Frum: Learn Sweden's Lesson

David Frum reports for Marketplace:

While they riot in Greece, it's calm in Sweden. Well, that may sound like the ultimate dog-bites-man story. Isn't it always calm in Sweden?

But wait a minute. We often hear that the Greece story is a story about excess government spending leading to social crisis. Yet who spends more than Sweden?

In fact, in the decade leading up to the Great Recession, Greece spent about half its national income on government. That's high by American standards, but it's quite typical of Europe. Sweden ranks at the top of Europe spenders.

Sweden was hit extremely hard by the recession. The Swedish economy shrank more than 6 percent, one of the deepest slumps in Europe, and much more than Greece shrank at that time.

But in 2010, Sweden started a strong recovery, while Greece has sunk ever deeper into the quagmire. What was the difference?

Simple. The Swedes cut everybody's wages and consumption across the board. By cutting costs, Swedes boosted their exports. The economy surged ahead.

How'd they do it? Simple again. Sweden has its own currency, the kroner. The Swedish kroner was one of the weakest currencies in the world through the recession. It lost more than one-third of its value against the dollar. Nasty and unpleasant for every Swede. But not the kind of nastiness that causes riots.