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Malinvestment

2012-03-13T08:59:00Z

173.245.51.176: /* Irish housing bubble */ Typo.

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'''Malinvestment''' is an [[investment]] in wrong lines of production, which inevitably lead to wasted [[capital]] and economic losses, subsequently requiring the reallocation of resources to more productive uses. "Wrong" in this sense means "incorrect" or "mistaken" from the point of view of the real long-term needs and demands of the economy, if those needs and demands were expressed with the correct price signals in the free market. [[Austrian School|Austrians]] believe systemic malinvestments occur because of unnecessary and counterproductive intervention in the free market, distorting price signals and misleading investors and entrepeneurs. For Austrians, prices are an essential information channel through which market participants communicate their demands and cause resources to be allocated to satisfy these demands appropriately. If the government or banks distort, confuse or mislead investors and market participants by not permitting the price mechanism to work, malinvestment will be the inevitable result.

Malinvestment results from the inability of investors to foresee correctly, at the time of investment, either the future pattern of consumer demand, or the future availability of more efficient means for satisfying consumer demand. Malinvestment is always the result of the inability of human beings to foresee future conditions correctly. However, such errors are most frequently compounded by [[inflation]] misleading market participants.<ref name="Greaves_malinvestment">Percy L. Greaves Jr. [http://mises.org/easier/M.asp "Mises Made Easier"], "Glossary, Malinvestment - Mutatis mutandis", referenced 2010-05-11.</ref>

==History==
The concept dates back at least to John Mills (not to be confused with [[John Stuart Mill]]) in ''An Article read before the Manchester Statistical Society in December 11, 1867, on Credit Cycles and the Origin of Commercial Panics'':<ref>As quoted in ''Financial crises and periods of industrial and commercial depression'', Burton, T. E. (1931, first published 1902); see [http://books.google.com/books?id=d6jGnoyQXZ8C&printsec=frontcover&dq=Financial+crises+and+periods+of+industrial+and+commercial+depression,+Burton&source=bl&ots=I4yNyo6OD1&sig=V4luvJK86lLkwWL7hYbiT3vDKcg&hl=en&ei=sQrQS6HJJtHn-QaI1eS4Dg&sa=X&oi=book_result&ct=result&resnum=1&ved=0CAgQ6AEwAA#v=onepage&q=john%20mills&f=false online version], New York and London: D. Appleton & Co.</ref>
{{quote|Panics do not destroy capital; they merely reveal the extent to which it has been destroyed by its betrayal into hopelessly unproductive works.}}

[[Ludwig von Mises]] developed the concept in the context of the [[Austrian School]]'s perspective on the deleterious effects of [[fractional reserve banking|bank-created]] "fiduciary media":<ref>[[Ludwig von Mises]], [http://mises.org/humanaction/chap20sec9.asp#580|''Human Action: A Treatise on Economics'', 1966].</ref>

{{quote|The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression. People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overconsumption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers' stone to make it last.}}

More recently, [[Austrian School]] economist and libertarian [[Murray Rothbard]] used the concept of malinvestment to study the [[Great Depression]] in his [[historical revisionism|revisionist]] work, ''[[America's Great Depression]]'':<ref>[[Murray Rothbard]], [http://mises.org/rothbard/agd/chapter1.asp#cluster_of_error|''America's Great Depression'', 2005, 5th Edition, Ludwig von Mises Institute, Chapter 1, ''The Cluster of Error''].</ref>

{{quote|A credit expansion may appear to render submarginal capital profitable once more, but this too will be malinvestment, and the now greater error will be exposed when this boom is over. Thus, credit expansion generates the business cycle regardless of the existence of unemployed factors. Credit expansion in the midst of unemployment will create more distortions and malinvestments, delay recovery from the preceding boom, and make a more grueling recovery necessary in the future. While it is true that the unemployed factors are not now diverted from more valuable uses as employed factors would be (since they were speculatively idle or malinvested instead of employed), the other complementary factors will be diverted into working with them, and these factors will be malinvested and wasted. Moreover, all the other distorting effects of credit expansion will still follow, and a depression will be necessary to correct the new distortion.}}

==Austrian Business Cycle Theory and Malinvestment==
{{Main|Austrian Business Cycle Theory}}
The complicated and somewhat fragile [[production]] structure requires that complementary inputs be available not only in the right magnitudes but also at the right moments in time. If they are not, then projects that appeared profitable are soon revealed to be unprofitable. In other words, what appeared to be [[capital]] creation is seen in fact to be capital consumption. The price mechanism co-ordinates production by "signalling" excesses and shortages in the market, allowing stocks to clear and markets to function efficiently.

In a monetary expansion, price signals are confused. Monetary growth reallocates resources but cannot in itself produce [[economic growth]]. The economy is being pulled in two directions. Entrepreneurs want more capital goods, at the same time that consumers want more consumer goods.

The decline in interest rates by a central price fixing authority such as the central bank means it pays less to save, so consumption is raised beyond levels that would have otherwise taken place. At the same time, more real funding seems to be available for businesses. More resources are used for the production of consumer goods and less for the maintenance and improvement of the wealth-producing infrastructure. This lowers the economy's capacity to produce final consumer goods and so it weakens the [[Subsistence fund|pool of funding]] - contrary to the popular idea that a central bank can grow the economy by keeping interest rates as low as possible. The needed correction comes in the form of a recession, during which many projects are liquidated and [[unemployment]] rises.<ref name="Shostak_saving">Frank Shostak. [http://mises.org/daily/1596 "The Subsistence Fund"], Mises Daily, August 2004, referenced 2010-05-11.</ref>

[[Austrian Business Cycle Theory]] focuses on the "medium run", because that is where problems arise. In the short run, the capital structure cannot be changed significantly, and in the long run all errors have been rectified. In the medium run there is time enough for capital projects to be initiated and the direction of production to change, but not enough time for malinvestments to be corrected - at least not without serious repercussions.

The inability to smoothly liquidate or redirect projects stems largely from the heterogeneity of most capital goods. Capital goods cannot immediately be converted into final consumer goods - or other capital goods. Changes in the structure of production cannot easily be reversed. There is a significant degree of "path-dependence" involved with the capital restructuring that occurs in the medium run. The economy cannot simply "erase" the errors and start over.

Malinvestment occurs due to misleading relative price signals, and it necessitates a corrective contraction - a bust following the boom.

