"Sweden’s impressive start-up record can also be attributed to some broader aspects of how the country is set up. Its social safety net, for instance, helps entrepreneurs feel safe to take risks. In Sweden, university is free, and students can get loans for living expenses, which allows anyone to pursue higher education. Health care is free too, and childcare is heavily subsidized. None of these benefits are contingent on having a job, which means people know that they can take entrepreneurial risks and still know many of their necessities will be covered.
“I think if you want to be an innovative country, you have to give people security so they dare to take risks,” Mikael Damberg, Sweden’s minister for enterprise and innovation, told me."
The second case, which is not present in the article is that in Sweden, working in a small company is considered a risky proposition and a such small companies are offering higher salary than big companies. It means that they tend to attract the best people too. In most of the rest of Europe (DK, DE, FR from my own experience), if you want the engineer path with good money, you need to get hired by a big company.
Other Scandinavian countries are also doing quite well, way beyond what their size would suggest.
But also well beyond other countries with developed welfare systems, such as France. I think these discussions always miss one key factor: Language.
If you don't speak English quite well at an early age (already at 10-13 years old) you are much less likely to get into software development at an early age. If you don't get into software development at an early age, you are much less likely to do a software based startup when you are in your twenties. There is a thousand times as much documentation, conferences, tutorials, courses, online fora etc in English as in other languages and this is how new ideas in IT spread. Only months or years afterwards, it's translated to Spanish or Chinese, and only if it has caught on. Just about everything new in IT spreads through English, whether it's AI or web development or anything else.
The Scandinavian languages are not that different from English, the countries are small and consume a lot of music, movies, TV etc from the US/UK. Movies and TV have never been dubbed, except for toddlers. So for the last 50-60 years or more, Scandinavians have been quite good at English. Your average 70 year old Scandinavian speaks English better than your average 20 year old Italian. A drunkard on a bench in Scandinavia is likely to speak better English than most academics I've met in Southern or Eastern Europe.
We live in an era of software driven startups. It's easy to forget that it was not always like that. There were times when successful businesses were driven by mechanics (GM), electronics (Sony), chemistry (Kodak), trade or other factors. Now it's software, and whether your language, framework, or library of choice is C, C++, Python, Lisp, Java, PHP, JS, HTML, CSS, Tensorflow, React, or almost any other tech that the unicorns are built with, the new developments in that tech will initially have spread from English speakers to English speakers. The fact that the largest software companies in the last two decades have all been American then reinforces that trend.
I'm Finnish (the lang is nowhere near English) and I've begun coding in my early 20s and I'm a technical co-founder (who actually knows his stuff). I don't think language is the reason here.
Good education, smart people, good safety nets and a culture of doing things well & properly are IMHO better explanations.
About the culture thing: go to anywhere in Europe/World and you'll find out that the Nordic countries in general have very clean cities and all broken things like door knobs etc. are replaced faster. Design & architecture is very simple, functional and there isn't much "kitsch" to be found. I'd say this helps in startups too: you'll find people who really want to do their job well and build a solid product.
I think you are right in this being one of the important factors as well. I'm Swedish and my toddlers never watched any YouTube content in Swedish. Pretty much all they ever watch is in English. I wasn't too surprised this summer when visiting some friends in England and I heard my 4 year old girl say complete sentences like: "yeah, I'm coming down Toby" to her English playmate. Thanks YouTube and Apple!
Still doesn't explain why I can't name a hugely popular programming language, library or framework created by a French programmer but several by Swedes, Norwegians, Danes, and Dutch, all small countries but where English is a very strong second language. I'm sure there are great French programmers and programming languages, but doesn't is strike you as remarkable that there are not more?
From a country of 5 million (Denmark) you got the creators or cocreators of C++, C#, PHP, Ruby on Rails, Turbo Pascal etc. From a country of 60 million you got ...?
France is a a power house in so many other engineering fields like nuclear power, auto industry, aviation etc so they clearly have engineering talent. But in software, not so much.
There's a ton of French influence in software: Symfony, OCaml, lots of Java stuff...
But I treat "made in France" like a warning label for anything software, hard to explain exactly why :)
I guess it might be because they have very few self-thought people (probably because university is decent and free) that have that "intuition for how to simplify stuff and make it obvious and grok-able" (academic education tends to kill this "intuition" in people). Also, there's a kind of cultural "hate" for KISS and "complexity reduction" in general - they tend to view complexity as an asset somehow, quite a messed-up mindset imho...
...and also, ugly as it may be as a language, PHP is a great tool at reducing complexity if you think higher-level (deployment, scaling): the shared-nothing, each requests runs from scratch (and in an isolated process) architecture makes lots of things 100x times simpler. Of course, this wonderfully simple architecture turns 100% against you if you have the bad taste of trying to write a big and "properly engineered" framework on top of it.
I kinda love PHP as long as I don't have to read/write any of it myself ;)
(Oh, and you made me realize what's the core of my "french software" stereotype: getting complex-vs-simple completely backwards! ...of course, it's just a funny stereotype, the real people I've actually known are all smart and cool and understand trade-offs even when we don't agree on architecture and organizing stuff :P)
Did I say anything about PHP?! I mentioned Symfony but that's contrary too the point (and a fine example of over-engineering, btw...).
And Ocaml seems cool, though Haskell people see it like "eager Haskell with too many features and complexity and syntax on top". I took a look at the Ocsigen Ocaml web framework long ago though, and I was like "jeeez, wtff"... the language may seem cool, but that thing... ugh... But I can't really have an opinion on that since the only truly functional languages I've really played with were dynamic (Clojure and Erlang), static + functional is not really my area of experience.
Haskell people see Ocaml as a language with too many features and complexity? really? Haskell, a language with a billion extensions? Have you ever tried compiling ghc?
I don't know about ocsigen(i don't do web development), but i guess all web frameworks are more complex than they need to be.
I haven't even mentioned all the formal verification stuff(coq, a verified C compiler, frama-c etc.) that come from inria.
I mentioned PHP because the GP was saying languages like PHP that comes from denmark etc., but nothing from France.
I don't have immediately all the examples in my head but one which comes to mind is Docker, created by a bunch of french people including Solomon Hykes. It's not like Docker appears every single day on Hackernews, uh ;) ?
