What the Demise of Saab Says About the Swedish Welfare State

The distinction between the social security structure in the United States and Sweden gives uncanny insight into why Sweden has the option of saying “no” to Saab’s urgent need for a bailout.

Saab, like almost all of the other automakers around the globe, has hit hard times, but unlike most of the governments around the world, Stockholm has refused to bail the car “born from jets” out, a move that could cause significant unemployment across southwest Sweden’s industrial belt.

In a recent Times piece reporter and Big Think guest Sarah Lyall examines the impact that a collapse of Saab would have on the small industrial city of Trollhattan, where almost all residents are directly or indirectly effected by the fortunes of their local industry. Enterprise minister Maud Olofsson recently said “The Swedish state is not prepared to own car factories,” in sharp contrast to the path that the United States has gone down with General Motors and Chrysler.

General Motors is the parent company of Saab’s automobile division. But the Swedes should not anticipate any aid coming in from across the Atlantic. GM’s decision to pull out of Saab completely by the end of the year pretty much assures that.

But the Saab case poses an interesting opportunity to contrast two governments. Former Swedish Finance Minister Leif Pagrotsky gave some insight into why the two countries have taken different approaches to bailing out companies when he spoke with Big Think. In describing the differences between US social security and unemployment benefits and those of Sweden, Pagrotsky makes the point that in Sweden, if your company goes bankrupt you can still rely on a steady stream of income to provide for food, medical bills, and old age, meaning the fear of unemployment is not that violent, the fear of change not that strong, the economy is more adaptable to economic shifts.