At the same time, there is also the phenomenon of overinvestment, because entrepreneurs are led to believe that the [[subsistence fund]] is larger than it actually is.<ref name="Sechrest_Malinvestment">Larry J. Sechrest. [http://mises.org/journals/scholar/Sechrest10.pdf "Explaining Malinvestment and Overinvestment"] (pdf), October 2005, referenced 2010-05-11.</ref>

==Government intervention==
Government interference can also distort market information signals. For example, if the government creates a false expectation of greater trust (e.g. by declaring its backing of one of the parties), it can cause the second party to invest too much in this relation (and thus create "overinvestment"). In the opposite case, it can create distrust, causing people to invest too little and making them lose potential benefits from unconsummated transactions. By generating such fluctuations, the government can "add" or "remove" trust from various private activities or individuals, or it can interfere with them by its own activity and crowd them out. In financial markets, the government in most cases obtains more favorable loan conditions than any other potential borrower. The most common explanation attributes this advantage to the government’s power to [[tax]]. As a result, it crowds out private investments that cannot compete.

Similarly, some studies of [[crowding-out]] in the area of private philanthropy explain it with reference to private charities’ reduced effort to raise funds from individuals after they receive a government grant.<ref name="Chalupnicek_overinvestment">Pavel Chalupnicek and Lukas Dvorak. [http://www.independent.org/pdf/tir/tir_13_03_3_chalupnicek.pdf "Health Insurance before the Welfare State The Destruction of Self-Help by State Intervention] (pdf), The Independent Review, v. 13, n. 3, Winter 2009, referenced 2010-05-11.</ref>

Rothbard stated the following in relation to the "blindness" of government intervention in the economy:<ref name="Rothbard_govt_malinvestment">[[Murray N. Rothbard]]. [http://mises.org/rothbard/mes/chap12e.asp "Chapter 12—The Economics of Violent Intervention in the Market"], [[Man, Economy and State]], 10. Growth, Affluence, and Government, referenced 2010-05-11.</ref>

{{quote|Government is deprived of a free price system and profit and-loss criteria, and can only blunder along, blindly "investing" without being able to invest properly in the right fields, the right products, or the right places. A beautiful subway will be built, but no wheels will be available for the trains; a giant dam, but no copper for transmission lines, etc. These sudden surpluses and shortages, so characteristic of government planning, are the result of massive malinvestment by the government.}}

==Analogies==
As Mises wrote: "The whole entrepreneurial class is, as it were, in the position of a master-builder whose task it is to erect a building out of a limited supply of building materials. If this man overestimates the quantity of the available supply, he drafts a plan for the execution of which the means at his disposal are not sufficicnt. He oversizes the groundwork and the foundations and only discovers later in the progress of the construction that he lacks the material needed for the completion of the structure. It is obvious that our master-builder's fault was not overinvestment, but an inappropriate employment of the means at his disposal."<ref name="Mises_Action">Ludwig von Mises. [[Human Action]], p.557, referenced 2010-05-11.</ref>

Some may think that the "capital consumption" during the unsustainable boom period must show up in things like reduced spending on building maintenance, or perhaps in the owner of a fleet of trucks neglecting to have the tires rotated.

In reality, it's more accurate to say that during the boom period, entrepreneurs (led by false signals) invest in projects that are individually rational and "efficient," but that don't mesh with each other. In other words, it's not so much that a farmer forgets to plant some of the seed corn in order to have a future crop. Rather, it's that a farmer plans on expanding his output, and so he plants much more than he did in the past, but unbeknownst to him, the owners of the silos and railroads (needed to bring the harvest to market) aren't expanding their own operations at the same pace.

In summary, it's not that an inspection of an individual enterprise would reveal a technological deficiency. Rather, it's that all of the entrepreneurs are "getting ahead of themselves," trying to develop too quickly. There aren't enough real savings to allow all of the new processes to be completed.<ref name="Murphy_Reply">Robert P. Murphy. [http://mises.org/daily/4993 "My Reply to Krugman on Austrian Business-Cycle Theory"], ''Mises Daily'', January 24, 2011. Referenced 2010-05-11.</ref>

==Examples==
===U.S. housing bubble===
In May, 2010, [[Detroit]] started to tear down vacant and abandoned structures, planning to knock down 10.000 to "reconfigure the city to reflect its shrinking population."<ref name="Kellogg_Detroit">Alex P. Kellogg. [http://online.wsj.com/article/SB10001424052748703950804575242433435338728.html?mod=WSJ_hp_mostpop_read "Detroit Shrinks Itself, Historic Homes and All"], ''The Wall Street Journal'', May 14, 2010.Referenced 2011-02-15.</ref>
The city of Dayton, [[Ohio]], plans to demolish 500 of the 1,732 properties on the city’s nuisance list in 2011. The process to demolish a property can take a year or more and costs an average of $13,800. The city doesn’t have the capital to demolish these structures and has to rely on federal funding.

The federal [[Neighborhood Stabilization Program]] funds the demolition of houses in neighborhoods hit hardest by foreclosure. City leaders say the $28 million Dayton has received will only make a small dent in the growing list of vacant and deteriorating properties, estimated to be as high as 10,000. The program money amounts to the demolition of only about 1,500 structures. Housing officials estimate they will need an additional $20 million to $30 million in funds — money the city does not have — to deal with the remaining vacant housing stock.<ref name="Wedellt_nuisance">Katie Wedell. [http://www.daytondailynews.com/news/dayton-news/city-needs-millions-more-to-raze-nuisance-housing-1075435.html "City needs millions more to raze nuisance housing"], ''Dayton Daily News'', February 8, 2011. Referenced 2011-02-15.</ref> As of July, 2011, the [[Bank of America]] and other mortgage holders were donating foreclosed and abandoned houses they couldn’t sell for demolition.<ref name="Rupp_Demolishes">Lindsey Rupp. [http://finance.yahoo.com/news/BofA-Donates-Then-Demolishes-bloomberg-946456059.html?x=0&sec=topStories&pos=6&asset=&ccode= "BofA Donates Then Demolishes Houses to Cut Glut"], ''Bloomberg'', July 27, 2011, referenced 2011-07-28.</ref>

