IKEA Says Government Bureaucracy Slows Job Creation

OhlssonMikaelCEOofIKEA2013-02-03.jpg “The economy ‘will remain challenging for a long time,’ says IKEA Chief Executive Mikael Ohlsson.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B3) MALMO, Sweden–IKEA is poised to embark on a global spending spree, but its departing chief executive says red tape is slowing how fast the home-furnishings retailer can open its pocket book.

With the company set to report record sales on Wednesday, CEO Mikael Ohlsson said the amount of time it takes to open a store has roughly doubled in recent years.
“What some years ago took two to three years, now takes four to six years. And we also see that there’s a lot of hidden obstacles in different markets and also within the [European Union] that’s holding us back,” he said in an interview recently at an IKEA store on Sweden’s western coast.
. . .
IKEA plans to invest €2 billion in stores, factories and renewable energy this year. But the company fell €1 billion short of its goal of investing €3 billion in new projects last year, largely because of bureaucratic obstacles, he said. For 10 years IKEA has tried unsuccessfully to relocate a store in France, for example. The company also is challenging German policy dictating what can be sold and where, saying the rules are out of sync with EU legislation.
“It’s a pity, because it can help create jobs and investments at a time when unemployment is high in many countries,” Mr. Ohlsson said. A new IKEA store creates construction and store jobs for about 1,000 workers, he said.
. . .
The company’s highest-profile headaches have come in India, an untapped market where IKEA wants to open a first store in at least five years and roll out an additional three soon thereafter.

For the full story, see:
ANNA MOLIN. “IKEA Chief Takes Aim at Red Tape.” The Wall Street Journal (Weds., January 23, 2013): B3.
(Note: ellipses added.)
(Note: the online version of the story has the date January 22, 2013.)

Poor People Want Washing Machines

The wonderful clip above is from Hans Rosling’s TED talk entitled “The Magic Washing Machine.”
He clearly and strongly presents his central message that the washing machine has made life better.

What was the greatest invention of the industrial revolution? Hans Rosling makes the case for the washing machine. With newly designed graphics from Gapminder, Rosling shows us the magic that pops up when economic growth and electricity turn a boring wash day into an intellectual day of reading.

Source of video clip summary:
http://www.ted.com/talks/hans_rosling_and_the_magic_washing_machine.html

The version of the clip above is embedded from YouTube, where it was posted by TED: http://youtu.be/BZoKfap4g4w

It can also be viewed at the TED web site at:
http://www.ted.com/talks/hans_rosling_and_the_magic_washing_machine.html

(Note: I am grateful to Robin Kratina for telling me about Rosling’s TED talk,)
(Note: I do not agree with Rosling’s acceptance of the politically correct consensus view that the response to global warning should mainly be mitigation and green energy—to the extent that a response turns out to be necessary, I mainly support adaptation, as suggested in many previous entries on this blog.)

Sweden Prospers from Low Taxes, No Stimulus and Fiscal Discipline

SwedenGraphGDP2012-11-20.jpg

Source of graph: online version of the WSJ article quoted and cited below.

(p. A9) STOCKHOLM–Sweden’s economy, bolstered by solid exports and healthy consumer spending, is picking up considerable steam even as many of its European neighbors gasp for breath amid the struggle to contain the euro-zone debt crisis.

Sweden’s second-quarter economic output data, released Monday, significantly outpaced expectations, further solidifying the Northern European country’s reputation as a haven in a volatile period. The Swedish krona, which recently reached a 12-year peak against the euro, strengthened further after the report.
. . .
. . . , Sweden has built a reputation for fiscal discipline since it suffered a financial crisis in the early 1990s. Successive governments have since stuck to a target to post a surplus of 1% of GDP over any business cycle.
Lawmakers resisted the temptation to borrow to fuel growth during the boom of the early 2000s, which meant Sweden hit the global financial crisis of 2008 and 2009 with strong public finances. The government hasn’t needed to increase taxes in the way Spain has, or to cut spending as in the U.K.

For the full story, see:
CHARLES DUXBURY. “In Crisis, a Rare Swede Spot.” The Wall Street Journal (Tues., July 31, 2012): A9.
(Note: ellipses added.)
(Note: the online version of the article was dated July 30, 2012.)

