Iceland: The emerging tech-ecosystem of the Nordics
erikdestefanis.substack.com
erikdestefanis.substack.com
Most of that geothermal energy? Yeah, it's sent to massive aluminum smelting plants. The entire government is also influenced heavily by the fishing industry, and there is a lot of resistance to change.
The article also talks a lot about per capita investment. Considering Iceland has 375,000 people, that's hardly the stat to lead with. ~250,000 of them live in the capital area.
Iceland is a wonderful place, with wonderful people, but the economy is collapsing and the warring 10 parties of government are effectively slap fighting each other instead of changing anything just so they can not be the Independence party. Inflation has been hovering around 8-10% a month for the last year. Iceland's real draw is its natural beauty, and the tourism it inspires. Unfortunately, what used to be a very inexpensive place to visit is now incredibly expensive to fly to, and also expensive to be in. People I know in the tourism industries have said they saw rapid growth post-covid, but rising costs have zeroed out or even made them less profitable than before covid.
It is a place I love, and a people I love, and I will continue to go back and visit yearly. It isn't going to be the next hot tech spot though.
You can imagine how the cost would be now after the economy has recovered since then, plus at least 10% inflation.
Doesn’t stop a lot of people here from trying, however.
https://www.pewresearch.org/short-reads/2023/01/13/monthly-e...
Nearly the entirely population of Iceland came to the US in a single month. The scale of immigration here is very hard to compare with anything the EU sees.
17k people migrated to Iceland last year, or about 4.3% of the total population.
The United States 200k is about 0.06% of the population.
Have you been to Iceland? There's loads of non-Icelandic people living there. About 16.3% of the entire country's population[1], and in some areas it's close to 30%.[2]
The highest number of immigrants in the US are in CA, where it's ~23%,[3], and the country average is about 14%.[4] Although this number is no doubt higher in some cities like SF and LA. But as a country, Iceland has roughly the same or more immigrants than the US.
[1]: https://icelandmonitor.mbl.is/news/politics_and_society/2022...
[2]: https://icelandmonitor.mbl.is/news/news/2021/10/20/immigrant...
[3]: https://www.ppic.org/publication/immigrants-in-california/
[4]: https://www.pewresearch.org/hispanic/2020/08/20/facts-on-u-s...
It's not. Lots of European countries have comparable or greater immigration rates than the US. And the EU as a whole is soaking up a huge number of Ukrainian refugees.
That's why it's such a paradise for DNA research, and why they have websites so you can check how closely you're related to someone before marrying them -- everyone's related to everyone else, at a fairly close level.
Anecdotally, on a recent trip I briefly felt like there were no Icelanders in Iceland - I had a British masseuse, a Finnish horse tour guide, and a Namibian scuba guide.
Finland isn't that bad
Every discussion would be a variation on:
- "I want $LIBERTARIAN_POLICY policy"
- "In Sweden, they have $SOCIALIST_POLICY and its better!"
- "That only works because it's small and homogeneous!"
That, or people would motte-and-bailey harder left-wing opinions behind the Sweden motte.
Some people happen to prefer taxes and governments that provide value to its citizens.
Go live there and see what you get for your money. A poor, overloaded health care system, food prices that the rest of the world drops their jaw at, and a nice clean downtown area in Reykjavík to show off.
The rest of Europe doesn't have to import nearly as much food and at high tariffs.
If it isn't fish, lamb, potatoes, some garden veg or oats, it's coming over on a boat. The price of a single lime at Bónus will make your eyes water.
https://www.islandsbanki.is/en/news/what-is-an-indexed-mortg...
150€ sounds like the advertised poor person diet. Rice, beans, cheap vegetables like potatoes, little of cheap meat(chicken legs maybe).
That's my diet too lol. Am I eating like a poor person? TIL
Speaking from personal experience, its mostly younger workers who eat yesterday's leftovers in the cafeteria.