Meanwhile, the rash of foreclosures and mothballed construction projects has launched a boom in the business of shrink-wrapping. Plastic-covered foreclosed homes, half-finished hotels, a canceled casino project in Las Vegas, new terminal expansion projects at the San Jose or Sacramento airports and even a church stand as silent indicators of a global recession.<ref name="Fink_Wrapping">Bill Fink. [http://www.americanwaymag.com/mike-enos-global-wrap-james-talbot-las-vegas "Web Exclusive: Wrapping Up a Recession"], ''American Way Magazine'', August 1, 2010. Referenced 2011-02-15.</ref>

===Irish housing bubble===
In the [[Irish property bubble]], around 2006, more than a fifth of the Irish workforce was employed building houses. The Irish construction industry had swollen to become nearly a quarter of the country’s G.D.P.—compared with less than 10 percent in a normal economy—and [[Ireland]] was building half as many new houses a year as the United Kingdom, which had almost 15 times as many people to house. Since 1994 the average price for a Dublin home had risen more than 500 percent. By 2007, Irish banks were lending 40 percent more to property developers than they had to the entire Irish population seven years earlier. [[Morgan Kelly]], a professor of economics at University College Dublin, predicted the Irish real-estate prices could fall relative to income—by 40 to 50 per cent, and they did.

Many of housing developments are called "ghost estates" because they’re empty. According to the audit of Ireland’s Department of the Environment published in October, 2010, of the nearly 180,000 units that had been granted planning permission, only 78,195 were completed and occupied. Others are occupied but remain unfinished. Virtually all construction has ceased. There were never enough people in Ireland to fill the new houses.<ref name="Lewis_Irish">Michael Lewis. [http://www.vanityfair.com/business/features/2011/03/michael-lewis-ireland-201103 "When Irish Eyes Are Crying"], ''Vanity Fair'', March 2011 issue. Referenced 2011-02-15.</ref>

===Spanish housing bubble===
In [[Spain]], 2006 was a milestone as regards the number of houses constructed: 760,000; more than the 650,000 started that year in France and the United Kingdom, whose combined populations almost triple that of Spain. Between 2001 and 2008 around four million new houses have been built and the average number of housing units completed per year was 565,000, more than double the figure of 250,000 for the previous decade. This is equivalent to the construction of twelve dwellings per thousand inhabitants, far in excess of the European average of five per thousand.

In 2009, after the collapse of the construction sector caused by the bursting of the housing bubble and the effects of the global economic crisis, the number of housing units started fell to 160,000, and there were almost 700,000 housing units in stock (that is, completed but unsold).<ref name="Concheiro_Spain">Isabel Concheiro. [http://www.architecturalpapers.ch/pdf.php?ID=4 "Spain Interrupted: On the form of the financial bubble"], ''DAP - Digital Architectural Papers'', Issue 1, 16.2.2011. Referenced 2011-02-15.</ref> This has created ghost towns all across Spain.<ref name="Heckle_Ghost">Harold Heckle. [http://www.huffingtonpost.com/2012/02/16/spain-ghost-towns-real-estate-crash_n_1281032.html#s703461 "Spain Ghost Towns Develop From Real Estate Crash (PHOTOS)"], ''Huffingon Post'', posted: 02/16/2012. Referred from [http://blog.mises.org/21060/friday-links-spanish-real-estate-bust-produces-ghost-towns/ here] with more resources and comments. Referenced 2012-02-18.</ref>

===Other countries===
The shipping industry has been heavily affected by the [[Great Recession]], about 12 per cent of the world's container ships were estimated to be 'doing nothing' in 2009.<ref name="Parry_ghost">Simon Parry. [http://www.dailymail.co.uk/home/moslive/article-1212013/Revealed-The-ghost-fleet-recession-anchored-just-east-Singapore.html "Revealed: The ghost fleet of the recession anchored just east of Singapore"], ''Daily Mail'', 28th September 2009. Referenced 2011-02-15.</ref><ref name="Durden_Rusting">Tyler Durden. [http://www.zerohedge.com/article/thousands-rusting-ship-hulls-are-fitting-tribute-speculative-market-bubble "Thousands Of Rusting Ship Hulls Are A Fitting Tribute To The Speculative Market Bubble"], ''Zero Hedge'', 09/16/2009. Referenced 2011-02-15.</ref>

[[Dubai]] was a land full of grandiose, landmark projects, only to see the bubble burst. The office-space vacancy rate in prime locations was in 2009 according to some estimates at around 40%, other estimates arrived at a total 74% occupancy rate in residential and commercial space.<ref name="Ulrich_Rise">Fernando Ulrich. [http://mises.org/daily/3956 "Rise and Fall in Dubai: An Austrian Perspective"], ''Mises Daily'', December 16, 2009. Referenced 2011-02-15.</ref> Burj Dubai, the tallest building in the world (about 2,600 feet high with 160 stories) has been at its opening in January, 2010, described as mostly empty.<ref name="Hawthorne_vacant">Christopher Hawthorne. [http://latimesblogs.latimes.com/culturemonster/2010/01/the-burj-dubai-and-architectures-vacant-stare.html "The Burj Dubai and architecture's vacant stare"], ''Los Angeles Times'', January 1, 2010. Referenced 2011-02-15.</ref> 90% of its 900 apartments were still empty a year later.<ref name="White_ghost">Simon White. [http://www.mortgagestrategy.co.uk/the-ghost-town-that-is-dubais-property-market/1026137.article "The ghost town that is Dubai's property market"], 14 February 2011. Referenced 2011-02-15.</ref> (The construction of the world's tallest buildings seem to correlate with the business cycle - see the [[Skyscraper Index]].<ref name="Thornton_Skyscrapers">Mark Thornton. [http://mises.org/daily/3038 "Skyscrapers and Business Cycles"], ''Mises Daily'', August 23, 2008. Referenced 2011-02-15.</ref>)

[[China|China's]] economy is continuing to grow despite the global recession, helped by massive government spending. For years, regional governments across China have been building massive real estate projects that have attracted both private and corporate buyers. As prices have continued to rise (residential values in 70 large and medium-size cities across China soared in 2009, according to real estate consultancy Colliers International), more investors have become speculators, buying brand-new properties with the sole intention of flipping them.