HTML was created in Switzerland. Linux in Finland. Not sure what "software" companies are for you. Google? Well, China has enough Internet counterparts (Tencent, Wechat, Alibaba etc.). Softbank (Japan) just bought ARM (UK). Regarding "software" companies like Microsoft, SAP (DE) is quite a decent size. Nokia (Fi) was once leading edge too. Sure you have not heard about Skype and Transferwise, but they do exist. Maybe you should come out of your little bubble once in a while?
HTML was based on the ideas of a British national, Tim Berners-Lee. He spoke English. So did Linus Thorvalds, and the founders of Skype and Transferwise.
ARM and Nokia are/were not mainly software companies, but producers of chips and cell phones (where software is a part).
>If you don't speak English quite well at an early age (already at 10-13 years old) you are much less likely to get into software development at an early age.
The percent of English speaking people is probably like 4x in China or Russia vs. France or Spain. And you don't need "speaking fluency", just "advanced reading comprehension skills" to get most advantages...
I could read advanced academic papers written in English (not just technical, also philosophy and economics) well before my speaking fluency was good enough to make "live conversation" well.
Of course, there is a horrible side to it: coming from Eastern Europe and living in Western Europe, I need to "dumb down" my English a lot, and to force myself to talk slower in English when speaking with French/Italian/Spanish (French are the worse btw - never met people harder to communicate efficiently with than them... even when their language skills are ok they sprinkle that "context dependency" and "nonobviousness" into everything) people that speak "English" but are actually only fluent in a lifeless subset of "standard international business English"...
I think the point is, though, that there's plenty of resources available in Mandarin and Russian to be able to get really good at programming from a young age, even if you don't learn English until later.
Contrast with, say, an African child of well-to-do parents who has access to computers and the Internet but who doesn't (yet?) speak English. Good luck finding lots of coding resources.
Why would this matter? There are more than enough books in the local languages about programming.
Formerly it may have mattered if you can afford a computer. But prices have come down so far that this is not an issue anymore. Hey, you could use a Raspberry with a keyboard and attach it to a TV to learn how to program.
"In most of the rest of Europe (DK, DE, FR from my own experience), if you want the engineer path with good money, you need to get hired by a big company."
This is true. Unfortunately this has likely very little to do with your skills. To get hired by a big company there are three options:
1. You have family connections
2. Your professor in the university has connections
3. You work for a start up that get's acquired by a big company.
Exceptions confirm the rule. Also this may not be the case for companies like McKinsey or BCG.
I once applied for a job Germany at BASF. Job location would be Asia. Based on my resume I was very well suited for the job. I filled out the shitty SAP application interface. They really got back to me. "We received your application. Please also upload your 'letters of recommendation' (something that is provided to you in writing for every job you had in Germany)". I emailed them that I got my PhD in the US and worked in the US and that I don't have this but that I am happy to provide references. They emailed: " If you don't have letters of recommendation then we don't need you. We deleted you application!" This was a multinational company.
Austria also has a very good social safety net, free universities and subsidized childcare - and we have very few startups, because people just don't like to take risks here.
The article's point is not very strong, from personal experience (Finland, experience in Nordic startup "ecosystem").
Like you said, working at a Startup in the Nordics is considered risky, which doesn't make sense at all. Like the article underlines, Nordics countries have a insane social safety net, that even if your company fails, you're no where near as fucked as if the same thing happened in the US for example.
Yet, comparatively a very small amount of startups come out from the Nordics. Yes, Sweden has some, but if welfare = more startups were true, Denmark, Norway, Finland should all be top startup countries.
What I actually believe happens, and this is backed by personal experience, is that this safety net actual promotes doing nothing. Nearly all the gains/positives outsiders see of the system are wasted on the actual habitants. Nobody here thinks for a second longer about healthcare being free. It's taken for granted. So no, I don't think this is the reason for Sweden's success.
(Sorry for going on a tangent! Just wanted to write some of my thoughts)
According to the Wikipedia article: "Skype was founded in 2003 by Niklas Zennström, from Sweden, and Janus Friis, from Denmark.[30] The Skype software was created by Estonians Ahti Heinla, Priit Kasesalu, and Jaan Tallinn. "
I think more important than the welfare system (potential entrepreneurs probably don't see welfare as their backup solution anyway) is that the quality of life depends so much less on income than in say the US, so people are not that worried about earning less for a few years.
You still get the same healthcare and education, the same access to sports (even golf!) and nature (very important for us), and since there is zero stigma associated with public transportation it doesn't matter if you can't afford a car.
I think that's true. But it's also that he Swedish concept of welfare has traditionally included the broader concept of "the welfare state". Meaning that welfare doesn't just apply to social security as such but the availability and quality of housing, education, care, transport and, as you say, even recreational activities.
It's not that sport organizations in Sweden are open to everyone out of the goodness of their hearts (though I think many people support it). It's because they are required to if they want to be registered as non-profits, receive government funding, rent subsidized facilities owned by the state etc.
Regarding sports there is nothing stopping anyone from starting an entirely profit driven club, like most gyms for example, as far as I know. I think it's mostly a matter of tradition. And the financial support you get for that type of broadly run organisation, not just sport. But that too speaks to the egalitarian traditions.
What's stopping them is of course that they can't compete with non-profits that are being subsidized by the state. (Which I don't disagree with). Sure, it is a tradition, but like many things it's enabled by the laws on the books.
For instance the school system isn't very egalitarian, at least not in Stockholm, these days (nor is the housing market for that matter). The school system is quite different compared to e.g. Finland. The laws changed and so did the quality of different school. "Grade inflation" is very common etc.
Ah, but they would be able to compete with the subsidised, volunteer run organisations if there was greater willingness to pay for a more professionally run club, with better facilities etc. This does happen for some sports, such as gyms where there is a market for upscale clubs, but not for football for example, to my knowledge. People would just feel weird about putting their children in a luxury football club.
Every year when it's time to sign the children up for ballet, football, gymnastics etc it's the same thing, extremely high pressure on all clubs, places fill up within hours. I'm sure that if it wasn't for Jante, there would be a huge market for more expensive clubs with shorter queues.
In what sense is the school system not egalitarian? It's not very good anymore, true, but that has other causes. I mean all schools cost the same, i.e. nothing, and anyone can apply to any school. It's even forbidden to charge for school lunch, or even ask children to bring fruits because "some people may not be able to afford that" (though this is going way too far in my opinion).