Is a maritime shipping supposed to drive up prices or something? I thought it was the cheapest way to go, to the point of being cheaper than trucking.
The only exception I can see if for stuff that doesn’t store well, but controlled atmospheres have done a ton to make it possible to eat “local” apples in the middle of winter.
I’m in Canada and it seems to be a wash whether our citrus comes from Spain, North Africa or Florida.
Now change that to Hawaii or remote First Nation communities and those costs go up dramatically.
https://www.civilbeat.org/2015/04/living-hawaii-how-much-doe...
Since this is HN I will add that I am ok with both of those. Wages for unskilled labour should be high enough to live on, and taxes pay for our social infrastructure.
I do remember the time 3 (!) onions were as expensive as 1.5 kg in Germany. Overall, and I have no idea about rent or salaries, groccery prices were reasonable for 2022.
I can't speak to all of Europe but tech wages are significantly higher here in Denmark.
Apart from that, many compare the salaries in Copenhagen and Malmö, which is obviously unfair with Copenhagen being the national capital, while Malmö was a run-down hole the last time I was there. I assume tech wages in Stockholm are more comparable.
I can't speak for Iceland, but for Western European tech workers 80k USD isn't massive. Like it's not bad, maybe an early-mid level developer?
US tech salaries are also distorted due to VCs having more cash than they know what to do with, bidding up salaries to compete with FAANG.
I don't think that Germany will ever catch up tbh. There is no incentive. Once you earn a little more, the progressive tax rate is too high and eats everthing away. Less people pursue engineering in the first place, because net wages are so compressed. Also just look at real estate.
Munich:
- Median house price: USD 1’534’933 for ~1500 sqft
- Median salary: USD 59k pre-tax.
The pension system will break in the next decades. Actually it already is.. it is already heavily financed by other taxes.
This country has other perks like more vacation days, but making bank is definitely not one of them tho.
Many academics emigrate to Switzerland, USA, Netherland or Canada - me included.
Also education is paid for by the state. In the USA I heard people pay off study debts for many years and are thus also forced to look for high paying jobs
2. It's also dozens of markets when selling products. As much as the EU tries, functionally there are still barriers to trade across the EU, let alone places like the UK. Stuff like language, culture, religious practices all impede easy scalability, not to mention differing laws.
3. The US is a continental-scale superstate mercifully isolated from most of the world's wars. Europe is not. It's that much harder to grow the amount of capital North America sees when the continent is split of more than often at war with itself.
An SDE II offer from Amazon (Berlin) was 90k base + 15K sign-on bonus + some RSUs. An SDE I (new-grad ish) at Amazon makes 72K euros + RSUs (at Aachen).
Zalando offered 75k for an Applied Science role (Berlin) for someone with a masters degree and 3 years of web-dev experience before the masters.
Delivery Hero (Berlin) recently hired a friend of mine. His base pay was 84k euros. He had ~ 5 years of experience as a back-end dev.
Some one I know who defended their PhD in 2022 was offered 90k (base pay, no variable component) at Porsche.
I know about a recent offer from a translation comp any based in Cologne that was close to 80k euros (base) for an SDE.
New grads still get offers in the 45-55k range, especially in smaller cities. A friend of mine just received a 57k offer from Deutsche Boerse (Frankfurt) for a non-SDE technical role. Honestly, it's not bad. 57k is approximately 2500 euros a month after taxes. Assuming that you pay 1000 euros for rent, you are still left with 1500 euros. Groceries shouldn't be more than 500-600 euros a month.
It's good money but not a ton.
Also, it's Iceland, COL is very high!
I assume there must be an order of magnitude mistake somewhere here, either in the currency conversion or in the timeframe.
> Inflation has been hovering around 8-10% a month
Likewise I don't believe this for moment. It'd mean an annual inflation of about 300%.
I guess the GP meant "USD per year". With that the numbers work out.
To clarify. 1M ISK ≈ 7,150 USD. So 1M ISK per month translates to about 85,000 USD per year.
