Headlines 2016

IFN researchers: Multiple errors in Landström's report

2016-09-06


An op-ed by Magnus Henrekson and Henrik Jordahl, IFN, is published in Dagens Industri. The basis for the article is the proposal to limit profit to 8 percent of capital invested in tax financed services, i.e. education, healthcare and so on. Henrekson and Jordahl found several errors with Joachim Landström’s analysis of the matter, explaining that "a reasonable mandate would be to investigate whether a profit control is at all needed in tax financed services (and whether it is consistent with the Swedish Constitution and the European legislation Sweden is subject to)."

Henrekson and Jordahl write that Landström is completely wrong when suggesting that this sector needs a profit cap because companies do not set their own prices. "Local governments can already reduce corporate profits by lowering prices. In the LOV system, prices are fixed, but set at the level it costs the municipalities' to produce the same service. The problem is not that there are companies that make profits, but that the municipalities have higher costs than the private companies as their operations are less efficient."

Further reading (in Swedish)

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