I agree that housing has changed, and prices are getting pretty crazy in places. But regardless of the price differentials between areas, which still are far from as extreme as in the US, my point is more that it doesn't matter as much which area you live in, your quality of life will be pretty similar. Building standards are extremely high in Sweden so even the cheapest places are pretty robustly made at least. And the houses on the most expensive addresses are still relatively modest, there are no doormen or valets or crazy things like that. The differences are more subtle, and there is less showing off.
It's funny how that works, even in Berlin i feel there is more of a stigma if you actually own a car instead of using public transportation, but Berlin is probably an extreme example of a very left-heavy capital.
Many startups and many 'small businesses' are different things; what about value of startup exits in Sweden, vs its nominal GDP? How does that figure compare to the U.S.?
Sweden may look tiny, but in fact it has GDP 1/36th of U.S., did it also generate ~$100B of startup worth in 20 years (Silicon Valley made about $2.5-3T in this time and quite a bit - maybe up to $1T - elsewhere in the U.S.)?
Nobody's really mentioning it, but taxes are a huge consideration.
For US companies, acquiring an overseas company provides an easy way to repatriate cash without having to pay the higher levels of tax on it. Note that a number of successful Swedish startups were acquired either by US companies or by international conglomerates with a strong US presence. That's not a coincidence.
Sounds like the whole discussion is kind of blurred by the definition of what a start-up is.
IMO the article misrepresents the cited study[1], which doesn't talk about "start-ups". It could just as well be represented as: in weak state countries lacking a stable operating environment for large businesses, companies are short-lived and the only option for many people is self-employment. Also, the size of state sector vs private sector just tells you how the activity in the country is organised: you can have public healthcare or private healthcare, and of course the private healthcare means more private sector activity. It doesn't mean that the private sector healthcare is a better outcome.
Sweden have good working morale and extremely high unemployment rates among young people that often have high education. If you start a tech company you will be flooded with applications and you can cherry pick talents. The entry wage for developers are around $25,000 year, yes year, not monthly!
Yup, that is the backside. I'm a Swede and patriotic enough to like my country, but engineering salaries are abysmal. You don't get rich by working. :) Pay ranges are usually also set by age, so there is little room to improve your salary by being extra competent.
Your salary number is off the mark though. Median pre-tax income is roughly double that.
I'm not sure that's true. Sweden regularly feature quite far up on these "highest engineering salaries" lists [0]. I think Swedes have adopted sort of a strange outlook these days. Maybe because of avoiding the financial crisis, or at least thinking they did. People attend university for 5+ years, vacation three times a year, get into huge debt 'buying' an apartment or summer home, get a large brand name car and go on long parental leave. Preferably before hitting 30. The result being that private debt is larger than ever and the government has been selling assets like never before to keep the people happy. All great things of course, but unlikely to make one rich (at least by working).
There's no problem getting rich by working in Sweden if you keep your costs in check (which is hard to do these days), don't over educate yourself (also hard with high youth unemployment) and eschew some of the social benefits by working in less comfortable conditions (which is becoming the default anyways).
Doesn't mean you'll be super rich just by working of course, but that's not really true anywhere. At least not if your family isn't already. If it's really a priority one could of course leverage the competitiveness of most Swedes education, attitude and knowledge of languages by going to Zurich, London or (a large city in) the US for a few years.
As a former tech recruiter in Stockholm I can assure you that they do. These devs, however, usually do not have a degree from university/college, and are either juniors and/or self taught. If you look at the university/college educated devs the story is different, but not by that much.
Entry level median salary for devs without higher education from the year I left recruitment (2013/2014) was 28000 USD per year. Add 3000 USD for entry level devs with university/college education.
YMMV but I don't think things have changed that much since then.
I would still be very surprised if any developer in Stockholm is paid $25k a year as OP says. That's less than 17k SEK a month. I also don't think your numbers are valid anymore. The demand on developers is completely crazy in Stockholm right now. Even with minimum prior experience you shouldn't settle for anything less than 25k a month.
While I think you are right in saying the salaries probably has gone up, I am very hesitant to believe that they are more than 25-30% higher. There were boatloads of devs coming out of these 12-14 week bootcamps or vocational 80 week programs (KY) with promises of work, and the market was flooded. This kept salaries down. I don't think it has become any better.
I had a look at some old notes and stats from 2012-2013. Knowledge in JS, Php, Java, Python or C/C++ were required for all of the positions.
14 recruits in the 18-20 yr, no edu bracket (high school dropouts/just graduated), mean salary 24451 USD (199200 SEK)
24 recruits in the 18-20 yr, bootcamp/vocational edu bracket (high school dropouts/just graduated), mean salary 27249 USD (222000 SEK)
17 recruits in the 20-22 yr, bootcamp/vocational edu bracket, mean salary 28869 USD (235200 SEK)
29 recruits in the 20-26 yr, higher edu bracket, mean salary 34467 USD (280800 SEK)
These were placed with employers, startups and established companies, in the tech sector. Mainly in central Stockholm and Kista (tech hub outside of Stockholm).
Make what you will of this, the amount of job seekers with bootcamp/vocational education hasn't gotten less than in 2012/2013. I believe this keeps the salaries in Stockholm down, and makes you settle for less if you want the job at all. Entry level salaries for devs in Stockholm are low.
BUT - as soon as you get some experience under your belt, you can rise quickly in salary by job hopping for a year or two.
While I have seen people fresh out of high school making about those numbers as devs most college educated engineers start at around $3000-$3500 monthly. Bear in mind that this includes (nearly) free health care, free education and very low interest student loans, so you normally don't start of with several hundred thousand dollars worth of debt.
It is true that Sweden has high unemployment among young.
But sadly most of them are unemployable for tech-firms. Sweden, like most other places, has a shortage of well educated engineers (and other young professionals).
Much of higher education is Sweden is very low-quality. For example, there are government subsidized university courses in Harry Potter knowledge (no joke).
Completely missed one of the most important points: It's easier to take risks, if those risks actualizing will not destroy your life.
In the US, there's very little social safety net to catch you. If you get sick before the startup is big enough, it means personal bankruptcy - and no medical treatment. Missing revenue targets can mean missing student loan payments, missing rent, etc. There's real risk you'll end up homeless in the end.
In Sweden, you might end up poor, but the poor are still taken care of. You get your medical treatment, the state pays your rent, and you are guaranteed enough income to buy groceries.