> it's rare to break 1M isk a month (85 kUSD/year)
1M isk enough is very liveable here. If you disagree with this statement, I'm not surprised you left Iceland. Rightly so Icelandic society is undergoing a period of union-based striking in order to improve salaries for lower wage people (most recently teachers). If your motive in life is to maximise salary and pay minimal tax then, yes, Iceland isn't the best place to be.
> Most of that geothermal energy? Yeah, it's sent to massive aluminum smelting plants.
This is oddly snarky and vaguely frames this to be a negative when it is positive (especially for the economy). Roughly 85% of homes in Iceland are heated directly by geothermal energy. This drastically reduces residental electricity use. The economic situation in Iceland would be a lot worse if not for the smelters. Also, if the smelters were not in Iceland they would be elsewhere using electricity with a much higher carbon intensity. The article is wrong also, in that it praises Iceland for renewable energy when it is really just geographically lucky.
> the economy is collapsing
This is a pretty big statement that lacks any sort of support.
> the warring 10 parties of government are effectively slap fighting each other instead of changing anything just so they can not be the Independence party
As far as democracy goes, that sounds healthy to me. I agree that Icelandic politics is largely self-serving and is prone to "big fish in a small pond" mentality, but this is basically as good as democracy gets.
> Inflation has been hovering around 8-10% a month
No, annual inflation is 10%, so monthly inflation is around 0.8%. [1]
> Unfortunately, what used to be a very inexpensive place to visit is now incredibly expensive to fly to, and also expensive to be in
Yet tourism demand is quite good, which is creating a lot of jobs and bringing a lot of money into the country. It is now one of the 3 main pillars of the Icelandic economy (with electricity intensive industry and fishing). Odd that you'd look at this as a negative seeing as you have concerns about the economic health of Iceland.
> It isn't going to be the next hot tech spot though.
I agree.
Lots of places that are geographically lucky still fail to take advantage of that very same luck. Iceland could just as easily not have used geothermal energy to heat nearly all their homes, but they saw their advantage and capitalized on it. That should be commended, imho.
Actually, about 1/12th of that. You meant 8-10% a year. [0]
In what way? Saying I disagree and not qualifying it makes it impossible for those unfamiliar to compare and contrast these divergent opinions.
Energy production is majority from Hydroelectric, home heating uses geothermal.
They don't pay very much for their use however, that's true.
Comedian Ari Eldjarn has a really good joke a bout "per capita". It's an economist term, but in Iceland every five year old knows the phrase, because we, as a nation, are very frequently outliers when it comes to per capita, due to the small size of the population it doesn't take much in absolute terms, to skew the average very high or very low.
Also, as an Icelander who escaped to London almost a decade ago, I agree with everything bbarn has said. Most annoying to me was the fact that I could be a top expert in my field, and still only make about 50% above median income (assuming I can even find employment in Iceland doing that work). The bell curve in Iceland is very narrow, with almost no tail. In London I'm getting paid 4-5x what I got in Iceland, with significantly lower cost of living (and no inflation linked mortgage; if you want to be outraged, read about Icelandic mortgages)
I always tell people; Iceland is a great place to live, if you're happy being an average person, who drives an average car, lives in an average house, have an average family, with common hobbies and average ambition. If you dare dreaming bigger than that, you are considered a narcissistic capitalist and nobody likes you.
People are very supportive of start-ups, as long as they're not very successful. Once they start taking off and earning money, people change their tune. Then suddenly it's all "they couldn't possibly have been that successful without corruption", and "they need to pay more taxes"...
---
I remember reading comments on various social networks, where people cheered when my family's hotel business failed. A spate of cancelled bookings after WOW air went bust (people also cheered that), ended up causing cashflow problems and eventually the hotel was shuttered and the property was repossessed. In the end it was sold for more than outstanding debt and every creditor got paid, including the bank. - but oh my god people lost their collective minds about this. "Corrupt capitalist scum getting their comeuppance" was sort of the summary of people's opinions. My dad literally worked himself to death fixing up that hotel and trying to make it successful (he had a sudden heart attack on location in 2017). My mom was left with a ~10 million krona stake in the business along (~80k USD) with her siblings who had a similar stake, but for most of them this was a significant portion of their savings.
