"Sweden needs laws against politicians' reckless spending"

Today I write about the current debt crisis in online newspaper The Local:

After the 2008 financial crisis, there was much talk about the failure of markets. However, with the growing worry about government debt, the focus has shifted to politicians’ failures. It is clear from the situation in Greece, the United States and other countries that governments are far from perfect. A new report from the Moderate Youth League (MUF) investigates this.

We conclude that the reasons for the debt crisis are a number of government failures that cause politicians to run larger budget deficits than anyone really wants – economists call this phenomenon deficit bias. In some cases, such as in southern Europe, this eventually results in a loss of investor confidence and a deep crisis.

One reason for deficit bias is that voters may have better information about spending and taxes than about deficits. Hence they fail to perceive that politicians run too large deficits that will need to be repaid in the future.

A second reason could be that politicians commit to future austerity policies rather than implementing immediate cuts. But because these politicians may not be in power when the policies are due, the commitment is not credible.

Lastly, deficit bias could be caused by a failure of interest groups to agree on cuts. Each interest group wants to appear willing to bring the economy close to a crisis to improve its bargaining position and so have to face a smaller share of the burden. If all interest groups behave in this way it will be difficult to agree on austerity measures before it is too late.

Because the political system is far from perfect, checks and balances are needed to counteract populism and myopia. Although the current Moderate Party-led government pursues responsible fiscal policies, we do not know which politicians will be elected in the future. Therefore we propose strengthening the Swedish political system by amending the constitution with a prohibition of government debt default. We also propose that binding limits on the deficit – e.g. at most three percent of GDP in peacetime – are made into law.

Overall we conclude that the risks of high government indebtedness are substantial while the benefits of fiscal stimulus are small. Therefore we recommend all countries that are currently in deficit to implement immediate cuts in government spending in order to return to a balanced budget as soon as possible.

Ny rapport: "Skuldkrisen"

I tisdags släppte Moderata ungdomsförbundets ekonomiskpolitiska arbetsgrupp, som jag är med i, en rapport om staternas skuldkris.

I rapporten konstaterar vi att det finns stora risker med statlig skuldsättning. Samtidigt är fördelarna med keynesiansk stimulanspolitik små.

Därför drar vi följande slutsatser:

• Stater som har ett budgetunderskott bör vidta omedelbara utgiftsminskningar för att återgå till en budget i balans.
• Statsapparaten bör krympas så att politikerna får mindre handlingsutrymme att begå misstag.
• Sverige bör skriva in i grundlagen att statens skuldavtal måste hållas.
• Fackförbundens särställning i svensk lagstiftning bör begränsas så att lönerna kan bli mer flexibla. Detta skulle leda till en mindre ökning av arbetslösheten under kriser.
• Den svenska statens underskott bör begränsas i lag.

Arbetsgruppen består förutom undertecknad av Martin Bucht, Erik Raita, Sofia Fölster och Erik Gestrinius.

Läs rapporten här.

Time to kill or capture Joseph Kony

The half-hour movie Kony 2012 has been all over the social networks the last few days. It aims to put the spotlight on the Ugandan warlord Joseph Kony and his infamous rebel group the Lord's Resistance Army who aims to establish a Christian theocracy.

The campaign has received criticism because it allegedly is a form of slacktivism where people think they can make a difference by sharing some video on Facebook. Ironically, those who critizice the supposedly mindless reposting of the film on social networks have mostly done so by mindlessly reposting a link to a critical blog run by a Canadian sociology student.

Here are some criticisms against Kony 2012 and the group behind the movie, Invisible Children, and my replies:

• Joseph Kony left Uganda in 2006. If you believe that the LRA conflict no longer has anything to do with Uganda, I congratulate you on having better knowledge of the security situation in east and central Africa than the United States Department of Defense and president Obama's military and security advisors, who chose to deploy US troops to – yes – Uganda in order to help fight the LRA. The film makes no secret of the fact that Kony is not in Uganda – it states that the country is "relatively safe" and it is clear from a map that the LRA has shifted its operations elsewhere, although of course Uganda is still involved in the conflict and cooperates with its neigbours in capturing Kony.

• Uganda is an anti-gay dictatorship. True, but the LRA is much worse.

• The Ugandan army has been accused of rape and looting. If the Ugandan army has problems with discipline, the more reason for them to be trained by American advisors.

• Invisible Children spends most of its money on film-making and advocacy. The main aim of the movie is to put pressure on US policymakers, not to raise money. I doubt many of those who reposted the move donated anything. On its website, the organization states that is spends 20 percent of revenues on administration and fundraising.

• The founders of Invisible Children pose with guns on a photo. "Stop Kony" is not a non-violence campaign. They are not advocating hugging Joseph Kony to death. In order to stop the LRA you need guns. More about the photo here.

• The campaign implies that white people should save Africa and smells of colonialism. After Rwanda 1994 and Srebrenica 1995, the world said "never again". Last year, reluctant western intervention helped bring peace and democracy to Libya and the Ivory Coast. Even the United Nations now agrees that the international community has a responsibility to protect people against grave human rights abuses. Although war is declining and democracy is progressing, everybody should help accelerate this process. Inaction is not an option.

Invisible Children has done a great job at bringing this issue to the agenda. The United States and other liberal democracies should send more ground troops to Africa in order to fight the LRA and other obstacles to the 21st century becoming Africa's century.

Update: The United States Africa Command has published a blog post explaining their role in combating the LRA. Like their Facebook page to show your support.

Fattigdomen minskar rekordsnabbt i Afrika

Världsbanken släppte i dag de efterlängtade definitiva siffrorna för extrem fattigdom 2008. Banken uppskattar att 1 289 miljoner människor var extremt fattiga 2008, vilket är 19 procent av världens befolkning. 1981 var samma siffra 43 procent.

En människa är extremt fattig om hennes konsumtion eller inkomst understiger 1,25 dollar om dagen med det prisläge som gällde i USA 2005. I dagens svenska prisläge motsvarar det ungefär 13 kronor.

Världsbanken rapporterar fattigdomen i treårsintervall så före dagens tillkännagivande hade vi bara fattigdomsstatistik fram till 2005. Den årliga fattigdomsminskningen mellan 2005 och 2008 var 0,7 procentenheter. Världsbankens tidigare preliminära uppskattningar för 2008 antydde en minskning på 1,1 procentenheter per år. Fattigdomsminskningen ligger därmed något under prognos.

Kina är inte längre den motor i fattigdomsminskningen landet varit tidigare. Detta beror naturligtvis främst på att Kina inte har så mycket extrem fattigdom kvar att utrota: andelen fattiga minskade från 84 procent till 13 procent mellan 1981 och 2008. I stället är det i Afrika som fattigdomen sjunker mest. Där minskade andelen fattiga mer än någon tidigare treårsperiod sedan statistiken börjar – med fem procentenheter till rekordlåga 48 procent.

Det viktigaste budskapet i denna statistik är som vanligt den enorma omfattningen av välståndslyftet i världen de senaste decennierna. Mellan 1990 och 2008 lyftes 620 miljoner människor ur extrem fattigdom. Det motsvarar en person per sekund (1,09 personer per sekund för att vara exakt).

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