A notable example is the city Ordos in Inner Mongolia, a whole town built with government money that is standing empty. The district was originally designed to house, support and entertain 1 million people.<ref name="Powell_Runaway">Bill Powell. [http://www.time.com/time/magazine/article/0,9171,1975336,00.html "Inside China's Runaway Building Boom"], see also the slideshow [http://www.time.com/time/photogallery/0,29307,1975397_2094492,00.html "Ordos, China: A Modern Ghost Town"]. ''TIME'', April 05, 2010. Referenced 2011-04-06.</ref><ref name="Al_Jazeera_empty">AlJazeeraEnglish. [http://www.youtube.com/watch?v=0h7V3Twb-Qk "China's empty city"] (video), ''Al Jazeera'', November 9, 2009; [http://english.aljazeera.net/news/asia-pacific/2009/11/2009111061722672521.html# original video]. Referenced 2011-04-06.</ref> Other examples abound. Some estimates put the number of empty homes at as many as 64 million.<ref name="Brown_Ghost">Adrian Brown. [http://www.sbs.com.au/dateline/story/watch/id/601007/n/China-s-Ghost-Cities "China's Ghost Cities"] (video, [http://youtu.be/rPILhiTJv7E YouTube]), ''dateline'', a show of ''SBS TV'' (Australia), on air: 20th March 2011. Referenced 2011-04-06.</ref><ref name="Bristow_stops">Michael Bristow. [http://news.bbc.co.uk/2/hi/8691083.stm "Work stops on Chinese ghost town"], ''BBC News''', 26 May 2010. Referenced 2011-04-06.</ref><ref name="Daily_satellite">Daily Mail Reporter. [http://www.dailymail.co.uk/news/article-1339536/Ghost-towns-China-Satellite-images-cities-lying-completely-deserted.html "The ghost towns of China: Amazing satellite images show cities meant to be home to millions lying deserted"], ''Mail Online'', 18th December 2010. Referenced 2011-04-06.</ref>

==References==
{{Reflist}}

==Links==
* [http://mises.org/journals/jls/19_3/19_3_1.pdf Is "Malinvestment" enough to go bust?] (pdf) by Enrico Colombatto, summer 2005
* [http://mises.org/journals/qjae/pdf/qjae9_4_4.pdf Explaining Malinvestment and Overinvestment] (pdf) by Larry J. Sechrest, winter 2006
* [http://mises.org/journals/scholar/Sechrest4.pdf Capital, Credit Expansions, and the Subsistence Fund] (pdf) by Larry J. Sechrest, November 2002
* [http://mises.org/daily/4309 Malinvestment, Not Overinvestment, Causes Booms] by Ludwig von Mises
* [http://www.ritholtz.com/blog/2010/10/portrait-of-a-housing-bust/ Aerial Footage: Portrait of a Housing Bust] by Barry Ritholtz, October 2010
[[Category:Economic concepts]]
* {{wplink}}

Sweden

2011-11-13T22:08:25Z

173.245.51.176: /* Articles and essays */

{{Stub}}

{{Infobox Country
|Box title = Country summary
|Row 1 title = Capital
|Row 1 info = Stockholm
|Row 2 title = Borders
|Row 2 info = [[Finland]] 614 km, [[Norway]] 1,619 km
|Row 3 title = Government type
|Row 3 info = constitutional monarchy
|Row 4 title = Population
|Row 4 info = 9,059,651 (July 2010 est.)<ref name="CIA_SE">CIA - The World Factbook. [https://www.cia.gov/library/publications/the-world-factbook/geos/countrytemplate_sw.html "Sweden"], from The World Factbook. Referenced 2010-09-29.</ref>
|Row 5 title = Population growth
|Row 5 info = 0.158% (2010 est.)<ref name="CIA_SE" />
|Row 6 title = Life expectancy
|Row 6 info = 80.86 years<ref name="CIA_SE" />
|Row 7 title = Unemployment
|Row 7 info = 8.3% (2009 est.)<ref name="CIA_SE" />
|Row 8 title = [[Wikipedia:Index of Economic Freedom|Index of Economic Freedom]]
|Row 8 info = 21<ref name="Heritage_SE">Heritage Foundation. [http://www.heritage.org/Index/Country/Sweden "Sweden"], Economic Freedom Score. A lower ranking is better; but please be careful when comparing between different countries or years. Referenced 2010-09-29.</ref>
|Row 9 title = [[Wikipedia:Corruption Perceptions Index|Corruption Perceptions Index]]
|Row 9 info = 3<ref name="Transparency_SE">Transparency International. [http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table "Sweden"], Corruption Perceptions Index 2009. A lower ranking is better; but please note that the numbers cannot be compared between countries or years due to different methodology. Referenced 2010-09-29.</ref>
|Row 10 title = [[Wikipedia:Doing Business Report|Doing Business ranking]]
|Row 10 info = 18<ref name="Business_SE">Doing Business. [http://www.doingbusiness.org/economyrankings/ "Sweden"], Doing Business 2010 (part of The World Bank Group). A lower ranking is better; but please be careful when comparing between different countries or years. Referenced 2010-09-29.</ref>
}}

A military power during the 17th century, '''Sweden''' has not participated in any war for almost two centuries. An armed neutrality was preserved in both World Wars. Sweden's long-successful economic formula of a capitalist system interlarded with substantial welfare elements was challenged in the 1990s by high unemployment and in 2000-02 and 2009 by the global economic downturns, but fiscal discipline over the past several years has allowed the country to weather economic vagaries. Sweden joined the EU in 1995, but the public rejected the introduction of the euro in a 2003 referendum.<ref name="CIA_SE" />

{{See also|Scandinavia}}

==Sweden, free market and the social state==
{{Main|Scandinavia and the social state}}
{{See also|Swedish banking crisis}}
Until the second half of the 19th century, Sweden was fairly poor. But far-reaching free market reforms in the 1860s allowed Sweden to benefit from the spreading [[Industrial Revolution]]. And so, during the late 19th and early 20th centuries, Sweden saw its economy rapidly industrializing, driven by the many Swedish inventors and entrepreneurs.

Another factor which continued Swedish prosperity was the fact that Sweden was able to stay out of all wars, including both World Wars. Sweden is the country with the longest consecutive period of peace since 1809, when Sweden was invaded by Russia, [[Wikipedia:Finnish War|losing Finland]] in the process. As a result of its free market policies, the resourcefulness of its people, and its successful avoidance of war, Sweden had the highest per-capita income growth in the world between 1870 and 1950, by which time Sweden had become one of the world's richest countries, behind only the United States and Switzerland, and Denmark (who have since also fallen behind because of high taxes).

