Illuminating outline - The Nordic Model - Financial Times July 30(Edit: All pasted in because link directs you to register with them.)"Idar Kreutzer, head of the Nordic region’s biggest life assurer, was in New York recently when a senior executive of a large US bank invited him in for a quick chat. It soon extended into a two-hour discussion of the Nordic business model and corporate diversity. “It surprises me, the interest and the curiosity in the Nordic model,” says Mr Kreutzer, chief executive of Norway’s Storebrand.The model of capitalism practised in Sweden, Norway, Denmark and Finland is seen by some as one of the few winners of the current economic and financial crisis. From its response to a previous banking crisis to its promotion of women in the boardroom, the Nordic model is piquing interest around the world in the same way as the Japanese style of capitalism did in the 1980s or the Germans’ in the 1960s.Just as those systems faced challenges after their time in the limelight, so does the Nordic model. There are doubts, too, about how easy it would be to export it to other parts of the world. But the recent appointment of Ericsson’s Carl-Henric Svanberg as chairman of BP, joining two other Nordic heads of big UK companies, demonstrates the growing respect for Nordic capitalism and its leaders."Another of those chairmen, Jorma Ollila, who in his positions at Royal Dutch Shell and Nokia counts as one of the Nordic region’s most prominent businessmen, says the model offers a possible way forward for a global system seeking to reform itself. “What is the future of capitalism? In one way or other the answer is to solve these issues that the Nordic model does well,” he says. “The Nordic model has a good bid” to be the best system. Debate abounds as to what exactly the Nordic model stands for. But Mr Ollila points to the analysis of a group of academics from across the region who wrote a book called The Nordic Model. They argue that an openness to globalisation combined with strong social protection and egalitarianism defines the region’s capitalism.Francis Sejersted, a Norwegian historian and former chair of the country’s Nobel prize committee, talks about “democratic capitalism”, meaning a high degree of equality and participation in political and corporate decision-making.Matti Alahuhta, chief executive of Finland’s other big company – Kone, the lift manufacturer – says the lack of a large domestic market makes Nordic openness to globalisation a necessity. “Finland is a very small country. The size of the market is very small so it is not very difficult to realise we have to expand abroad.”Kone itself has embraced growth in markets such as Asia and the US in much the same way as Nokia did in mobile phones in the past 15 years. Other groups across the region have become world leaders, from SKF in bearings to Husqvarna in chainsaws.But Nordic countries are also well aware of the negative side of globalisation and take measures to alleviate that. Mr Kreutzer refers to “the personal safety net”, explaining: “There is a need to carry individuals who are hurt by things that are good for companies or society.” He points to workers in the paper and pulp sectors who saw their factories closed but were able to transfer to newer technologies.Underlying this is a deep sense of egalitarianism, especially in the education system. Mr Ollila points to the absence of social class as a factor, unlike in the UK and elsewhere: “Everybody can get a good education no matter what your background is. It is not who you are but what you can contribute.”It also extends to the boardroom, where Norway – thanks to a law that fixes a quota for women – has the highest level of female directorships in the world, with Sweden, Finland and Denmark all scoring relatively well too.But this deeply held egalitarianism also makes the Nordic model difficult to export. Mr Alahuhta explains how hard it was in places such as the UK, in which Kone expanded in the 1990s, to persuade employees to embrace the non-hierarchical ways of Nordic companies. “Egalitarianism is very important to us. This culture is the glue that holds Kone together,” he says.Executive pay reflects the same tendency. Many Nordic companies pay senior executives well below the international average, out of concern that the wage gap between the highest and lowest earners does not grow too large. Anne Breiby, a non-executive director of several Norwegian companies, says: “In most Nordic countries there are small wage gaps. People go to the same schools. There are no real class distinctions.”Swedish managers – the best paid in the region – earn just one-third of what their German counterparts receive while Norwegian executives, who receive the lowest salaries, typically earn just NKr3m ($480,000, £290,000, €340,000) to NKr4m, according to consultants.The lack of hierarchy in companies extends right to the top. Mr Kreutzer explains how his workers “just pop up and knock on my door”. He carries on: “They feel responsible for the company. And I want to put myself in situations where