IKEA opened their first store outside of Scandinavia in 1973, H&M in 1976 and according to wikipedia Tetra Pak had financial troubles until they became successful in the mid 1960s. Of course Sweden had a major advantage in that its infrastructure wasn't destroyed in WWII.

That's true. But I think while the "infrastructure" argument explains a lot why Sweden has done well "in average", it does not explain why there are more billionaires than average. I think that is more due to individual drive and entrepenureal spirit of Persson, Kamprad and Rausing.

Or, you know, it could be the fact that Sweden's industrial capacity survived WWII largely intact and so the country in general was better positioned than the rest of Europe to make money.

http://en.wikipedia.org/wiki/Sweden_in_World_War_II

The same thing helped out post-war America as well. Was isn't good for the economy on average, but when all of your industrialized competitors get bombs dropped all over them and/or occupied your relative advantage in manufactured goods goes way up.

This theory doesn't hold up at all. Germany nearly flattened, and yet, they had the Wirtschaftswunder ( https://en.wikipedia.org/wiki/Wirtschaftswunder ). In fact, it wasn't just that Germany was bombed, but after the war their machinery and even their top talent were ruthlessly pillaged by both the West and the Soviets. And yet, Germany emerged just as well (or better by some measures) industrially than Sweden or the US.

If you want more counter-examples, look to Japan, nothern Italy, or Austria, whose industrial capacity and economy became exceedingly powerful after the war.

A lot has to do with the stability of your society; as long as your government and talent is relatively intact, you can rebuild quite quickly even from extreme catastrophes. Its only when you start "liquidating" the intelligentsia (Cambodia, Soviet purges) where you begin to take steps back, or maybe a prolonged multi-decade war or colonial occupation (Afghanistan, India).

I would wonder if the Marshall Plan didn't contribute greatly to the post-war success of Western Europe (as was the intention of the program). A cursory glance over the Effects section of the Wikipedia page shows that the effects of the plan greatly increased Western Europe's industrial and agricultural standing.

It sped things up, but I doubt much more than that. Look at the money we pump into Africa and the developing world; without the right society in place, that money just evaporates into short term fixes along with a lot of corruption and waste (not saying we should stop, but we have to do it better than we are).

Entirely possible, but the fact remains that those three companies are not proof that high tax rates still start big companies. Forget about "why", the simple fact is they were not started in times of high tax rates.

It's apparently been a much longer journey, starting in the 1800's as detailed by http://www.libertarianism.org/publications/essays/how-laisse... The part about John Hierta is especially interesting; he's the obvious entrepreneur who managed to change politics.

Am I supposed to take an article that only references other libertarians seriously?

The conventional story about Swedish wealth is a joke. In fact, wealth was primarily accumulated under a largely free market system between 1840 and 1970 or so. After that the welfare state started expanding in earnest and it has mostly been downhill from there, e.g. Sweden going from the fourth richest country to the fourteenth.

http://meriksson.net/how-sweden-became-rich

Sweden has acquired much more wealth since 60's than before. Something like 600 times more.

"The authors contrasted American-style cutthroat capitalism with Nordic-style cuddly capitalism"

America hasn't had cut-throat Capitalism in a century.

Few seem to understand the difference between 19th century Capitalism, with actual free markets, and 21st century Socialism. You'd think the entire 19th century never happened, such that authors have no reference source for actual 'cut-throat' Capitalism.

We have soft European Socialism. The government system spends 40% of GDP ($6.7 trillion out of $17 trillion). We don't have a free market in nearly any sector, including the biggest such as: healthcare, education, banking, telecom, energy, utilities. When 80% of your economy lacks any actual free markets, how can one claim Capitalism as the system?

In fact, our government spends so much we're bankrupt a few times over when you count entitlements + public debt, none of which can ever be paid in full. The public debt is of course laughable, we couldn't pay it down in a century of surpluses, even at 2% interest rates. We're currently in the process of actively defaulting on our debt, using QE (aka debt monetization) to devalue said debt.

The Federal Government alone spends so much, it's half the size of the entire Chinese economy.

We have the largest welfare system in world history, by far. We have the largest entitlement system in history, by far. We have the largest government-controlled health system in history, by far.

America has more regulations on its books than any other country, by far. We add thousands upon thousands of regulations annually. We have the most regulated economy in history, there isn't even a close #2.

Our taxes are worse than Canada (supposedly a semi-Socialist nation), and among the highest for industrialized nations when you count local + state + federal. We also have the largest and most convoluted tax system by far, the total IRS tax code is so large no human could ever reasonably read it.

Where's the Capitalism? It doesn't exist.

It's not pure capitalism, of course. But America is undeniably more capitalistic than the majority of OECD countries and even goes so far as to consider capitalism an ideal, and capitalistic policies to be more virtuous. And the US is very much a low-tax country, in aggregate. See this graph: http://blogs.crikey.com.au/pollytics/files/2011/12/taxasgdp2...