In 1932, the Social Democrats rose to power in the face of the Great Depression. Until 1932, government spending had been kept below 10% of GDP in Sweden, but the Social Democrats, under their leader [[Wikipedia:Per Albin Hansson|Per Albin Hansson]], wanted to change this and remake Sweden into a "[[Wikipedia:Folkhemmet|folkhem]]" ("people's home"), a term Swedish Social Democrats adopted from the Fascists in Italy.

Even in the early 1950s, Sweden was still one of the freest economies in the world, and government spending relative to GDP was in fact below the American level. But between 1950 and 1976, Sweden experienced an expansion in government spending unprecedented during a period of peace, with government spending to GDP rising from about 20% in 1950 to more than 50% in 1975. Virtually every year, taxes were increased while the welfare state expanded, both in the form of a sharp increase in the number of government employees and ever more transfer payment benefits.

During the first 20 years, this relentless government expansion took place seemingly without ill effect, as Sweden benefited from rapid global growth — although Sweden's growth had already started to slip in relative terms, from well above average to just average. This changed in the 1970s after [[Wikipedia:Olof Palme|Olof Palme]], from the left wing of the Social Democratic party became Prime Minister. Palme stepped up the socialist transformation in Sweden, rapidly increasing anti-business regulations and sharply increased payroll taxes.

The payroll-tax increases, along with increasing wage demands from unions, made Swedish businesses highly uncompetitive on the global markets, something which was to be solved by devaluing the Swedish krona. As a result, price inflation rose sharply, leading to repeated devaluations.

After Palme was killed by an unknown assassin in February 1986, pragmatist Ingvar Carlsson became prime minister. Worried that Swedish growth had trailed most other countries, Carlsson's government implemented a number of free-market reforms. Among these were the lifting of all currency controls in 1989 and a tax reform that dramatically reduced marginal tax rates. Although these reforms have arguably contributed to improving the long-term economic performance of Sweden, they would contribute to precipitating the deep economic downturn in the early 1990s.

Meanwhile, as the economy started slowing significantly in 1990 after a series of tightening measures, consumer price inflation slowed. With the combination of continued high nominal interest rates, reduced capital gains taxation (and with that, reduced deductions for interest payments) and falling price inflation, real interest rates started rising significantly, helping to end the asset price bubbles. On top of all of this came the oil price shock following Saddam Hussein's invasion of Kuwait and an economic downturn in key trading partners such as the United States, the United Kingdom, and Finland. The end result was that Sweden slipped into a recession in late 1990.

In the collapse in November 1992, the dramatic increase in interest rates and the deep recession had at the same time created a large amount of bad loans, making almost all major banks in effect bankrupt. Only after the Swedish government pledged they would bail out the banks with whatever money they needed was a widespread banking collapse averted.

The recession became Sweden's deepest by far since the Great Depression, with GDP in 1993 being 5% lower than in 1990, with employment falling more than 10%, and the budget deficit rising to more than 10% of GDP. By then Sweden had fallen to between 15th and 20th place in international income comparisons, a decline from which it has never since recovered. After this deep downturn, a number of free market reforms and budget cuts were implemented and Sweden underwent a recovery.<ref name="Karlsson_Myth">Stefan Karlsson. [http://mises.org/daily/2259 "The Sweden Myth"], ''Mises Daily'', August 07, 2006. Referenced 2010-10-10.</ref>

The jobless rate was traditionally very low in Sweden, averaging about two percent. Over the following two decades, however, the official unemployment rate has more than tripled, and the official numbers almost certainly undercount the true rate of unemployment.<ref name="Mitchell_Restore">Daniel Mitchell, Ph.D. [http://www.heritage.org/Research/Reports/2006/09/Hoping-to-Restore-Growth-Voters-Rebel-Against-Swedens-High-Tax-Welfare-State "Hoping to Restore Growth, Voters Rebel Against Sweden's High-TaxWelfare State"], ''The Heritage Foundation'', published on September 21, 2006. Referenced 2010-10-12.</ref> The McKinsey Global Institute estimated that the real unemployment rate was around 15 percent (as of 2004).<ref name="McKinsey_Performance">McKinsey Global Institute. [http://www.mckinsey.com/locations/sweden/pdf/Full_report.pdf "Sweden's Economic Performance: Recent Development, Current Priorities"] (pdf) ''McKinsey Global Institute'', May 2006. Referenced 2010-10-12.</ref>

Estimates usually put total Swedish [[unemployment]], including the so called hidden unemployment, at somewhere between 15 and 20 percent, about three times above the official unemployment figures. In 2005, Mr. Hans Karlsson, a member of the prime minister's cabinet as secretary of labor, was quoted in Dagens Industri, a major business daily, as saying that about 20 to 25 percent of the work force is unemployed and that most of them are "stashed away" in the statistics on long term sick leave, in labor market programs, or in early retirement and similar programs.<ref name="Larson_Swedish">Sven R Larson, Ph.D. [http://www.freedomandprosperity.org/Papers/sweden/sweden.shtml "The Swedish Tax System: Key Features and Lessons for Policy Makers"] (html, [http://www.freedomandprosperity.org/Papers/sweden/sweden.pdf pdf]), ''Center for Freedom and Prosperity Foundation'', June 2006, Vol. VI, Issue II. The article referred to [http://di.se/Default.aspx?pid=60648__ArticlePageProvider&epslanguage=sv this article] (in [[Wikipedia:Swedish language|Swedish]]) for its claim. Referenced 2010-10-12.</ref>

===Impact of high taxes===
High taxes and excessive regulations have encouraged many large corporations to leave the country. Almost the entire pharmaceutical industry has moved: the most significant examples are [[Wikipedia:Pharmacia|Pharmacia]], which was bought by Michigan-based Upjohn, and Astra, which was effectively taken over by Zeneca. Research and development has moved abroad, while some low tech production has remained in Sweden. The automobile industry met a similar fate in the 1990s: [[Wikipedia:Volvo Cars|Volvo Cars]] was broken out of the Volvo Corporation and sold to Ford; GM took over [[Wikipedia:SAAB Automobile|SAAB Automobile]]. SAAB is already building two of its four models for the American market outside Sweden and Volvo has expanded its Netherlands and Belgium operations significantly.