The Bear Details of Belarus Communist Tyranny

BelarusTeddyBear2012-08-07ProvinceVersion.jpg “Swedish advertising agency employees Thomas Mazetti and Hannah Frey hold a stuffed bear that was parachuted into Belarus.” Source of caption and image: http://www.theprovince.com/business/Teddy+bears+make+picnic+generals/7028460/story.html

(p. A4) The plane crossed stealthily into Belarussian airspace and headed for the capital, Minsk. At the appointed moment, the cargo doors opened, and an invasion force of tiny plush freedom fighters parachuted to the ground.

Belarus was under attack — by teddy bears.
Three members of a Swedish advertising firm planned and carried out the operation last month, adorning more than 800 plush bears with signs promoting democracy and denigrating Belarus’s authoritarian government.
Comedic touches aside, the security breach has become a major embarrassment for President Aleksandr G. Lukashenko, who has channeled his country’s meager resources into maintaining a calcified police state.

For the full story, see:
MICHAEL SCHWIRTZ. “Teddy Bears Fall From Sky, and Heads Roll in Minsk.” The New York Times (August 2, 2012): A4.
(Note: the online version of the article has the date August 1, 2012.)

Paternalistic Welfare State Discourages Integration of Immigrants

(p. A9) . . . Alf Svensson [is a] former leader of the center-right Christian Democrats.
. . .
Sweden’s paternalistic welfare state is partly to blame for some immigrants’ marginal status in the economy, said Mr. Svensson. “We had…a system which was ‘taking care’ of immigrants, which didn’t give them a chance to flex their own wings and show what they could do, and this has made integation worse,” he said.

For the full story, see:

MARCUS WALKER And CHARLES DUXBURY. “Far-Right Party Wins Seats in Sweden.” The Wall Street Journal (Mon., SEPTEMBER 20, 2010): A9.

(Note: bracketed words and first two ellipses added; last ellipsis in original.)
(Note: the online version of the article is dated SEPTEMBER 19, 2010.)

Big Government Slows Economic Growth

(p. A15) Americans are debating whether to substantially expand the size of their government. As Swedish economists who live in the developed world’s largest welfare state, we urge our friends in the New World to look carefully before they leap.

Fifty years ago, Sweden and America spent about the same on their government, a bit under 30% of GDP. This is no longer true. In the years leading up to Sweden’s financial crisis in the early 1990s, government spending went as high as 60% of GDP. In America it barely budged, increasing only to about 33%.
While America was maintaining its standing as one of the world’s wealthiest nations, Sweden’s standing fell. In 1970, Sweden was the fourth richest country in the world on a per capita basis. By 1993, it had fallen to 17th.
This led us to ask whether Sweden’s dramatic increase in the size of government contributed to its sluggish growth. Our research shows that it did.
We surveyed the existing literature looking at the trade-offs between government size and economic growth throughout the world. While results vary, the most recent research, by Diego Romero-Avila in the European Journal of Political Economy (2008) and by Andreas Bergh and Martin Karlsson in Public Choice (2010) find a negative correlation between government size and economic growth in rich countries.
The weight of the evidence demonstrates that when government spending increases by 10 percentage points of GDP, the annual growth rate drops by 0.5 to 1 percentage point. This may not sound like much, but over 30 years this would result in the loss of trillions of dollars each year in an economy as large as America’s.

For the full commentary, see
ANDREAS BERGH AND MAGNUS HENREKSON. “Lessons From the Swedish Welfare State; New research shows bigger government means slower growth. Our country is a prime example.” The Wall Street Journal (Mon., JULY 12, 2010): A15.
(Note: the online version of the article is dated JULY 10, 2010.)

Swedish Town Wants Nuclear Waste Dump

OsthammarSwedenNuclearWasteSite2010-05-20.jpg“Osthammar is competing for the right to host a storage site for radioactive waste.” Source of caption and photo: online version of the NYT article quoted and cited below.

After reading Petr Beckmann’s The Health Hazards of NOT Going Nuclear, a few decades ago, I became convinced that nuclear power was being rejected in the United States due to irrational fears based on a failure to make reasonable estimates of the costs and the benefits.
Isn’t it ironic that the irrational fear of nuclear power is at long last being overcome mainly by the irrational fear of global warming?