From source: http://blogs.crikey.com.au/pollytics/2011/12/08/australian-e...

> 19th century Capitalism, with actual free markets

To be absolutely clear, when people say that free markets have never been a thing, you're saying that this claim is false and we've had them in America in the 19th century?

We did have something much closer to them.

The popular reaction to what happened under those markets is why we developed anti-trust regulation, and taxes on rich people. (Which peaked in the 1950s with a marginal income tax of 92-93% on earned income over $1 million/year.)

Bill Gates is, in many ways, the Andrew Carnegie of our day. Both in good and bad ways.

> 21st century Socialism

If you think that any major world economy is socialist, you're deluded.

> Our taxes are worse than Canada (supposedly a semi-Socialist nation)

Wait, what, no, it isn't. Why do you think this? Are you confusing socialism with social democracy, or something?

One thing you should understand about Americans is that the word 'socialist' means something a bit different to them.

As a Canadian working in SF, I can assure you I owe the Canadian government a big fat check when I go back for the difference in taxes.

>Their reasoning was that high levels of inequality create financial incentives for innovation

>>http://www.youtube.com/watch?v=WbS9jZOlQjc

Maybe we should tell those kids in somalia to "innovate" a steak or a hamburger...

American today are living off the golden age when a man could work his way up and actually move up in life. I say actually because they had the means to do so.

If you are too poor you can't afford shit, you can't afford to go to college, to move to an area with better jobs (or less cancer) let alone dropping everything and building a startup.

Why you think YC started giving out $20k? so founders wouldn't starve during the 3 months they are skipping from work. It might be news for some here but most young people have no savings and their parents can't support them anymore.

Back in 1950 you could live off a part-time gig waiting tables while you were in college/building something, but today? don't make me laugh.

Also part of the "Golden Age" of America was generational thinking. Many people immigrated to America not to become rich themselves but to provide better opportunity for their children. Even if you don't believe that rags-to-riches stories are possible in the extreme, it is certainly possible to be born poor and work your way up the point that your children are able to go to college, which allows them to provide your grandchildren with even more opportunity.

It's a myth that this is no longer possible. Want to know how I know? Because I did it.

I grew up poor. My parents told me if I was going to college, I'd have to figure out how to do it myself because they couldn't afford to help me. So I did. I worked hard in high school, scored a 30 on the ACT, got some scholarships and paid the rest myself from jobs worked during school and money saved during the summer.

I earned my CS degree, got out and found a job, and now I have a (different) job where I can afford a 2000 sq. ft. house that I currently owe just over $100k on and still have plenty of money to save up.

People today are generally either lazier or less imaginative. I'm not sure which.

I did it, therefore everyone can do it? This kind of thinking is completely counter-productive to working towards a solution where no-one has to do it. Unfortunately such a myopic self-accountability for one's own situation is deeply ingrained in the American mythos. Ironically, this conception leads to some of the lowest socio-economic mobility amongst developed nations. After all, if anyone can get to where I am, anyone who isn't where I am is in their position because they're too lazy. No need to look at education, incarceration, safety net programs and healthcare.

http://en.wikipedia.org/wiki/Socio-economic_mobility_in_the_...

Key quote: ... 42 percent of American men raised in the bottom fifth of incomes stay there as adults. That shows a level of persistent disadvantage much higher than in Denmark (25 percent) and Britain (30 percent).

I think there is a position in the middle between you and the person you responded. I see a lot of kids now that have grown up with that attitude that it is never their fault. That leads to not taking responsibility for their own situation.

When I was growing up, it didn't matter if I was right. If a teacher called the house it was always my fault and I was punished. Now it seems teachers are blamed for simply trying to do the right thing. Parents take their kids side even when they are grossly wrong. A local murder case where 2 teens shot and killed a guy after luring him to buy a truck has their parents and friends posting 'free <whatever the idiot thugs are called>' on facebook and twitter.

So while you are right that a lot of factors come into play when attempting to move up the ladder, you cannot completely absolve the individuals responsibility for their own situation.

> People today are generally either lazier or less imaginative. I'm not sure which.

Definitely less imaginative. Fewer people these days have fantastical stories where they're a singularly representative sample of a nation of 300 million. That takes imagination.

You can give examples of social mobility in all societies; that doesn't mean that those societies necessarily have high social mobility. For that you need statistical evidence.

I never said we have high social mobility. I responded to "you can't" with "I did".

Lately, I've begun to realize that a sure mark of a fool is someone who interprets what he reads not by what is there, but by what he wants to be there.

> I never said we have high social mobility.

Yes, you did.

> People today are generally either lazier or less imaginative. I'm not sure which.