Just ordinary people trying to work hard and take a small risk to make something big happen, but people couldn't have that.
> Iceland is also home to lots of "love refugees," tourists who found love during their trips to Iceland and never left.
The foreign workforce in the tourism industry is probably filled with people like this, so you're likely to get that impression. Most foreign immigrants move here to do all kinds of jobs simply because the salary is better than in their home country. For example, I once met a guy who was a manager at a software company in Poland that moved to Reykjavik to clean because it paid so much better.
It is quite common for IT related work in Iceland to be outsourced to mainland Europe. So while there is venture funding available to create new companies, the actualy labour of software development is outsourced. This to me is a red flag that counters the underlying message of the article.
> Iceland stands as a global leader in renewable energy, with 100% of its electricity grid relying on renewable resources.
Technically 99.9% as some areas require diesel generators. Iceland isn't a "leader". Iceland is geograhically lucky to have a lot of glacial meltwater (hydro) and shallow volcanism (geothermal). The virtue signalling around Iceland's grid is quite on the nose, particularly when it overlooks similarly lucky countries like Costa Rica. As an Icelander in this very field, I would say Ireland is the leader in renewable energy (if interested look up Eirgrid's DS3 project), as they're literally leaders in pushing the key technical limits of grids relative to renewable energy (i.e. inertia).
One broad aspect that is overlooked here is the need for work and residency permits. It is incredibly hard to get either of those as a non-european foreigner. Both because the requirements are highly restrictive and the directorate of immigration does its best to find reasons not to provide permits. The only recent positive change, that some here on HackerNews might find use for, is the long-term remote work visa (https://island.is/en/get-long-term-visa-for-remote-workers).
But it doesn't sound that far off. Managers are at home and many resources are elsewhere. An architect role is fairly senior...
Also I'm not saying all of the work is outsourced -- I should have said "that many jobs compared to US tech markets". I found lots of developer opportunities in Copenhagen when looking around -- but everyone I talked to they had bigger teams working in Spain and did most of their hiring there.
It's trauma care, not health care. Anything preventative is deprioritized and the country beats the United States in Obesity rate. Get hurt, they patch you up, but have a chronic condition, like say a thyroid problem? See you in 6 months.
Iceland Obesity rate: 21.9%
Source: https://en.wikipedia.org/wiki/List_of_countries_by_obesity_r...
That perception is made clear in this Reddit thread
[1] https://www.reddit.com/r/copenhagen/comments/11xbvvk/boom_in...
So despite the public perception on progressive taxes, in practice the Nordics can be quite attractive compared to European countries which have lower income tax rates but income through equity/stocks are progressively taxed together with income taxes. So they can eat their cake and have it too in a sense, by being more accomodating for the wealthy tax-wise than most of the population realize.
https://taxsummaries.pwc.com/iceland/individual/taxes-on-per...
And according to Wikipedia Iceland has a lower marginal tax rate than the US.
https://en.m.wikipedia.org/wiki/List_of_countries_by_tax_rat...
Does that “marginal tax rate” in the US include payroll tax? If not it is inaccurate.
Employees pay payroll tax, even if they don’t see it taken out on their paychecks.
Yes, the so-called "employers' contribution" is a fine piece of propaganda.
The Blue and or Sky Lagoons (disney world of spas) for me werent that great when compared to meeting/conversing with locals at the local and free bathhouses (not free for tourist though; $10).
Do you mean Denmark or Iceland, the latter a car is a necessity.
> vehicle reg taxes (in denmark) of around 85% to 150% of the car’s value
So Denmark probably.
Well, yeah. And people who get a job also do it for the money.