I'm an entrepreneur and I'm strongly in favour of these policies for this exact reason. It often surprises people that there are entrepreneurs who're in favour or more, not less, social spending. But I think that in the long term, making to feasible for anybody, not just rich kids, to start companies is good for the economy.
I wish we (the Netherlands) had a system more similar to the Scandinavian countries. We have social security, but it has gaps and holes all over the place and once you get stuck in one of those gaps there's virtually no way out. Notably, having been an entrepreneur puts you in one of those gaps.
I'm a (sufficiently) rich kid though, so no biggie.
Well it is quite similar in Finland. It seems like the government does everything in its power to pull the social security net out under entrepreneurs.
A more pessimistic view is that the government does everything it it's power to pull the social security net out under everyone, but the current the legislation makes it much easier to do for entrepreneurs.
No. Only when you're an employee somewhere part of your taxes are marked as "paying premium for social security". But as an entrepreneur, I'm only covered for health, not unemployment.
Note that many entrepreneurs agree with this policy: they rather pay as little tax/premium/whatever and just sort things out themselves. The thing that bothers me is that I can't even choose to pay the same state unemployment premium as my employees are forced to pay.
But when you're not entitled to unemployment money (also happens if you've never had a job more than x months in a row), you're not entitled to all the extra benefits you get when trying to get out of unemployment. Eg you don't get day care support for kids because you're home all day, right.
No matter that you're trying to reeducate yourself to get a new job - you're not costing the state any money so it's your problem. However if you are entitled to unemployment benefits and then working on reschooling yourself, then you get day care support for your kids as if you had a job.
NL is very American in that respect. The social security is designed from the perspective of the treasury, not the people's well being.
There are some similar issues in Sweden as well. If you are unemployed you can't study at the university without loosing your unemployment benefit, so you stick with the benefit instead of learning to get a better job. This is really counter productive in many cases. This is not specific to entrepreneurs, but nevertheless quite strange. I can see that it could be abused, but I can also see that one could come up with a solution for it.
Fun fact: most Swedes are covered by unemployment insurance, which gives you 70-80% of the income from your last job for a year.[1] I imagine this helps, as it's not only a safety net if your startup tanks, but also a runway for starting risky ventures.
If you own the company that tanks it is harder to get the unemployment insurance [1] (in Swedish) but it is possible. The 80% maxes out at 18 700 SEK / month ($2300) before tax.
> The 80% maxes out at 18 700 SEK / month ($2300) before tax.
Many unions will offer you cheap insurances covering up to 3 times that amount. And you can actually be in the union and get many benefits even as an entrepreneur.
In the US you can't collect unemployment if you quit and you have to demonstrate that you're looking for a job. Are either of those the case in Sweden?
There is a quarantine period of a couple of months if you quit. You have to be looking for a job, which means submitting reports of what jobs you have applied for to the job exchange. There are quite severe restrictions on what you can do while on unemployment, but if you want to do a startup there is likely some program that allows you to get the money and do that.
(German here, but pretty much the same situation.)
Not really. It's really hard to try and get fired, since the employees are protected pretty well. So in order to get fired you would have to mess up pretty bad, to a point where you would usually leave a lot of scorched earth, so very few people do that.
If you are on good terms with the company you can also "get fired" (I've heard of that in a few startups), so you can collect the benefits, but that only works in a small set of companys I think.
If you're fired for cause, they deny unemployment benefits.
You can't just stop doing your job, show up drunk, and yell obscenities at your boss all day. Well, you can, but you probably won't get unemployment benefits.
If you show up drunk or with anger management problems, the company is by law required to provide you with professional help. If that doesn't work, they can fire you and your benefits kick in from day 1.
Are you positive? I checked with Google and I may have the wrong keywords, but I'm not seeing that as a law in the United States.
Sadly, I have not just one - but two friends who have lost their jobs for showing up incapacitated. One wasn't alcohol, though. They were stuffed full of amphetamines - but the first one was drunk. Neither mentioned any employer offers of rehab.
I have visited Denmark and Sweden, and the most obvious change when you cross the border is that Danes rarely smile walking down the street (or talking to you), whereas Swedes look generally happy.
It is likely a cultural thing, as young (4-6 year old) Danes on the street do some happy, unlike their older siblings and parents;
I am aware that this contradicts surveys that conclude Danes are the happiest people and Swedes aren’t - just recounting my personal impression
These kind of things matter and are very rarely captured in statistics
As an Eastern European living in America. These days I smile so much for no reason during the simplest interactions with people that I feel like an idiot. I'm not happy at all.
Getting of the ground is key. Before you can raise VC money, you have to have traction. This increasingly includes seed financing as well. So either way, you have to take a huge risk to start a company where the outcome is uncertain.
When you run into a founder or work for one in the US, realize the absolute big risk they are taking. People in Sweden have a safety net to catch them. The result is people are more willing to take risks to start something and you also see more innovative startups that would otherwise be considered high risk in the US by founders.
In the USA, paid health insurance is tied to one's choice of employment, unless one declines the employer's coverage. Whom are you expecting to pay for health insurance if one hypothetically quits working for Google and starts their own one man/woman company? Or is this not factor in as a risk in your opinion?
>Whom are you expecting to pay for health insurance if one hypothetically quits working for Google and starts their own one man/woman company?
Um, yourself? I have an ACA plan. It handles all the catastrophic stuff, and has a very reasonable deductible. It costs me ~$360/mo. Certainly this is a different ball of wax with a family (figure more around $1100-1400/mo for a reasonable plan) that has dependents.
In my case I quit working eons ago. I bought health insurance via a state marketplace (RomneyCare). My total costs (business insurance, legal, marketing) were less than $10K. I was profitable at the end of month two. At the end of year one, even with expenses I was making 70% more than I could as an employee in most companies in Boston (and around what I could theoretically get at Google, if they would even give me the time of day). It's been 5 years, and I still question why I didn't do it earlier. Worst case I had two years of savings in the bank from average-paying software jobs.
You don't have to do crazy things that require millions of dollars. I'm working on a "big thing" (to me) now that will require ~3000 hours of development time to launch, but I'm doing it all myself, and my costs are $10-15K and learning some new skills. Though the very real potential is for it to easily replace business one, and put my income well above what even the Valley could ever pay me. I wouldn't of done that quitting a job though -- that's something I would build on the side and launch while still employed, and only quit when it's clear the revenue will cover expenses.