(p. A10) . . . , in Osthammar, . . . as many as 80 percent of the 21,000 inhabitants are in favor of the nuclear waste dump. The town is now one of two finalists among the communities in Sweden that vied for the right to host the dump.

Sweden, which swore off nuclear power after less than 20 percent of Swedes approved of it in a referendum in the 1980s, would seem an unlikely place for such a competition. But it has reversed course recently and plans to begin building new nuclear reactors, adding to the 10 it already operates.
But legislation requires that before any new plants can be built, the Swedish Nuclear Fuel and Waste Management Company, better known by the initials SKB, must first create permanent storage space for the radioactive waste the reactors produce.
In most countries, of course, people would sooner allow a factory hog farm or garbage incinerator in their backyards than a nuclear waste dump. But in Sweden, SKB found 18 of 20 possible towns near proposed sites intrigued by their proposition. Then it had to whittle the list down to two, Osthammar and Oskarshamn, both already the site of nuclear plants.
SKB recently said it would ask the Swedish government later this year for permission to build the storage depot in Osthammar. If the government gives the green light to Osthammar over Oskarshamn, construction could begin some time after 2015, officials said.
Claes Thegerstrom, a nuclear physicist who is the chief executive of SKB, attributed the new attitude of Swedes toward nuclear energy to fears of global warming. “In the 1980s nobody was mentioning CO2,” or carbon dioxide, considered the major cause of global warming, he said. “Now, it’s on the top of the list of environmental issues.” Since they burn no fossil fuels, nuclear power plants do not produce carbon dioxide.

For the full story, see:
JOHN TAGLIABUE. “Osthammar Journal; A Town Says ‘Yes, in Our Backyard’ to Nuclear Site.” The New York Times (Tues., April 6, 2010): A10.
(Note: ellipses added.)
(Note: the online version of the article is dated April 5, 2010.)

Beckmann’s wonderful book was:
Beckmann, Petr. The Health Hazards of NOT Going Nuclear. Golem Press, 1976.

When the Berries Are Scarce, Keep Your Eyes Open for Gold

SvenssonWiikSwedishEntrepreneurs2009-08-14.jpg “Harriet Svensson, left, and Siv Wiik, amateur geologists and berry-picking grandmothers, at the site where they found gold.” Source of photo and caption: online version of the NYT article quoted and cited below.

Schumpeter focued on entrepreneurial innovation, while Kirzner focused on entrepreneurial alertness.
The article quoted below, presents a neat example of a couple of Kirznerian entrepreneurs:

(p. A9) OVERTURINGEN, Sweden — It was a lousy blueberry season in 2007, said Siv Wiik, 70, one of a pair of Swedish grandmothers now credited with discovering what experts say may be one of the richest gold deposits in Europe. “That year it was too cold in the spring, so there were few berries,” she said.

Berry picking is a serious business to Mrs. Wiik (pronounced VEEK), who was born in this village of 171, and her friend, Harriet Svensson, 69. For 40 years the two, widows with children and grandchildren, have explored every patch of field and forest clearing in the region, hunting for mushrooms and wild berries — blueberries, raspberries, blackberries, cloudberries.
But the women are also amateur geologists. They never leave home for a stroll in forests or fields without their geologists’ hammers, with their 30-inch handles, and their magnifying eyepieces, dangling from ribbons around their necks.
So in that terrible August when the blueberry crop failed, they decided to poke around for minerals. They went to a place called Sorkullen, far down an unpaved logging road, where trees had recently been felled, upending the earth and exposing rock to the air. Using their hammers, they cleared soil from around the stones, digging for about six hours, deeper and deeper, until they found a rock with a dull glimmer.
. . .
A huge Swedish lumber conglomerate, S.C.A., owns the land where they found the gold, but not the mineral rights. So they proceeded to obtain the rights for a large area around the find, then entered into negotiations, alone and without lawyers, with about 20 mining companies from Sweden and abroad, finally choosing Hansa Resources, of Vancouver, Canada.
This month, Hansa began boring at the site to obtain samples to send to Vancouver for analysis. “Whether it’s gold or not, even with a high-grade ore, you cannot see it with the naked eye,” said Anders Hogrelius, project manager for the drilling. “This was a surprise, and I think it’s positive, since it shows that it’s worthwhile to go outside the traditional mining areas.”
The windfall for the women has until now been modest. Hansa paid the women about $125,000 for the mining rights, and if a second round of boring is authorized this fall, the company will pay an additional $225,000. But the women have also been given a 20 percent stake in any future mining activities, which could yield a bonanza for many years to come.
. . .
Mr. Hogrelius, the drilling project manager, said a fully operating mine would bring jobs. “We usually estimate five jobs created in services for every one in the mines,” he said. A first estimate of initial investment, he added, comes to about $15 million.

