Environmental Fiscal Reform in Sweden Special Edition:
Scrabbling to take the lead in defossilization, Sweden released ambitious plans to be fossil neutral 2030.Flagship Ericsson sheds employees and factories and announces sharp profit shortfalls. As Ericsson’s shares tumble Signals advises corporate strategists to study Sweden. Can high-tech companies really be located in countries like Sweden that place the social contract high on the agenda? Or is it the other way round – can policy strategists craft alternatives that make the country a good place for Hi-tech corporations whilst maintaining the social contract? And defossilizing at the same time? If Sweden cannot de fossilise, have a liberal economy and keep the social contract, who can?
Having removed fossil fuel dependency from electricity generation, Sweden was convinced that all that was left was transport and that many alternative ways of transporting their goods could be found within the timeframe. That was until researchers reminded them of the almost 100% dependency of food provision on diesel. Having created one of the most urbanised countries in Europe (85%) Swedes are struggling to envision a way forward to, in the cold climate with mostly poor soils, provide food security without industrial agriculture and a highly centralised and transport-dependent food logistics network.
Sweden’s social direction has stranded
The Nobel Prize in Economics was , some say, created as a counter-weight to the pragmatic social democratic approach of honouring the social contract whatever the situation. Economists must be gloating that the social democratic model is failing and not finding a replacement.
(Apart from the beggars filling the streets, the population of non-registered citizens soaring and handicapped people dying after their care and assistance is withdrawn Signals heard that a university lecturer, who left her work due to illness, is now begging regularly to make ends meet.)
House speculation as economic engine has left many behind
Countries like Sweden, that have enjoyed home ownership as a money-creator for their banks and as a source of retirement income for themselves, are dangerously close to the bubble bursting. For policy makers we advise listening to debt forgiveness as serious economists like Steve Keen propose serious fiscal reform.
Current policy, of keeping interest rates low and allowing deductions for interest payment, is fuelling still further housing price rises. As the thousands of Ericsson employees hit unemployment we can expect it will produce an oversupply of mortgaged houses, causing a price dip if not a burst bubble.
Be aware of the alternatives
Alternatives to houses as piggy-banks are sprouting up. From the tiny house movement to the Permanent Real Estate Cooperative. Signals encourages social entrepreneurs and social enterprises to consider this route.
THERE IS NO B PLAN
Most corporate strategists who read Signals will readily admit that there is no B plan if fossil fuel is taken out of the equation. There is no strategy that can cope. The onus is on government policy to provide a transition path for businesses that risk having to ditch much of their equipment, supply chains and processes. Lobbying is what is needed along with serious dialogue.
Fossil vulnerability plan and a circular opportunity plan – soonest
For your organisation to get on top of this volatile situation, analysis of fossil vulnerability should be carried out. When you have done that, a full analysis of the potential of finding resources from the circular economy to run your operations is a priority.
TSSEF simulated the ecological alternative
The Swedish Sustainable Economy held a simulation to address just that question earlier last year. The results speak for themselves: only by applying a framework of large enough fees and dividends can the market be nudged to change.
Finally, when war seem on the cards for all, why not Invest in Peace?
This month’s newsletter outlines a few key developments affecting EFR.