An example that demonstrates the difference compared with a place like Sweden is that if you are a pennyless student, you can't afford $360/month. That would make it hard to do a startup and still have health insurance.
As a student I would would have 10000 SEK / month ($1200), in grant and student loan. [1] You would expect to need nearly all of that in any of the town Universities [2] leaving nothing for healthcare. But in Sweden healthcare is nearly free (maxed at $120 for a 12 month period).
That is good. If my example wasn't clear, Sweden healthcare costs are the same for everyone, regardless of income. We designed it that way deliberately.
The fact that it's possible to get it in the US doesn't make it favorable compared to Sweden. The US per capita pays more for healthcare than Sweden, and ACA plan costs are typically higher than many employer group plans.
The fact that health insurance is tied to employment in the us is just as much an argument for getting rid of the taxes and other incentives which led to employers being the dominant provider of health insurance.
Unless I'm not getting what you're saying, they did. Employers, in the US at least, started including health insurance during WWII. Because of the government needing to exert some control on the effective labor force, they government set a maximum amount a company could pay.
Because of this, companies needed to find additional benefits, non-monetary, to give to employees, both to keep and attract employees. So, they started to offer medical insurance.
Well, it stuck and medical insurance has been tied to employment ever since. But, that incentive has long-since been removed from the books and employers can now happily pay as much as they can afford.
As for other incentives, I don't know of any incentives offered to employers that offer insurance, at least until recently. The current incentive is a fine, if they are meet the criteria and don't offer insurance.
Other than that, a perverse incentive that does exactly opposite of what you're asking, there is nothing else. I suppose you could be referring to the employer not being taxed on money spent on insuring their employes, but taxes are based on profits and the personnel expenses are not on that side of the ledger. There's no incentive, the money just isn't taxed because we tax profit, not revenue.
If someone were really hard up, ie became homeless, there is Medicaid. It's free but not nearly as convenient or good as Medicare, which older citizens and disabled get (which has some costs). Medicare for all (single-payer) but with no copays for broke people would be ideal.
How do you get VC investment before you have a prototype or a working product? Building those take time. Time which you invest in not working and earning a steady paycheck.
That's conflating different risks. Personal income stream of worker/s (of which founders, angels and investors are also workers) is one thing, capital as fuel for growing a sustainable company from nothing is another.
> In Sweden, you might end up poor, but the poor are still taken care of. You get your medical treatment, the state pays your rent, and you are guaranteed enough income to buy groceries.
Way to propagate an ignorant myth. The US has a massive welfare state and social safety net. The average poor person in the US can typically draw $25,000 to $30,000 in benefits per year depending on the state they live in. Those benefits include free healthcare, housing, food, work training, etc. For some states, such as Hawaii, it's nearly $50,000 per year.
Just drawing on several of the most common welfare benefits programs in the US, gets you near $20,000 per year.
According to a fact check by the Washington Post in 2014, the median total individual welfare benefits package in the US was $28,800.
Let's put it another away. These welfare benefits numbers are so high, they exceed the median income in all but a few very wealthy nations.
The "free" healthcare you receive often has big, gaping flaws that cost you dearly when you can afford it the least. Single payer systems generally avoid these problems, thus while we do spend significantly more tax dollars on healthcare, the common person in the US lives a shorter, sicker life than those in single payer countries.
Housing programs are also often unavailable, if you were lucky enough to have got in years ago and stay in compliance with the requirements, then good for you. Most people who need housing assistance will never receive it.
Food support (SNAP, EBT & WIC) is essentially only for families, single people & couples get minimal assistance.
Welfare is capped at a maximum of 5 years, and unemployment insurance - which you don't qualify for if you quit your job -
is capped at even less. Meanwhile student loan payments pile up and can be used to garnish your wages and social security.
The Scandinavian countries clearly have far more generous social safety nets.
Comments here have blown up but almost everyone is missing one of the most important points: dollars spent do not determine how good a social safety net is.
There are estimates NYC spends >$40k/year/homeless-w-mental-illness with no evidence their situation has improved. In fact, it might be getting worse!
Social safety and healthcare in America is broken. The War on Poverty has spent 10s of trillions, and our healthcare costs are the most outrageous in the world. That doesn't mean we have a good social safety net.
Social pressure as well. Most people are going to treat you as a piece of shit if they find out that you are gaming the system to live off of welfare so that you can create your own company instead of working if you can.
Of course it's conditional, as it should be. If you're at or below the poverty line you can draw on the most welfare benefits, if you're earning a median income the benefits you can utilize are diminished.
Proclaiming it's often insufficient is a comically loaded premise. How often? In which states? Under which circumstances? I've got the perfect response for that: it's often sufficient.
According to the OECD's numbers, the US poor live better than almost any other poor people on the planet save for those in a select few countries (eg Canada, Norway, Sweden, Australia). [1][2]
We spend close to a trillion dollars on all means-tested welfare programs in the US, counting all levels of government. Just SNAP for example, as of 2015, was at $75 billion per year; each state then has their own various additional food programs, and typically cities do as well. Medicaid, by far the largest single program, was $545 billion for 2015.
There are approximately 16 million households that qualify as poor in the US. Households that exceed the poverty line do draw some benefits as well obviously, so it's not strictly those 16m poorest households pulling against the $1 trillion (which is to say, those 16m households are not each claiming ~$61k in annual benefits).
If you instead distribute that figure among the bottom quarter of adults - in terms of income - under the age of ~65 (over 65 most are drawing on Medicare), you get to something in the neighborhood of $20,000 per adult averaged. Per household you're going to be closer to $36k to $40k (eg the bottom 25m households * $40,000 per year).
Just the various healthcare programs utilized by the poorest 16m households - including Medicaid, CHIP, etc - is likely to be over $25,000 per year per household (not per person obviously).
The maximum welfare benefits a poor person in the US can draw annually, then reasonably aligns with the median state figure the Washington Post was quoting at ~$28,800 (again, it varies by state, some are far higher than others).
So, $55.5 billion goes to Americans, meaning %15.4 billion or 20% is overhead.
How much of the other money is also overhead? Consider a charity which takes in $100M to "build homes for the poor", and ends up building 100 such homes. Your analysis suggests the poor are receiving $1M homes. On the other hand, if 95% of the money is spent on overhead, they are only getting $50K homes.