[[Wikipedia:IKEA|IKEA]] and [[Wikipedia:Tetra Pak|TetraPak]] also moved abroad. IKEA was founded by Mr. Ingvar Kamprad soon after World War II. Having become one of the world's richest men on low price, "self assembly" furniture, Mr. Kamprad has relocated his corporation to the Netherlands. He himself resides in Switzerland. The TetraPak Corporation, founded by the Rausing brothers, gave the world the "sausage stuffing" procedure for manufacturing and filling milk cartons. The technology made the brothers billionaires, and motivated them to relocate to England.

By taxing professionals so onerously, the tax system also discourages education. This leads to a lack of highly skilled professionals and mounting recruitment problems in sectors of the economy that are based on human capital. Between 1993 and 2000, emigration of college graduates grew by 48 percent. College graduates account for half or more of recent emigrants, with their share increasing slightly between '93 and 2000. Since then, emigration has continued to grow at 5-7 times the growth rate of the population as a whole, and anecdotal evidence from newspaper reports indicates that college graduates continue to dominate emigration.<ref name="Larson_Swedish" />

One of the people who were burdened with this tax was [[Wikipedia:Astrid Lindgren|Astrid Lindgren]], the famous author of children's books best known for her Pippi Longstocking series. In 1976 she wrote a satirical short story published in one of Sweden's biggest newspapers, where she told the tale of a troubled children's-books author called [[Wikipedia:Pomperipossa in Monismania|Pomperipossa]], who lived in the fictional kingdom of Monismania. Among other things, Pomperipossa pondered why the more she earned, the less she got to keep, and why people like her were being economically punished by the government simply for writing popular children's books. The story also mentions that in Monismania one could escape some of the taxes by purchasing real-estate property, which is exactly what the Swedish secretary of the treasury, [[Wikipedia:Gunnar Sträng|Gunnar Sträng]], had been doing at that time. Lindgren's story stirred up a fierce tax debate in Sweden, and for the first time in 44 years the incumbent Social Democratic Party lost the general elections.<ref name="Bergstrom_Welfare">Markus Bergstrom. [http://mises.org/daily/4146 "The Scandinavian-Welfare Myth Revisited"], ''Mises Daily'', March 09, 2010. Referenced 2010-10-15.</ref>

===Budgeting reform===
Before the reform, the government introduced parts of the budget in January. Over the following months, it would introduce further appropriations, sometimes comprising about a third of the overall budget, as they were being finalized. Parliamentary approval proceeded on an item-by-item basis and was typically concluded in June, before the beginning of the fiscal year in July. As a result, aggregate spending and the deficit were unpredictable until the very end of this process.

After the reforms in the mid-1990s, parliament would vote first on budget totals before deciding individual appropriations. The first step was for a Spring Fiscal Policy Bill to propose aggregate expenditure ceilings for the upcoming budget plus two further years, as well as indicative ceilings or ‘frames’ for the allocations across expenditure areas. While ceilings were initially approved three years in advance, later has the setting of medium-term ceilings been delayed, officially owing to a pending evaluation of economic growth potential and possibly also to retain flexibility for the period following elections.<ref name="Wehner_Budget">Joachim Wehner. [http://personal.lse.ac.uk/wehner/sweden.pdf "Budget reform and legislative control in Sweden"], ''Journal of European Public Policy'', 14:2, March 2007. Referenced 2010-12-12.</ref>

The [[Parliament of Sweden|Riksdag's]] work on the budget begins each year with a proposal from the Government. In the spring, the Government's first proposal - the Spring Fiscal Policy Bill with guidelines for Sweden's economic policy and budget policy - is presented. In September, it presents its second proposal, the Budget Bill, which contains the entire central government budget.

The central government budget applies for one year at a time, but sometimes revisions need to be made after it has started to apply. In this case, the Government will submit a supplementary budget. The Riksdag has until the end of November to determine the total limit for central government expenditure, as well as the limits for each expenditure area. In mid-December it decides how the money for each expenditure area is to be allocated.<ref name="Swedish_budget">The Swedish Parliament. [http://www.riksdagen.se/templates/R_Page____6204.aspx "The budget process"], April 2008. Referenced 2010-12-12.</ref>

===Private employment===
In an article (available in ''Swedish'' only - [http://www.ratio.se/media/43604/privat%20och%20offentlig%20sysselsattning.pdf pdf]) published in the Swedish Economics Association's journal Ekonomisk Debatt in 2009, Ratio Institute economists Bjuggren and Johansson, relying on public data from the government agency Statistics Sweden, they found that there has been no job creation at all in the private sector from 1950 to 2005. They show the effects of the corporate government by identifying what corporations are owned by government and therefore considered, as government-owned corporations, part of the [[public sector]]. The data takes the self-employed into account, as well as foreign ownership, both of which are categorized as "private" (whether owned by foreign governments or not).

While the private sector has provided zero net job creation, the public sector has seen monstrous growth during this period. The population has increased even more, which explains the higher unemployment rates as well as the great chunk of people of working age pushed into public universities to further "educate" themselves.<ref name="Bylund_Stagnating">Per Bylund. [http://mises.org/daily/4936 "Stagnating Socialist Sweden"], ''Mises Daily'', January 11, 2011. Referenced 2011-01-11.</ref>

==Sweden during the crisis==
In response to the [[Great Recession|current recession]] were taxes cut, a move according to the critics the country could not afford, the [[European Commission]] also warned against this. But instead, the lower taxes were a spur to growth and Sweden now has the fastest-growing economy in the Western world. Tax on low-paid jobs fell sharpest. Nursing assistants, for example, saw their tax bill drop by a fifth. The aim was to make work compete more aggressively with Sweden's famously generous welfare state. (The conservatives won the election with the slogan 'We are the new workers' party,' meaning they would cut taxes for those in employment, but not for those on benefits.) The notorious wealth tax, which took 1.5 per cent a year from any Swede worth over about [[Swedish krona|Skr]] 1.5 million, has been abolished.

When the recession came, Sweden was badly hurt, as one would expect from an export-orientated economy trading with a stricken continent. But the damage was limited because Sweden had properly regulated financial institutions (having been stung by a serious financial crisis in the 1990s). Banks which had embarked on misadventures in the Baltic cleaned up their own mess. The government entered the recession with a surplus, because its laws prohibit politicians running up the national debt in boom years.

