The Confederation of Swedish Enterprise and Swedish politicians who call for tax cuts, deregulation and faster permit processes with reference to how well the US is doing are being rebuffed by the LO economist:
We risk making bad political decisions that are bad for people, bad for public health, bad for cohesion and bad for the financing of welfare in the belief that it will be beneficial for economic growth, warns Torbjörn Hållö.
In individual cases, I can certainly agree that things take too long. But I think they greatly underestimate the value of the rules we have in Sweden and the EU when it comes to protecting people's prosperity, well-being and public health.
“It smells like bubbles”
There are some very successful companies in the US, notes Hållö.
But they obscure the view. If you scratch below the surface, there's not much left. The underlying dynamics in the US are pretty bad. It's a few companies on Wall Street that are driving it.
According to Hållö, AI investments are inflating US growth, which has created “extremely high valuations” on Wall Street. His advice to Swedish savers and pension companies is to be cautious about exposure to this:
It smells like bubble a long, long way.
The 27 EU countries had a larger GDP than the US 15 years ago. Today, the US GDP is almost 50 percent larger than the EU's.
“The US is several years behind Europe”
According to this perspective, the EU began to lose ground after the financial crisis in 2009. And if you look even further back – to the mid-1990s – today's EU countries accounted for around 25 percent of the world economy. This can be compared to today's 18 percent, LO states in a section of an upcoming economic report that TT has seen.
But Hållö thinks these figures give a false picture. Instead, one should base one's calculations on the IMF's purchasing power-adjusted GDP measure, that is, how much GDP can buy in each country. In that case, the EU and the US have lost roughly the same share of the world economy over the past 15 years – from 18.0 and 17.5 percent respectively to around 13 percent for both.
The winners are instead China and India.
And the most important measure of all categories is how long people live. In that, the US is several years behind Europe, says Hållö.