We know there's overhead elsewhere, though not 95% - that was used to make a point. For example, your Medicaid example is directly connected to the absurd health care costs in the US. As Wikipedia tells me: "In 2011, there were 7.6 million hospital stays billed to Medicaid, representing 15.6 percent (approximately $60.2 billion) of total aggregate inpatient hospital costs in the United States.[74] At $8,000, the mean cost per stay billed to Medicaid was $2,000 less than the average cost for all stays."
So part of that Medicaid spending is on an overpriced medical system. Another part of that spending is simply wasted in carrying out means testing and administrative overhead. These are costs which don't exist in the healthcare system of most other rich countries, and in neither case should it be viewed as money going towards poor Americans.
Furthermore, means tests requires that applicants do extra work to file the right forms, stand in the right lines, and in general deal with the bureaucracy. This can include taking time off of work (so getting paid less), trying to find a baby sitter, etc. These are monetary costs which are hidden in your analysis, which only looks at the government costs, and there are human costs of extra stress and hassle - and issues related to loss of respect and humanity aren't easy to quantify monetarily.
To get back to your text, you use numbers like "There are approximately 16 million households that qualify as poor in the US" and "you instead distribute that figure among the bottom quarter of adults". However, as DanBC pointed out from the Forbes article, the denominator "the number of people who claim benefits", gives $24.77 per day.
That suggests that there are many more people who claim benefits than your estimates suggest. I can see one place already. You limited the denominator to the "bottom quarter of adults .. under the age of ~65 [because] over 65 most are drawing on Medicare." However, https://www.ssa.gov/history/pdf/RowlandandLyons.pdf points out that 9% of the elderly draw on both Medicare and Medicaid.
About 46.3M people are enrolled in Medicare due to age. 9% of that is 4M, so that's 8% missing from your earlier numbers.
In addition, children in "[a]ll states - except Tennessee - have additional disability-specific eligibility criteria, which allow some children with disabilities to qualify for Medicaid even if their parents’ income exceeds the state-established threshold." https://www.americanprogress.org/issues/early-childhood/repo...
I think this would also affect your numbers by increasing the denominator and so lowering the overall per-person payments.
To go back to DanBC's point, why aren't you using "the number of people who claim benefits" as your denominator?
Per The Washington Post at least 10 states come in above the $35,000 line per year in terms of welfare benefits packages (those include eg Massachusetts, Hawaii, Connecticut, NY, etc). The national median is near $28,800, again per the Washington Post (Michigan, Ohio and North Carolina are at that level).
CATO's numbers also match the Post's. They did a 2013 follow-up study to a prior 1995 study they did of work vs welfare trade-offs on a state by state basis. There is probably no more comprehensive source than their study, that I'm aware of.
"this study seeks to determine the approximate level of benefits that a typical welfare family, consisting of a single mother with two children, might receive"
These Cato ‘welfare package’ papers have been circulating for a long time and are misleading. Their calculations wind up being for a maximum amount of benefits someone could receive if their life circumstances happened to fit a multitude of criteria. In reality someone falling on hard times would only qualify for a small fraction of those amounts.
Here are two articles that dig into how the Cato numbers are technically possible but not useful for having a real dialogue about the benefits people wind up receiving in real life:
That would actually imply the point of this article, in my opinion. More startups will inevitably mean more failures due to more risks, which would drag the stock market.
But that doesn't matter. You shouldn't gauge the inventiveness and exploratory nature of a country by looking at its stock index. Especially since stock indices are irrational and get inflated for many misleading reasons.
But the effect on stock prices was to return them to pre recession levels (while growth did not). So regardless of what it did to interest rates (or perhaps in some part because of what it did), the QE has likely inflated prices of stocks - particularly US stocks. So the S&P 500 growth vs the Swedish index is hardly indicative of anything re: startups either way. If anything the increased stock prices in the US should have helped buoy the option for a IPO exit strategy in favor of the US.
American engineers who are tired of Trump; Feel free to come work with us in Sweden! ;-) Swedish startups are hiring and there's definitely a shortage of engineers at the moment.
I've considered launching a start-up of my own here in Sweden so I've given the pros and cons some thought, and it is virtually risk free. To summarise, compared with other countries, we may have even more of the upside but the downside is capped at a very anxiety free level.
These are a few of the reasons:
- highly skilled labour is cheap in absolute terms and the cost to performance ratio for such workers is probably amongst the absolute best in the world. Good for a start-up!
- For the individual worker a job as a highly competent senior developer on average in my 20 years of experience is pretty much just double that of a garbage collector. Salaried men don't get ahead much but start-up workers do to a similar extent as they do in other start-up hubs in the world. Good for the early employees getting shares or stock options.
- Social security systems would still leave me able to stay in my nice home in my nice suburb even without a job. It would not affect the healthcare or education for me and my family at all. I would have to cut down on my intercontinental vacations with my family though. It feels like bet I could make without too much anxiety.
-Sweden has had, and still have to some extent, lots and lots of world leading large tech companies in pretty much every industry like automotive, telecom, different types of processing industries etc. Lots of skills, knowledge and ideas has spun off these large companies or started as suppliers to these. I think this ecosystem is one of the more critical factors which the other Scandinavian countries lack. I cannot come to think of even one Scandinavian unicorn-ish type of company from another Scandinavian country than Sweden. Finnish Rovio is close though, but I cannot come to think of any other non-Swedish company. Sorry but please fill me in here Norwegians, Danes and Finns!
- Stockholm specifically, where all the companies mentioned in the article are from, is a tech hub with lots of skilled and nice people living and working here and lots of good tech companies which makes it start-up friendly for the same reasons it would anywhere else in the world.
- The Swedish society, compared with most other I've experienced, is pretty well oiled and modern (not saying there isn't room for lots of improvement) where infrastructure like transportation, administration of personal and company affairs etc work quite well. More time and energy to focus on stuff that matters like your business and your family.
- The weather sucks for at least 6 months of the year. No I'm serious here. Having pretty much nothing else to do than to work and watch Netflix frees up lots of time and energy for work.
"please fill me in here Norwegians, Danes and Finns!"
Well, Skype is half-Danish, so there's that :-)
Others that I know of are Unity (founded in Copenhagen), Zendesk (started in Copenhagen), Steelseries, Endomondo, Just-Eat, Tradeshift, Trustpilot, Flying Tiger, Sitecore, TC Electronic, Soundboks, Navision.
It kinda depends on how you define "startup". Bu no, not quite as many as Sweden, but we do have our own established large companies that have spun off into daughter companies in different areas or helped create successful startups.