Gosh darnit, when I was young we had to climb a mountain in the snow barefoot to go to school, uphill BOTH ways, and we liked it!

It is a truth universally acknowledged, that a generation of people will always view the next generation as lazier and stupider; when in fact, they are just bitter from getting old.

I for one put myself through a good school in CS with great ACT scores also; but tuition back then was only $900/quarter, and the CS department only rejected 50%, not 80% of its applicants as today. Kids these days have it much harder than me.

For what it's worth, I'm only 31...

I'm genuinely surprised by the responses I've gotten to my post. I replied to a post that spoke in generalities and said "you can't" with my own message of "I did" and people are disagreeing with that assessment by saying "not everyone can".

I suspect that most HN readers are those who have "made it", relative to many in their respective societies. The professions that are often represented here are usually well-compensated, and there are successful entrepreneurs here, to boot. So I would expect people to be a bit more sympathetic to your anecdote.

You are being a black and white literalist, where "you can't" generalizations = 0% probability. It is literally false to say "you can't win the lottery" but given the odds...you are likely not to win.

Now go back and read parent post like a normal non-literalist human being, and it will definitely make more sense to you.

My theory is that (over)population might have something to do with it. The population of the US was around 150 million, it's more than double that now. Maybe there was the same amount of "opportunity" back then as now, but now more people compete over it (and over the same resources). The total population of the world was 2.5 billion back then, now it's almost triple that. The world hasn't grown 3 times since then, it's the same size.

One thing missed by the article is that Sweden was one of the few European highly industrialized nations that weren't ravaged by WWII (due to their neutrality, in turn due their perceived Arianism by Germany), so in 1946, they could start making and selling stuff to Europe which desperately needed, well, everything.

due their perceived Arianism by Germany

As opposed to Denmark and Norway? It's more likely that the Germans got what they wanted anyway (Sweden sold Germany a lot of steel) and didn't have resources to occupy Sweden just for the principle of it.

It's not like they had any particular interest in Norway, either. It was only about preventing the Brits from setting up shop, which they were in fact poised to do.

It was also about securing Narvik, a very important harbor at the time.

Norway was pretty important. Hitler wanted lots of coastline from which to send hidden submarines to torpedo British shipping. And Norway has lots of coastline with convenient fjords to hide stuff in.

Denmark was important both as the gateway to Norway, and to control the gateway to the Baltic. With those two in German hands, they didn't need Sweden anymore.

Probably no one is reading, but ....

Sweden somewhat collaborated with Germany during WWII as well, and probably got a break therefrom, though they also helped the allies and some Scandinavian Jews.

http://en.wikipedia.org/wiki/Sweden_in_World_War_II

Not to get too deep into the historical weeds, but several neutral, "Aryan" nations were invaded during the war. Doesn't it seem more likely that Sweden was fortunate enough to be geographically isolated between Russian-held Finland and German-held (and more strategically significant) Norway? Swap the government and population of Sweden for Denmark and I suspect nothing changes.

Finland was not "Russian-held" in WWII.

You're right, of course. Russian-entangled?

How about: entangled in brutal fighting with the Russians since even before the war.

Netherland also expected to remain neutral, but was invaded anyway, because North Sea coast and close to England.

The article tells one story, and it is true, but it is not the story why Sweden has many billionaires. Many of facts mentioned in the article are quite recent reforms, and can in themselves not explain this.

I recall that in 1997 the social democratic government introduced tax exemptions for the very rich, put in front of the threat by Stefan Persson that H&M might move abroad otherwise

This old, Google-translated link to an article in Affärsvärlden (Sweden's "Financial Times") describes a more relevant piece to the puzzle.

http://translate.google.com/translate?hl=en&sl=auto&tl=en&pr...

This might be relevant: I've summarized a few lessons from when IKEA and H&M were startups:

http://blog.trejdify.com/2012/08/lessons-learned-hm-startup....

http://blog.trejdify.com/2012/08/lessons-learned-ikea-startu...

You could ask the Lithuanians, I'm sure they would have some colorful input.

Why is that?

The housing market and quite a few banks are effectively being taken over by Swedish banks. People are buying property but the mortgages are paying into the pockets of non national banks, so money spent to have a home in Lithuania is leaving the country to pay for social services in Sweden.

It's a bit of a political debate for some.

I can understand such frustrations (especially in light of the financial crisis) but they seem a bit naive. The system is more complex than just moving the money out of the country and funding Swedish social services with it.

Sounds more like a populist argument along the lines of: "Oh those dirty banks are stealing our money."

Anyone who is convinced that having foreigners owning the banks is a particularly bad arrangement should first take a look at where Ireland's determination to have its banking industry domestically-owned eventually led it.

>Anyone who is convinced that having foreigners owning the banks is a particularly bad arrangement should first take a look at where Ireland's determination to have its banking industry domestically-owned eventually led it.