Like most of Europe, Sweden launched a stimulus, but two thirds were set aside for a tax cut. Corporation tax fell from 28 per cent to 26.3 per cent, taxes on jobs were cut further still while income tax thresholds were raised. Determined not to let a crisis go to waste, the tax cuts were declared to be permanent. 'If you tax work higher, you will get fewer people in work,' said the education minister, Jan Björklund. 'But if you tax work less you will get more in work.'

Unemployment never hit the forecast 10 per cent - it was 8 per cent in July and 7.4 per cent in August, 2010. Two think tanks have confirmed the assessment that the tax cuts have created some 100,000 jobs. The deficit was tumbling as the economy recovered. Extraordinarily, Sweden has now overtaken the United States and reached second place in the [[World Economic Forum|World Economic Forum's]] yearly competitiveness rankings.<ref name="Nelson_Swedish">Fraser Nelson. [http://www.spectator.co.uk/print/politics/all/6296398/swedish-conservatives-bucked-the-recession-by-lowering-taxes-and-won-reelection.thtml "Swedish conservatives bucked the recession by lowering taxes – and won re-election"], ''The Spectator'', 25th September 2010. Referenced 2010-12-08.</ref>

The [[Swedish National Debt Office]] predicted that a stronger economy and increased tax income will lead to the central government budget being close to balance in 2010. In 2011 and 2012, there will be a surplus. Consequently, borrowing will be reduced in the coming years.<ref name="Riksgalden_budget">Swedish National Debt Office. [https://www.riksgalden.se/templates/RGK_Templates/NewsPage____20531.aspx "Sweden's budget returns to surplus in 2011"], Press release, 2010-11-16. Referenced 2010-12-08.</ref>

In the third quarter of 2010, exports, which make up more than half of the Scandinavian country's GDP, increased 11.9 percent and imports 14 percent. Industrial production increased by 9.3 percent.<ref name="Nylander_booms">Johan Nylander. [http://www.swedishwire.com/economy/7400-swedens-economy-booms-gdp-up-69-percent "Sweden’s economy booms – GDP up 6.9 percent"], ''The Swedish Wire'', 29 November 2010. Referenced 2010-12-08.</ref>

==Economical characteristics==
* '''Currency''': Swedish krona (ISO code: SEK)
* Central bank '''[[Wikipedia:Discount rate|discount rate]]''': 2% (31 December 2008)<ref name="CIA_SE" />
* Commercial banks '''lending rate''': NA% (31 December 2008)<ref name="CIA_SE" />
* '''Stock of money''' ([[Money supply#M1|M1]]): $185.4 billion (31 December 2008)<ref name="CIA_SE" />
* '''Quasi money''' (with M1 makes [[Money supply#M2|M2]]): $54.55 billion (31 December 2008)<ref name="CIA_SE" />

===Notable events:===
* [[Banking crisis]]: January 1811, 1876-1879, 1897, 1907, 1922-1923, 1931-1932, 1991-1994<ref name="Reinhart_crisis">Carmen M. Reinhart and Kenneth S. Rogoff. [http://press.princeton.edu/titles/8973.html "This Time is Different"], ''Princeton University Press'', ISBN 978-0-691-14216-6, p. 383-384. (The list does not claim to be complete.) Referenced 2011-07-21.</ref>
* Years in [[inflation]]: 1.9% (share of years 1800-2009 with annual inflation above 20 per cent per annum)
* [[Public default]]: 1811 (external)<ref name="Reinhart_histories">Carmen M. Reinhart. [http://www.princeton.edu/economics/seminar-schedule-by-prog/macro-s10/papers/Reinhardt-Chartbook.pdf "This Time is Different Chartbook: Country Histories on Debt, Default, and Financial Crises"] (pdf), March 3, 2010, p. 106. (The list does not claim to be complete.) Referenced 2011-07-21.</ref>

===Statistics===
{| border="1" cellspacing="0" cellpadding="5" style="text-align:center"
| Statistic / Year
! 1999
! 2000
! 2001
! 2002
! 2003
! 2004
! 2005
! 2006
! 2007
! 2008
|-
! [[GDP]] (million USD)<ref name="WorldBank_GDP_SE">World Bank. [http://open.worldbank.org/countries/se/indicators%5BNY.GDP.MKTP.CD%5D?date=1999:2009 "Sweden: GDP"], from World Bank [http://data.worldbank.org/ Data]. Referenced 2010-09-29.</ref>
| 257 065
| 245 573
| 225 206
| 248 612
| 311 038
| 357 191
| 366 008
| 393 157
| 453 316
| 478 961
|-
! Govt. debt (% of GDP)<ref name="WorldBank_Debt_SE">World Bank. [http://open.worldbank.org/countries/se/indicators%5BGC.DOD.TOTL.GD.ZS%5D?date=1999:2009 "Sweden: government debt"], from World Bank [http://data.worldbank.org/ Data]. Referenced 2010-09-29.</ref>
|
|
|
| 60.653
|
| 52.883
| 53.023
| 47.344
|
|
|-
! Govt. revenue (% of GDP)<ref name="WorldBank_Revenue_SE">World Bank. [http://open.worldbank.org/countries/se/indicators%5BGC.REV.XGRT.GD.ZS%5D?date=1999:2009 "Sweden: government revenue"], from World Bank [http://data.worldbank.org/ Data]. Referenced 2010-09-29.</ref>
| 37.189
|
|
|
|
|
|
|
|
|
|-
! Govt. expenses (% of GDP)<ref name="WorldBank_Expenses_SE">World Bank. [http://open.worldbank.org/countries/se/indicators%5BGC.XPN.TOTL.GD.ZS%5D?date=1999:2009 "Sweden: government expenses"], from World Bank [http://data.worldbank.org/ Data]. Referenced 2010-09-29.</ref>
| 36.663
|
|
|
|
|
|
|
|
|
|-
! Debt to revenue (years)
|
|
|
|
|
|
|
|
|
|
|}

==References==
<small>Note: statistical data was rounded. Different sources may use different methodologies for their estimates. Debt to revenue is calculated by dividing the two variables from their original ('unrounded') values. It represents how long it would a government take to repay its entire debt if it used its whole revenue for this purpose.</small>
{{Reflist}}

==Links==
* BBC [http://news.bbc.co.uk/1/hi/world/europe/country_profiles/1021823.stm country profile]

