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a wide variety of providers, with Waldorf Steiner, Montessori, confessional (faith schools) and traditionally-run schools which emphasise the basics and are strong on discipline.

Claes Bromander, vice-chairman of the Swedish Association of Independent Schools and principal of Vaxjo Fria Gymnasiet. "They reinvest most of the profit. Swedish TV has done some research: the 60 biggest providers that are run as companies have a turnover of about 10 billion kroner (£804m)."

The Swedish government has made a determined effort to make the admissions system for its independent "free" schools fair. They operate a "first come, first served" policy, announcing the date for the start of admissions and closing once they have filled up all the places.

Research for the Swedish National Agency for Education shows it has caused increased segregation, with better-educated parents more likely to opt for an independent "free" school place.

Mervyn Benford, a former primary school head from the UK who has spent years in Sweden advising ministers on their inspection system thinks there could be another reason for the "free" schools' higher results. "They are smaller than the municipal schools," he said. "They can give pupils more attention."

All political parties – the Conservative-led coalition in government at present and the opposition Social Democrats – are committed to maintaining the system, although the Social Democrats have called for a freeze on new schools, with pupil numbers falling. "We have to shrink the system," said Maria Sellberg, vice-principal of Norre Real High School, a top-performing public school in Stockholm. "Shrinking such an organisation costs a lot but the number of students [nationally] is decreasing. You squander taxpayers' money on this over-capacity; there is a great bleed-away of taxpayers' money." As the Swedish National Agency for Education put it: "To provide choice, you have to over-provide."

In the 1970s and 1980s the Nordics were indeed tax-and-spend countries.

They have avoided both southern Europe’s economic sclerosis and America’s extreme inequality.

But tax-and-spend did not work: Sweden fell from being the fourth-richest country in the world in 1970 to the 14th in 1993.

Government’s share of GDP in Sweden, which has dropped by around 18 percentage points, is lower than France’s and could soon be lower than Britain’s. Taxes have been cut: the corporate rate is 22%, far lower than America’s. The Nordics have focused on balancing the books. While Mr Obama and Congress dither over entitlement reform, Sweden has reformed its pension system (see Free exchange). Its budget deficit is 0.3% of GDP; America’s is 7%.

Nordics have been similarly pragmatic. So long as public services work, they do not mind who provides them

The performance of all schools and hospitals is measured. Governments are forced to operate in the harsh light of day: Sweden gives everyone access to official records. Politicians are vilified if they get off their bicycles and into official limousines. The home of Skype and Spotify is also a leader in e-government: you can pay your taxes with an SMS message

Denmark and Norway allow private firms to run public hospitals. Sweden has a universal system of school vouchers, with private for-profit schools competing with public schools. Denmark also has vouchers—but ones that you can top up.

the Nordics also offer something for the progressive left by proving that it is possible to combine competitive capitalism with a large state: they employ 30% of their workforce in the public sector, compared with an OECD average of 15%

All Western politicians claim to promote transparency and technology. The Nordics can do so with more justification than most.

Denmark, for instance, has a system of “flexicurity” that makes it easier for employers to sack people but provides support and training for the unemployed, and Finland organises venture-capital networks.

Public spending as a proportion of GDP in these countries is still higher than this newspaper would like, or indeed than will be sustainable.

They are stout free-traders who resist the temptation to intervene even to protect iconic companies: Sweden let Saab go bankrupt and Volvo is now owned by China’s Geely. But they also focus on the long term—most obviously through Norway’s $600 billion sovereign-wealth fund—and they look for ways to temper capitalism’s harsher effects.

Their levels of taxation still encourage entrepreneurs to move abroad

Too many people—especially immigrants—live off benefits

pressures that have forced their governments to cut spending, such as growing global competition, will force more change. The Nordics are bloated compared with Singapore, and they have not focused enough on means-testing benefits

Nordics are part of the answer. They also show that EU countries can be genuine economic successes. And as the Asians introduce welfare states they too will look to the Nordics: Norway is a particular focus of the Chinese

The main lesson to learn from the Nordics is not ideological but practica

A Swede pays tax more willingly than a Californian because he gets decent schools and free health care

You can inject market mechanisms into the welfare state to sharpen its performance. You can put entitlement programmes on sound foundations to avoid beggaring future generations. But you need to be willing to root out corruption and vested interests.