APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200090017-8
very sizable proportion of technicians and skilled workers could partake in sufficient measure of the good life. The inability to accommodate much money did not become a source of anxiety, particularly since adequate welfare insurance against nearly all forms of adversity seemed to obviate the need. If the tax needed to support the welfare state were at all income levels the highest in the nonCOmmunist world, the real wages nonetheless remained very high, only exceeded by those in the United States.
The conscious leveling-down policy of the Palme administration in the 1970's, however, threatened to upset the delicate equilibrium between optimum social equality and incentive. From the director of the board down to the skilled worker, motivation seems threatened. Not only are the few remaining rich now "soaked" as never before—in a country where the cost of living approximates that in the United States, an executive earning US$20,000 a year pays $13,000 (65%) in direct taxes alone, the director of the large Electrolux (electrical appliances) Corporation takes home $11,000 a year after taxes—but the middle classes are being subjected to an ever increasing bite. A mailman earning a gross income of $500 a month pays 31% in direct graduated income tax; a Volvo foreman earning $600 pays 35%; a district prosecutor earning $940 is taxed 45%; and an upper range executive earning $1,500 pays 53%. On a gross national product of $30 billion, Swedes pay $12 billion in direct or indirect taxes, or an overall tax of 40%. This rate is considerably higher than the 30% average that U.S. residents pay in combined federal and local taxes.
Although there is discussion in the Social Democratic ranks about the efficacy of the "equalization" policy, and strong hostility from almost the entire opposition, Palme in late 1972 was still attempting, via the wage as well as the tax structure, to level society. Central wage negotiations had to take cognizance of the "solidarity" principle and give priority to the lower income workers. Thus in a 1972 wage-settlement in the electrical industry, the highest paid skilled worker was awarded US$2.85 an hour, only 5% more than the lowest paid worker's $2.63.
Most of the rank and file skilled artisans who are being leveled downward are finding ways to express disagreement with the policies of their leaders in the unions and in government. Just as some members of the higher income groups are discovering new and ingenious means of evading some of their taxes, the heretofore conscientious skilled workers are resorting to forms of malingering, such as phony sick leave, that would cut the deductions from their pay envelopes. The ultimate outcome of the new equalization policy will depend on just how far the government will try to push it. Even Palme appears to have realized that taxes should not be raised any more in the near future, and, in any event, elections in 1973 could result in a modification or change of policy. Preliminary responses from much of the Swedish worker force to continued "leveling" suggest that even basic national work habits, formed over the centuries, are not immutable.
The penchant for cooperation that has marked the Scandinavians was never absent in the Swedish business community. While a degree of competition helped in some areas to keep prices down and increase efficiency, the classic laissez-faire laws of supply and demand were operative only to a point. It took the powerful consumer cooperative movement to finally brake the tendency of the more important producers to establish first local monopolies and then cartels.
The industrialists and financiers of Sweden have always formed a closely knit business establishment, and through their political arms, the Conservative and Liberal Parties, they continue to exert a not inconsiderable influence on government. In a country where compromise and cooperation rather than confrontation are the preferred vehicles for social change, the ruling Social Democrats had found pragmatic accommodation with big business naturally advantageous. It was, after all, capitalism's producing and earning power that provided the means to affect the welfare state. The extent to which a socialist government will go in this accommodation might shock North Americans living under more avowedly capitalist systems. Thus, in late 1971, Social Democratic Finance Minister Gunnar Strang defended before the parliamentary antitrust committee the planned merger of Sweden's two largest banks—the huge Wallenburg-controlled Stockholms Enskilda Bank and the Skandinaviska Banken. The enlarged Skandinaviska Enskilda Banken, he insisted, must be accorded the resources for a more active international role. He was unabashedly postulating the greater good for the new bank to be the greater good for Sweden. Writing in 1966, the noted U.S. observer Donald S. Connery was struck by the close social and business ties of the tycoons of Sweden. They not only tended to support the same
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