With Swedish high cost of living, is it feasible to bootstrap a product company there (a company that needs time to build something to sell) or is an outside investment the only feasible path for such companies?
High cost of living? Where’d you get that idea? It’s true that some things are certainly more expensive – gas, alcohol, dinners in mid to high end restaurants – but other things, notably the big ticket items like rent, are typically cheaper than in many other places I’ve been and especially big cities. No need to pay health insurance or other not-really-optional fees is also relevant. Sweden isn’t perhaps cheap per se, but I wouldn’t say it’s much more expensive than anywhere else.
I live in Sweden, and I’ve lived abroad in both the UK and US, and I’d say living in Stockholm is a lot cheaper than London, and certainly a lot cheaper (and much easier, if you can find an apartment that is) than NYC or SF. But of course it depends on your way of life I guess.
FWIW I’ve bootstrapped my business, and as someone else suggested in this context the social safety net takes away a lot of the anxiety in doing this. It’s not easy, but I also know if shit hits the fan I won’t be out on the streets the next morning.
I don't think so. It used to be like 10-15 years ago when many of these startups were created, but things have changed since then. Many people are in denial though since they already have their education, apartment and insurance.
It used to be possible (or at least not impossible) to rent an fairly cheap apartment close to the city and find a way to do something on your own. Conditions for getting a student loan, leave of absence or unemployment used to be more favorable.
Since 10 years ago the government have been actively trying to get more people to work. With the consequence that it is harder to do anything else. Studying, getting unemployment (risking your job) and living (housing costs have doubled) has all become harder to do. Most people these days would risk their job or apartment and do something on their own, because chances are will have a significant reduction in life quality if they fail.
Most startup activities these days seem to be running around cocktail parties trying to get (more) investors for you local clone of something else. Which is understandable, people need to pay their mortgage and attain social standing, but it's largely the opposite of what has made some Swedish startups successful in the first place.
One could try getting investments. But while Sweden is in generally has high degree of equality, it can also be very insular. Especially in recent times as social status matters a lot. You shouldn't expect to show up and compete based on your ideas. It's very much "who you know".
>How a tiny country with high government spending bred a large number of vibrant young businesses
The article then goes on to attribute almost all of Sweden's success to deregulation and anti-monopoly laws---i.e., less government intervention ∝ more startup success.
As usual it seems to be an issue not of the size of the regulation but the quality. Although in many areas Sweden has a lot less regulation than the U.S. - you don't need a license to be a hairdresser, taxis are mostly deregulated, etc. It seems all the time I hear about things that are micromanaged legally in the US that are just dealt with by common sense in Sweden.
And it shouldn't all be characterized as success. I wonder who in this thread has actually worked in Sweden before... I've had clients there and worked from co-working spaces, and I saw more fucking around and play time and work not getting done than I've ever seen admitted.
Sarcasm noted. It is quite a dismal place. Sure, it has great nature and the infrastructure is quite nice. However, the culture is such that most young people you'll meet are trying to escape - still while pumping out lots of overly positive marketing material via news media.
Swedes are very different from, say, Norwegians. Swedes are forthcoming and ambitious; if you succeed in your ambition, you're celebrated by your countrymen (so long what you're doing is in the politically correct sphere). You're allowed to be proud of your achievements. Norwegians keep their head down; most seem content with what little they have. If you do achieve more success than your average countrymen, you're scrutinized, not celebrated. You must have done some immoral stuff along the way, right?
All Norwegians know this. Any other Norwegians here who can confirm?
Finns are kind of similar to Norwegians, in this aspect, only, drunker and more depressed. Danes are even more content than Norwegians with having even less, giving almost everything back to the state. They just want their "hygge".
As a Swede I disagree; I find that "Jantelagen" (https://en.wikipedia.org/wiki/Law_of_Jante) is as strong in Sweden as anywhere else that I've been in Scandinavia if not even more so. Although, I live in Northern Sweden: far away from Stockholm. Maybe individual success is viewed more kindly there, I do not know.
Trust me, Janteloven is still going strong in Sweden as well. I guess that if you look at Sweden from the outside, you mostly see those that have been successful and defy it, which might make you think it's not present.
Strongly disagree. As a swede I've been taught my entire life not to think I'm special or in any way better at anything than anyone else. It's only in recent years I've come to realize that being good at something does actually give you the right to say you're good at it as long as it's true and not empty bragging.
That's not to say Swedes aren't hard working but you'll rarely hear a swede talk about their achievements in the way a person from the US would for instance.
Everyone's biased, but descriptions matching those above are commonly observed here regardless of political views. They are in fact common to the point of triteness.
If I were to talk about what's actually going on and explain why Norway fosters less tech innovation than Sweden it would have to be in a different form than comments. But I wanted to point out that the explanation might have to do with things unrelated to regulations, taxes, and safety nets.
Just for a starter, "Danes are even more content than Norwegians with having even less, giving almost everything back to the state" is blatantly and utterly false. The effective tax rate in Denmark is not particularly remarkable among OECD countries.
This misconception, as well as call to "all Norwegians know this", and your use of the term "politically correct" as a pejorative makes it clear that you have a political agenda, an axe to grind with the social democracy practiced in the Scandinavian countries.
Danish tax rate is one of the highest in the world if not the highest in the world. On top of that you have 25% VAT and on cars, you are up to around 200% (recently lowered)
The tax rate is high, but on the flipside we also have pretty much the best and most extensive public services and social safety nets in the world. Still, it's around 25-35% all-in, nowhere near the 50+% a lot of right-wing pundits keep lying about.
Car registration tax has never been 200%. It has been 105% up to ~$15K of the car's value and 180% above that for years, which was lowered to 150% some time ago. Now the lower rate has been reduced to 85% and the cutover raised to around ~$20K, and rebates for fuel economy and safety gear have increased significantly. A small car is only marginally more expensive in Denmark compared to Germany, while larger and luxury cars are rightfully more expensive.
You obviously only have a very tenuous grasp of what you're talking about, so please stop, listen and learn instead.
You seem to agree that Denmark's vehicle taxation is remarkably high. Many people are reliant on having a vehicle, and one larger than a Polo, so their total taxation is remarkably higher than in other countries based on this alone. You used the word "rightfully" as if it's a moral given that people in need of bigger vehicles should be taxed more.