I receive the unpolished truth.”Worker participation in the strategy of companies is an important factor. Employees sit on the boards of many Nordic companies thanks to a heavy trade union presence. But executives say the relationship has matured in recent years, allowing companies to make big restructurings with the co-operation of workers. Jorgen Buhl Rasmussen, chief executive of Carlsberg, the Danish brewer, says: “I think there’s a better understanding on both sides today: it’s less about conflict. It’s quite easy to add people in good times but also to adjust downwards in tougher times.”If demand were down 30 per cent at a company, executives and employees would discuss whether to cut the same percentage of jobs or make 60 per cent work half-time, says Ms Breiby by way of example. She adds: “There are really grown-up discussions between management and workers. They solve the problem together.”Pontus Braunerhjelm, economics professor at Sweden’s Royal Institute of Technology, says the success of Nordic companies suggests their informal management style provides a competitive advantage. But as groups such as Nokia and Ericsson have expanded across the globe, not everyone has found the Nordic way to their liking. “People from other cultures sometimes find it a little imprecise in terms of who is taking responsibility, what is the order, what is the objective?” he says.. . . Some critics question whether Nordic capitalism is quite as unique as its boosters claim and point out that the region has been retreating from some of the characteristics that set it apart. “Nordic businesses are not that different from those in other parts of Europe,” says Fredrick Erixon, director of the European Centre for International Political Economy, a free-market think-tank based in Stockholm and Brussels. “They are driven by the same forces as everywhere else.”Indeed, far from exporting their model to the rest of the world, some Nordic countries are trying to overhaul their economies and import elements of the Anglo-Saxon system. In Sweden, for example, a centre-right government has been in power since 2006 with a mandate to reduce the country’s tax burden – one of the highest in Europe – and make the labour market more flexible.The region has also historically relied on big companies and has been poor at generating smaller entrepreneurial businesses – a weakness in generating employment The generous social welfare net that underpins Nordic capitalism is meanwhile facing increasing pressure from an ageing population and the cultural homogeneity that makes the consensus-based system possible is being unsettled by increasing immigration. “There are certain weaknesses in the Nordic model and they are being ‘stress-tested’ by globalisation,” says Prof Braunerhjelm.Economic data show that Nordic countries have so far fared little better, and in some cases worse, than the US and UK during the current downturn. Nordic manufacturers have cut jobs as aggressively as rivals elsewhere, driving unemployment to more than 9 per cent in Sweden and Finland. Economists forecast that Sweden’s economy will have contracted by 6 per cent from a year earlier when the country releases second-quarter data on Friday, similar to the 5.6 per cent drop revealed for the UK last week.But while the region has not been insulated from the crisis, Nordic countries have a record of bouncing back strongly from economic turmoil. Sweden has been held up as a role model for its successful response to a regional financial crisis in the early 1990s, with a mixture of enforced recapitalisations and nationalisation.. . .That success has been undermined somewhat by a fresh barrage of bad loans facing Swedish banks that lent heavily to the troubled Baltic countries. But Mr Ollila says there are still lessons from how Nordic countries tackled their 1990s crisis. Politicians did not resort to protectionism and took bold decisions: Sweden and Finland applied for European Union membership in the middle of that downturn.Mr Ollila says he hopes policymakers today will also take the unselfish approach: “It would be very much on my wish-list for Europe. You don’t look at how good you are yourself but you look at the world as a whole.”This open approach may have much to commend it in the current crisis. But while it may be interesting for foreigners such as the US banker to look at the Nordic model, it appears difficult to emulate it. One leading Nordic businessman says the region’s capitalism is not exportable as it is so rooted in the traditions of all the countries: “You are talking about small, egalitarian countries with good education systems. That hardly applies anywhere else in the world. So you can admire it but replicating it is very tricky.”"***Charts shows Nordic equities outperforming world equities and recssion chart shows less severity for some (Norway at approximtely -1.75 and Denmark at about -3.75, forecast GDP annual % change; Sweden and Finland at about -5, compared to US -3, Eurzone -4.25 and Japan down more than -6.) Estimates from eyeballing the chart.

