The revival of Sweden’s upper class
Bengt Ericson’s critique of Sweden’s ultra-wealthy argues that rewards for failure and an enduring coterie threatens both the social contract and the efficient allocation of capital.
Bengt Ericson’s book, The New Upper Class – a book about Sweden’s economic elite (our translation), has been available in Sweden for the past year or so, but its description of cultural and business practices is still worth translating. It provides insight into some of the biggest business names in Sweden and links that could be made to other jurisdictions, such as the UK, where business secretary Vince Cable is re-writing rules on executive pay in the financial sector.
Interestingly, for a nation where the common hobby is to talk down the wealthy, few begrudge the self-made (SEK) billionaire, Ericson notes. But there are two big problems. Firstly, there is a layer of people trying to break into this exclusive set of seriously wealthy individuals and families. As executives of financial companies, the actions of these newcomers leave much to be desired, particularly when remuneration is gauged against share price performances and value creation in the past decade, alongside growing poverty generally. Secondly, there is increasing reason to question the scions of those families who control a portion of the economy that suggests a division of wealth even more pronounced than the US.
Sweden is often hailed as a state where government finances are in order while still offering cradle-to-grave social welfare policies, albeit with a high tax rate. Yet the figures obtained from Statistics Sweden by Ericson suggest 1% of the population controls 32% of total private wealth, with the proportion jumping to more than 40% if data on Swedes living abroad is included.
The latter includes Ikea founder Ingvar Kamprad; language school EF Education First founder Bertil Hult; IT entrepreneur and Skype co-inventor Niklas Zennström; and financiers Erik Penser (Penser Bank, Pan Capital) and Gerard de Geer (who sold his investment bank Brunswick Ltd to Warburg). Such rich Swedes tend to live in either the UK or Switzerland.
Ultimately, the book is about 300 people out of a population of 9.5 million who make up the so-called ‘New Upper Class’ in the title. But why ‘New’? Ericson identifies the turning point as Friday 11 April 2003. That is the day the speaker of Sweden’s Parliament banged the gavel to repeal the last formal privileges of the aristocracy, which had continued to exist through a type of corporate body, the statutes of which were meant to be negotiated between the House of Nobility (Riddarhuset) and the government. Following that date, the body’s status was the same as any other: Ericson compares it to a chain of fitness centres.