11/04/2007 7:31:51 am
The Third Way. The former Minister for Trade in Sweden, Leif Pagrotsky, and his State Secretary, Lotta Fogde, wrote in the FT yesterday that "Social Security Can Secure Europe′s Economy". They argued that when social security systems like pensions are tied to companies, there will be inflexibility. Hence, for the sake of a flexible economy, they argue that all of Europe should have vast state social security systems like Sweden has.

It may be one of the more appealing arguments for expanding the state for economists and businessmen. Still, one has to bear in mind the apparent disadvantages, such as lack of competition in a state system and the high taxes such a system requires. And there are more than two ways to choose between. Individuals can have private insurance against unemployment or sick-leave and they can have private pensions.

If payments to such private social security would be made tax-deductible, we would go that way. Then, we would have both flexibility in the economy and competition and freedom of choice in the system.

Read the Comment in the FT here - >