They should also check out what Icelands nationalisation of the banks led to.

http://en.wikipedia.org/wiki/2008%E2%80%9311_Icelandic_finan...

This is like claiming that McDonalds China is shipping money back to the USA, when in actuality, they are just reinvesting it back in China...and kicking back profits to shareholders who are hardly American.

The only way that this could have a shred of truth is if the Sweden banks had to pay Swedish taxes rather than Lithuanian taxes. Given how taxes work, you generally get taxed where you do business, not where you are headquartered, so this is most definitely false. More likely the Swedish banks are investing capital in Lithuanian for the benefit of their not necessarily Swedish owners.

> social services in Sweden

What's fun to note about social services in Sweden is that they're bleeding money like a motherfucker: more people are using the hospitals, schools, welfare checks, etc. More and more people are jobless and unproductive, even more unproductive people are being imported every year (over 140.000 immigrants are estimated to arrive during 2014), the services are prone to nepotism and very generous salaries for politicians and bosses (sometimes they're synonymous), etc.

The Swedish economy is a bomb waiting to explode, and Swedes are too afraid to speak about it for fear of being called racist or islamophobe or what not.

So... SNAFU. Just like the rest of Europe. Sucks to not be a politician / municipal boss right now. They're the only ones who have it blissfully easy.

Or you could just be reading libertarian propaganda that continuously predicts impending doom for USA, Western Europe, Japan, Australia...I think these are communicated by the same people who used to stand out on streets wearing signs stating "the end is near."

Yes, there are a lot of immigrants in sweden. All of them that I have met (except for the ones from the E.U) have been productive members of society.

There's the turk system administrator, the iranian who's also going to be a system administrator (once he gets a visa and my employer can actually hire him), the chinese guys, the pakistanians and so on....

Ironically the people from the E.U. that I know have been the people that are actually abusing the system. Like the welshman who is being "burned out" (no, he's not), and the irish guy who keep bouncing between jobs, and there are more people like this.

Sweden also have surprisingly many millionaires as well (69,800 millionaires) of a population of 9,5 million. The number have increased significantly the last years.

http://sverigesradio.se/sida/artikel.aspx?programid=2054&art...

As a Swede who have started businesses in Finland, South Korea and Lithuania, I do agree with the article that Sweden is the easiest country to start and run a company in. And the relative high taxes is nothing that bother me at all. I don't mind paying more if the service provided by it was justified.

"No single Swede comes close to the epic wealth of a Bill Gates or a Warren Buffett." -- wasn't Ingvar Kamprad (of IKEA fame) more wealthy than Gates at one point? Due to some currency being strong, iirc.

If I recall correctly, the ownership of IKEA is quite intricate, with Swiss foundations and what have you in the mix. Mainly for tax purposes I think - there was quite a controversy here in Sweden a few years back regarding this.

I believe that the wealth that Ingvar Kamprad ultimately controls is substantially larger than what a look at Forbes 500 might indicate, but perhaps that is not uncommon.

Back in 2006 The Economist had a reasonably in-depth article on IKEA's corporate structure, http://www.economist.com/node/6919139

Thanks! Just skimmed it for now but will definitely read it later.

So I was wrong in naming Switzerland - should've mentioned the Netherlands, Luxembourg, the Netherlands Antilles and Curaçao instead.

Hans Rausing of TetraPak is currently worth $11B according for Forbes. That's fairly close to Buffett's $55B.

In the same way that 20k a year and 100k a year are fairly close salaries ;)

11 digits and 11 digits are the same order of magnitude, at least.

Kamprad in on par with Buffet if you belive Bloomberg.

http://www.bloomberg.com/billionaires/2013-10-31/cya

True. He probably doesn't tax to Sweden and thus doesn't show up on the list.

If you look at multiple indexes that rank countries by competitiveness, low corruption and infrastructure, Sweden and other Nordic countries are usually in top 10.

If you think countries as companies, they would be like business parks. You can compete with low price or good infrastructure. Sweden is Google of countries. It provides highly educated people, good infrastructure, safety and low corruption with higher price. This will inevitability drive out low margin industries that rely on cheap labour but it will be good environment for high- and middle-tech companies.

At a theoretical level you would expect a free market system to produce very few billionaires. Low regulatory barriers to entry and easy capital formation mean high profit margins get rapidly eaten by competitors.

If you look around the world today, in practice billionaires and big government do seem to go hand in hand. Consider the massive barriers to entry to the US financial system erected by very wealthy people. Or more egregiously look at the Russian oligarchs.

>If you look around the world today, in practice billionaires and big government do seem to go hand in hand.

Of course. The bigger and more powerful the government, the more likely powerful people will seek to control it to their own ends.

I read "Why does Snowden..." lol :)

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