that “Swedish alcohol policy stands firm.” Anders Borg, the finance minister (and once a free-market evangelist), told reporters that the government would “do everything in our power to protect the alcohol [monopoly] and the tax rates.”

Despite this uneven record, Erixon offers Reinfeldt a back-handed compliment: “We have by far the most liberalizing government in Europe,” he says. “But that speaks more about Europe than the Swedish government.” There have been free-market reforms, Erixon adds, but “the government views itself more as an heir of the social democratic orthodoxy than an opponent.” Indeed, the coalition’s incrementalism is a response to voter desires, since “Swedes are, for the moment, content with the country’s welfare.”