;Government
*[http://www.sweden.se/ Sweden.se] — Sweden's official website
*[http://www.sweden.gov.se/ The Swedish Government] – Official site
*[http://www.riksdagen.se/default____56.aspx The Swedish Parliament] – Official site
*[http://www.royalcourt.se/ The Swedish Royal Court] – Official website of the Swedish Royal House
*[https://www.cia.gov/library/publications/world-leaders-1/world-leaders-s/sweden.html Chief of State and Cabinet Members]
* [http://www.riksbank.com Central bank] of Sweden

;General information
*{{CIA World Factbook link|sw|Sweden}}
*[http://www.britannica.com/EBchecked/topic/576478/Sweden Sweden] entry at ''[[Encyclopædia Britannica]]''
*[http://ucblibraries.colorado.edu/govpubs/for/sweden.htm Sweden] from ''UCB Libraries GovPubs''
*{{dmoz|Regional/Europe/Sweden}}
*{{wikiatlas|Sweden}}

;News media
*[http://www.radiosweden.org/ Radio Sweden] {{en icon}} – Public service
*[http://www.dn.se/ Dagens Nyheter] {{sv icon}}
*[http://www.svt.se/ Svergies Television] {{sv icon}}
*[http://www.svd.se/ Svenska Dagbladet] {{sv icon}}
*[http://www.thelocal.se/ The Local – Sweden's news in English] – Independent English language news site

;Other
*[http://www.studyinsweden.se/ Study in Sweden] – Official guide to studying in Sweden
*[http://www.swedishtrade.se/english/ Swedish Trade Council]
*[http://eh.net/encyclopedia/article/schon.sweden Sweden – Economic Growth and Structural Change, 1800–2000] — EH.Net Encyclopedia
*[http://www.vifanord.de/index.php?id=1&L=1&rd=243343734 vifanord] – A digital library that provides scientific information on the Nordic and Baltic countries as well as the Baltic region as a whole

===Articles and essays===
* by Per Bylund
** [http://mises.org/daily/2190 How the Welfare State Corrupted Sweden], May 2006
** [http://perbylund.com/the_library_therecyclingmyth.htm The Recycling Myth], February 2008 <small>(republished as Mises Daily [http://mises.org/daily/2855 here])</small>
** {{mb|13314|The State and Scarcity||July 2010}}
** {{mb|14312|UK follows Sweden’s lead||October 2010}}
** {{md|4936|Stagnating Socialist Sweden||January 2011}}
** {{mb|17418|How Keynes Saved Sweden?||June 2011}}

* by [[Daniel J. Mitchell]]
** [http://www.cato-at-liberty.org/sweden-repeals-wealth-tax/ Sweden Repeals Wealth Tax], March 2007
** [http://www.cato-at-liberty.org/sweden-is-a-tax-haven/ Sweden Is a Tax Haven?!?], May 2007
** [http://www.cato-at-liberty.org/the-welfare-state-causes-sickness/ The Welfare State Causes "Sickness"], May 2007

* [http://mises.org/daily/955 Sweden: Poorer Than You Think] by [[William L. Anderson]], May 2002
* {{md|2259|The Sweden Myth|Stefan Karlsson|August 2006}}
* {{md|4146|The Scandinavian-Welfare Myth Revisited|Markus Bergstrom|March 2010}}
* [http://www.cato.org/pubs/pas/pa160.pdf Sweden: From Capitalist Success to Welfare-State Sclerosis] (pdf), by Peter Stein, September 1991
* [http://mises.org/daily/1406 What Has Government Done to Our Families?] by Allan Carlson, January 2003
* [http://www.cato-at-liberty.org/if-the-swedish-system-is-socialist-whats-ours/ If the Swedish System Is Socialist, What’s Ours?] by Andrew J. Coulson, July 2008
* [http://www.mackinac.org/article.aspx?ID=1885 Economics-Free Enterprise in Action] by Dr. Burton W. Folsom, Dr. George C. Leef, and Dr. Dirk Mateer, June 1999
* [http://nationalinterest.org/print/article/swedish-models-869 Swedish Models] by [[Johan Norberg]], June 2006
* [http://www.thenewamerican.com/world-mainmenu-26/europe-mainmenu-35/328-swedish-welfare Swedish Welfar] by Nima Sanandaji, September 2008
* [http://www.timbro.se/bokhandel/pdf/9175665891.pdf Sweden after the Swedish Model - From Tutorial State to Enabling State] (pdf) by Mauricio Rojas, May 2005
* [http://www.google.com/hostednews/afp/article/ALeqM5jlSz_d-DCbzADaQbcl69tQcOXnIg Swedish government 'rules out takeover of Volvo Cars'] (from ''AFP''), Dec 2008
* [http://www.riksbank.se/templates/speech.aspx?id=1752 Financial Crisis - Experiences from Sweden] by the Sveriges Riksbank, July 1998
* [http://www.thelocal.se/24784/20100204 Justice Minister reluctant to store data] by Peter Vinthagen Simpson, February 2010
* [http://www.riksbank.se/templates/Page.aspx?id=26804 Penningmängd 1871-2006], ''Sveriges Riksbank'', money supply information, mostly in [[Wikipedia:Swedish language|Swedish]], February 2008
* [http://mises.org/journals/qjae/pdf/qjae10_2_3.pdf Free Banking in Sweden 1830–1903: Experience and Debate] (pdf) by Erik Lakomaa, 2007
* [http://personal.lse.ac.uk/wehner/sweden.pdf Budget reform and legislative control in Sweden] (pdf) by Joachim Wehner, March 2007
* [http://www.libera.fi/wp-content/uploads/2011/10/Libera_The-Swedish-model.pdf The Swedish Model Reassessed] (pdf) by Nima Sanandaji, October 2011

* {{wplink}}


[[Category:Countries]]
[[Category:Scandinavia]]

* [http://www.mises.se/om/mises-sweden/ Mises Sweden] by Joakim Fagerström, September 2011
* [http://www.mises.se/2011/10/05/samuel-gregg%E2%80%99s-misconceptions-about-sweden/ Samuel Gregg’s misconceptions about Sweden] by Joakim Fagerström, October 2011
* [http://www.mises.se/2011/11/12/the-swedish-model/ The Swedish model] by Joakim Fagerström, November 2011