Wow, it seems some guys have just discovered the wheel. Nevertheless i do agree with the last lines of this article. The Nordic model is made by Nordic people for the Nordic people. Notice how many times the article mentions the term egality and its derivatives. Hard to have egality in deeply stratified societies with establishments.

A follow on to "The Third Way" perhaps, pushing it further to the left.

And here is a bit on the monetary policy side:Norway to be First to Raise Rates - Bloomberg July 29(All here)"July 30 (Bloomberg) -- Norway’s central bank may be the first among the world’s richest economies to raise interest rates as the global crisis shows signs of abating and inflation overshoots the bank’s target, Deutsche Bank AG said. “Domestic inflation pressures will be the main reason why Norges Bank will have to be one of the first, if not the first, central bank to hike rates in the industrialized world,” Henrik Gullberg, a strategist at Deutsche Bank AG in London, said in a telephone interview. “The market is pricing in the probability of an initial rate hike at the beginning of next year.” The world’s fifth-largest oil exporter has fared better through the global slump than most, thanks to continued investments in its petroleum industries, which make up about a quarter of output. Record low borrowing costs and the country’s biggest stimulus package in more than three decades have also helped soften the impact of the global crisis and now risk overheating the economy. “They cannot afford the luxury of other central banks to wait too long,” Gullberg said. “Norges Bank will start to focus on the timing of the tightening cycle before other central banks. The rate path is not really compatible with the actual development we have seen in the Norwegian economy.” The krone gained 0.4 percent against the euro to trade at 8.7524 as of 9:28 a.m. in Oslo. Against the dollar, the krone gained 0.5 percent to trade at 6.2212. Svein Gjedrem, governor of Norges Bank, would overtake Mervyn King at the Bank of England, as well as Ben S. Bernanke at the U.S. Federal Reserve and Jean-Claude Trichet at the European Central Bank in reversing a spate of rate cuts. September Election Gjedrem has lowered the benchmark rate seven times from a five-year high of 5.75 percent in September to a record low 1.25 percent in June. Prime Minister Jens Stoltenberg, who faces an election in September, has pledged to push through stimulus measures equivalent to 3 percent of non-oil gross domestic product to support the labor market. “Norway is an exception,” Gullberg said. “They have a lot of ability to stimulate the domestic economy by using the oil wealth and that is what they are doing.” The support measures, designed to jolt the Nordic nation out of its first recession in two decades, have boosted domestic demand, with retail sales up 2.6 percent in May since March. Policy makers pushed through stimulus measures even after inflation overshot the central bank’s 2.5 percent target every month since June last year. Underlying inflation, which strips out the impact of taxes and energy, accelerated to an annual 3.3 percent in June, the fastest pace in eight months. Krone Losses Prices have also gained after the krone lost 17 percent against the dollar in the past year and about 8 percent against the euro. The krone, the third-worst performer against the euro since the end of June 2008, may return more in the next year against the euro than all 48 other foreign-exchange trades tracked by global investment banks, according to median predictions in Bloomberg surveys. Norwegian home owners, the second richest in the world, have floating rates on home loans, meaning lower central bank rates are quick to feed through to mortgage costs. At the same time, job security is high, with about a third of the labor force employed in the public sector. Residential property values rose 5.3 percent in the three months ended June from the first quarter, the second consecutive quarterly gain. Finance Minister Kristin Halvorsen has warned consumers against embarking on spending sprees. “I fear that maybe some of the consumers will invest in the housing market” on the assumption that “the interest rate will be at a very low level for many years ahead,” Halvorsen said in a June 22 interview. Outperformer Norway, the only Scandinavian country outside the European Union, will suffer a milder recession than Sweden, Finland and Denmark as well as the euro region. The mainland economy, which excludes oil and shipping, will shrink 1.5 percent this year and grow 0.9 percent next year, according to the Organization for Economic Cooperation and Development. That compares with a 4.8 percent slump in the 16-member euro area this year and no growth for the region in 2010. Norway’s jobless rate was 2.7 percent in June, down from this year’s high of 2.8 percent in April, the Oslo-based Labor and Welfare Organization said on July 2. Norges Bank “will start hiking much earlier than all the others because clearly Norway is outperforming all the other advanced economies,” said BNP Paribas economist Gizem Kara. Though she says Norway will lead the way in monetary tightening, the forecast is based on a delayed global recovery, meaning the first increase won’t be until the beginning of 2011. ‘Dare to Raise’ The Fed will start raising its overnight bank lending rate from 0.25 percent in the third quarter next year, according to the median in a July 10 Bloomberg survey of 53 economists. The European Central Bank will increase borrowing costs from 1 percent in the fourth quarter next year, a June 26 survey of 40 economists showed. “It will be interesting to see if Norges Bank dares to increase its interest rate before the rest of the world starts to hike,” said Katrine Boye, an economist at Nordea Bank AB in Oslo. “If they don’t make these increases, the economy could eventually overheat.”"

And U/E:Unemployment rises in Denmark, Norway - Forbes July 30COPENHAGEN, Denmark -- Denmark's jobless rate edged closer to 4 percent in June as the number of unemployed exceeded 100,000 for the first time in three years, the national statistics agency said Thursday.There were 105,100 unemployed people in June, representing about 3.8 percent of the work force, Statistics Denmark said.That was up from 3.5 percent in May and a record low of 1.7 percent in June last year.The last time the nation of 5.4 million had more than 100,000 jobless people was in August 2006, the agency said.Danish companies have announced thousands of layoffs because of declining demand in the wake of the financial crisis.In neighboring Norway, the Labor and Welfare Administration said the unemployment rate hit 3.0 percent in July, compared with 2.7 percent in June and 1.8 percent a year ago.

I notice Iceland was conveniently dropped from the list.

QuoteOriginally posted by: Traden4AlphaI notice Iceland was conveniently dropped from the list.The black sheep...