Hacker News Reader

Hacker News

Comment by Matti | Hacker News Reader

Full thread

Matti

"But they haven’t stopped Swedish entrepreneurs from building giant firms like H&M, Ikea, and Tetra Pak."

Look at when the mentioned companies were founded:

IKEA - 1943

H&M - 1947

Tetra Pak - 1951

Then look at the historical tax-to-GDP ratio chart here:

http://www.ekonomifakta.se/sv/Fakta/Skatter/Skattetryck/

The companies were founded in low-tax, pre-welfare Sweden.

View on HN

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.

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.

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?

Two of those companies are no longer based there. IKEA which isn't also jumps through hoops with shells and such to be presented as a non profit.

IKEA is still, as far as I know, based in Sweden as much as Apple is based in California.

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

Headquarters: Leiden, Netherlands

http://www.ikeafans.com/ikea/ikea-corporate/ikea-corporate-s...

http://www.nytimes.com/2012/04/29/business/apples-tax-strate...

Reply on news.ycombinator.com