At least compared to most other European countries, where every profit from stocks is heavily taxed, this is quite wild.
The downside of this ofc is that losses aren’t tax deductible either, and that you still pay the tax even if your stocks lost in value during the year. But still: Your capital gains earned through this scheme are close to be tax-free. If you bought a lot of Nvidia in January and sold it now, you could even withdraw the profit to buy a house or a car - and thereby avoid most of the tax that would come as a consequence of a bigger value of your stock holdings.
Just writing this to point out that there’s more nuance to this “taxes are high in the Nordics” narrative.
Makes for great countries to be rich in, but if you’re a high earning low wealth individual like many early-mid career programmers you’ll be taxed to death.
This allows you to even out high income periods with low income periods, thus avoiding the high margin tax on income.
Right… Nordics love to pick on US when their own healthcare have up to a decade of waiting times for inportant procedures. Up to two years for even an interview with a specialist.
Every single hospital sydtem in the Nordic countries is broken beyone hell. Both Sweden and Denmark offer private insurance so you can bypass lines and cut down costs.
Iceland does not. No idea about Finland and Norway.
In the nordics you pay socialist taxes for what is turning in to a kapitalist system.
I wish my fellow Nordics would grow up and face our crippled internal system of throwing immature comments on the US about our “free” healthcare.
Its neither free nor is it working.
I pay 43% of my salary to taxes. I also pay private health insurance as do half of the population here.
I also pay road tolls, school fees, taxes because I have a mobile ohone from work due to on call. Taxes because work offers food on premis. The dentist costs 100 euro just for a basic examination and some xrays.
Food cost is at an all time high, so is heating and electricity.
Nordics celebrating nordic superiority is more like the frog being boiled so slowly he doesnt realize until its too late.
I wasn’t saying anything even remotely similar to that.
> Nordics love to pick on US when their own healthcare have up to a decade of waiting times for inportant procedures.
It’s not a competition. There are serious problems within Swedish (and probably Nordic overall) healthcare, in particular non-urgent procedures like hip replacement surgery. We should criticize them both.
However, I’ve been living in both systems. In the US the total cost (both taxes and private) is >2x, and the outcome is significantly worse, in aggregate. Getting what’s considered “excellent” health insurance can still land you in a hell hole of legal disputes and unimaginable medical debt. I absolutely don’t blame you for your disappointment, but the US system is much, much more broken, in aggregate, and not just for “the poor”, but for everyone except perhaps multi-millionaires.
> Its neither free nor is it working.
It’s never free. However “working” is not a boolean, it’s floating point. It can get much, much worse.
> I also pay private health insurance as do half of the population here.
Out of curiosity, where? I’m not saying you’re wrong, but it’s news to me. I thought it was way less common.
> Nordics celebrating nordic superiority is[..]
Beyond stupid, indeed. The mindset “at least we’re better than X” leads to complacency and is a huge flaw in many people’s thinking. Everywhere. I don’t endorse any of that.
The advantage of the Nordic system is that it is brutally simple. You pay your taxes and there isn't a whole lot of room to change anything about that.
I lived in Sweden and Finland for a while. It's nice. Everything is taken care off. There is no drama around anything. You get sick you go the doctor. You get old, you are taken care off. Etc. When I moved from Finland to Germany as part of an international transfer in the same company, the company chose to raise my salary to compensate me for the raised tax burden ... in Germany.
Reason: the Finnish tax system is actually pretty alright. After you pay your insurances and taxes, which is pretty much just kept from your salary, that's pretty much it. The VAT is high as well. But there's very little else to take care off beyond things like your rent.
The German tax system on the other hand is death by a thousand cuts. A little tax here, a little insurance there, etc. None of it optional. Once you add it all up, it's quite a lot. So they compensated me. Of course cost of living is a lot lower so it was a quite nice raise for me. California is more like Germany than like Finland. But once you add it all up, you are paying a lot to a lot of different things.