The Policy Response to Factory Closings: A Comparison of the United States, Sweden, and France

Abstract

As the severity of the recent recession mounted so did the debate over what to do about it. Three basic options for policy are being promoted: conservative free-market, liberal industrial, and social welfare. Though the first of these has dominated in the United States, France has relied on an industrial policy, while Sweden has adopted a social welfare emphasis. In comparing the experiences of these three countries it becomes clear that an approach more interventionist than relying on the market is both possible and advisable. But neither the social welfare policy nor the industrial policy can fully address the problem of factory closings. In fact, Sweden is turning to industrial policies to complement their social welfare programs, while France is beginning to address the social welfare issues that accompany economic development. For the United States, the lesson is that the proponents of industrial and social welfare policies not only have more in common than the recent debate would suggest, but that these two groups of reformers must ally with one another if either policy is to be politically viable.