Vehicles aside, in Denmark, you have a gross tax of 8% in addition to payroll tax. You have municipal tax, a health contribution tax, etc. If you make more than DKK 479 600, you are taxed an additional 15%. This means you will be taxed around 50% on income tax alone. Then add the vehicle taxation, and VAT, etc.
You can try to justify this massive taxation. Rationalize it, based on your political views. But it's not wrong to say that Danes are taxed even more than Norwegians.
Yes, the vehicle taxation is high. Should it have been set that high originally? Maybe, maybe not.
But the simple fact is that it highly encourages people to buy cars that pollute less, and with the new rules, also cars with the best safety ratings. It also encourages people to keep their cars for longer, which is better for the environment (producing a new car uses a lot of energy).
And yes, if you buy a bigger and more expensive car (which probably also gets worse gas mileage), you get taxed more, in absolute numbers. It's not a complicated concept. Overconsumers pay more, it's only fair.
You seriously misunderstand the marginal tax rate. It is only applied to income above 479,600kr. Nobody pays even close to 50%. The ~40% in your link is on a 635,000kr/year income, which is rather high, includes marginal tax, and again is nowhere near the 50% you claim. It also doesn't take into account deductions for debt, charitable donations and other things, which help bring down the effective tax percentage.
Your third link is highly misinformative, since it only looks at the marginal tax rate, which again is only applied to income above 479,600kr. If you make 480,000kr/year, the marginal tax rate is only applied to the last 400kr.
I still don't understand where you get 25-35% tax "all-in" from, as you wrote in a previous post. It seems if you're to make what's considered anything like a decent wage in this sector (tech) you will pay at least 40%, and the more you make the more you pay, hence progressive tax.
Cars are a major cause of global warming, so there is a pressing need to curb their use. People don't inherently need cars (or big cars), we have to change our ways to drive less.
I won't really get into the politics of vehicles, but many people do need a car if they are to make a living, thinking otherwise is naive and unrealistic. For many, it is their living. Others need it for personal freedom, some people enjoy a road trip; others like to be able to visit friends and family. Perhaps some even use a vehicle to come take care of sick and elderly living in rural areas. People who don't live in cities need cars; public transportation is not widespread enough or flexible enough.
Maybe you want to condemn everyone to live in cities? Or to not have big families, or to not produce goods where at one point those goods need to be transported to outlets by vehicle. The manufacturing of goods cause pollution as well, you don't want to have that production in urban areas and affect the health of those living there. Not all transportation can be done by other means, shipping, trains, etc. Goods have to get to stores. Sometime in the future, we will have more efficient means of delivery, at the very least all the vehicles delivering goods will be autonomous and electric, but for now, we're not there.
In the case of Denmark, first off, their vehicles per capita is very low, and not because of taxation. Going after the few people who need their cars is punishing, kind of hypocritical as well, when you're at the same time burning coal. Second, Denmark's contribution to global warming is infinitesimal, let's focus on the United States and China who's the biggest polluters, by far. You don't cut the snake's tail.
> I won't really get into the politics of vehicles, but many people do need a car if they are to make a living, thinking otherwise is naive and unrealistic.
Like I said with "people don't inherently need cars", this line of thinking is anchored in the wrong thing. It's of course trivially true that many current jobs rely on cars, but we have to rapidly change that - otherwise much worse things than carlessness and change of job will happen to people and the ecosphere.
Try s/cars/slaves/ in your text to see what I mean.
Re coal - it is a logical fallacy to deny necessary improvement A because we have not made a tangential, equally necessary improvement B yet. Of course we have to stop burning coal as well.
Re cities - history does know instances of people living outside cities before widespread private car ownership...
> Like I said with "people don't inherently need cars", this line of thinking is anchored in the wrong thing.
Inherent need as in without you die? No. But right now, for efficient (compared to walking) mobility outside of the public transportation infrastructure, we need vehicles.
What is your suggestion for mobility outside cities, in a way that grants as much liberty, personal freedom as a car does?
> Re coal - it is a logical fallacy to deny necessary improvement A because we have not made a tangential, equally necessary improvement B yet. Of course we have to stop burning coal as well.
The logical fallacy is putting the cart before the horse.
> Re cities - history does know instances of people living outside cities before widespread private car ownership...
In case anyone is interested, Statistics Norway believes that the median after tax income for households consisting of persons living alone under 45 years old was 280,200 NOK/year in 2015. The exchange rate with the dollar varies of course, but this is somewhere between 33,300--38400 USD/year.
I am not sure how to compare the before and after tax measures, but even if I could, there are still many remaining differences between the United States and Norway. Also note that the two groups being compared are not the same, because of the age restriction.
For being one of the richest countries in the world the median income is way too low (especially for single-households). And a direct comparison with other countries can't be done without factoring in all the taxes we have in addition to payroll tax. Norway is also one of the most expensive countries in the world. We have 25% VAT on most goods and services. 15% for food and drink. Alcohol is heavily taxed, for high alc/vol 65% of the purchase price is taxes. Vehicles are heavily taxed, compared to, i.e., Sweden. A $50k car in the U.S. would be $100k here, or more, depending on engine size, emissions, etc. High environmental taxes for fuel, electricity, etc. Taxes on gifts, inheritance, property, wealth, pension, etc.
The statement "Country X has a lot of startups" also applies to more or less any Scandinavian country (and Finland, which isn't part of Scandinavia but part of the Nordic countries).
One thing to note about Norway: they might not have the same urge to create startups as they already are among the wealthiest countries in the world thanks to their very wisely spent oil reserves.
"Sweden’s impressive start-up record can also be attributed to some broader aspects of how the country is set up. Its social safety net, for instance, helps entrepreneurs feel safe to take risks. In Sweden, university is free, and students can get loans for living expenses, which allows anyone to pursue higher education. Health care is free too, and childcare is heavily subsidized. None of these benefits are contingent on having a job, which means people know that they can take entrepreneurial risks and still know many of their necessities will be covered.
“I think if you want to be an innovative country, you have to give people security so they dare to take risks,” Mikael Damberg, Sweden’s minister for enterprise and innovation, told me."
The second case, which is not present in the article is that in Sweden, working in a small company is considered a risky proposition and a such small companies are offering higher salary than big companies. It means that they tend to attract the best people too. In most of the rest of Europe (DK, DE, FR from my own experience), if you want the engineer path with good money, you need to get hired by a big company.