For the full story, see:
JOHN TAGLIABUE. “Overturingen Journal; Barren Berry Season Leads to Far Richer Discovery.” The New York Times (Mon., July 13, 2009): A9.
(Note: ellipses added.)

SwedenMap.jpg

“A mine in Overturingen could provide much-needed jobs.” Source of map and caption: online version of the NYT article quoted and cited above.

High Progressive Income Taxes Result in “Demoralization of Entrepreneurs”

(p. 127) High progressive and unnegotiable gouges like those in Sweden and England drive people altogether out of the country into offshore tax havens, out of income-generating activities into perks and leisure pursuits, out of money and savings into collectibles and gold, and, most important, out of small business ventures into the cosseting arms of large established corporations and government bureaucracies. The result is the demoralization of entrepreneurs and the stultification of capital. The experimental knowledge that informs and refines the process of economic growth is stifled, and the metaphysical capital in the system collapses, even while all the indices of capital formation rise.

Source:
Gilder, George. The Spirit of Enterprise. 1 ed. New York: Simon and Schuster, 1984.

Energy Experts Question Reliability of Wind Power

 

   "A wind farm near Malmo, Sweden. The use of wind power in many European countries has stagnated in recent years."  Source of caption and photo:  online version of the NYT article quoted and cited below.

 

(p. C1)  Yet Sweden’s gleaming wind park is entering service at a time when wind energy is coming under sharper scrutiny, not just from hostile neighbors, who complain that the towers are a blot on the landscape, but from energy experts who question its reliability as a source of power.

For starters, the wind does not blow all the time. When it does, it does not necessarily do so during periods of high demand for electricity. That makes wind a shaky replacement for more dependable, if polluting, energy sources like oil, coal and natural gas. More-(p. C5)over, to capture the best breezes, wind farms are often built far from where the demand for electricity is highest. The power they generate must then be carried over long distances on high-voltage lines, which in Germany and other countries are strained and prone to breakdowns.

In the United States, one of the areas most suited for wind turbines is the central part of the country, stretching from Texas through the northern Great Plains — far from the coastal population centers that need the most electricity.

In Denmark, which pioneered wind energy in Europe, construction of wind farms has stagnated in recent years. The Danes export much of their wind-generated electricity to Norway and Sweden because it comes in unpredictable surges that often outstrip demand.

In 2003, Ireland put a moratorium on connecting wind farms to its electricity grid because of the strains that power surges were putting on the network; it has since begun connecting them again.

In the United States, proposals to build large wind parks in the Atlantic off Long Island and off Cape Cod, Mass., have run into stiff opposition from local residents on aesthetic grounds.

As wind energy has matured as an industry, its image has changed — from a clean, even elegant, alternative to fossil fuels to a renewable energy source with advantages and drawbacks, like any other.

“The environmental benefits of wind are not as great as its champions claim,” said Euan C. Blauvelt, research director of ABS Energy Research, an independent market research firm in London. “You’ve still got to have backup sources of power, like coal-fired plants.”

 

For the full story, see: 

MARK LANDLER.  "Wind Power, and Resistance; Sweden Turns to a Promising Power Source, With Flaws."  The New York Times   (Fri., November 23, 2007):  C1 & C5.

(Note:  online the title was simply "Sweden Turns to a Promising Power Source, With Flaws.")

 

Strong Global Support for Free Markets

 

FreeMarketsPositiveViewTable.gif   Source of table:  "World Publics Welcome Global Trade — But Not Immigration." Pew Global Attitudes Project, a project of the PewResearchCenter. Released: 10.04.07 dowloaded from: http://pewglobal.org/reports/display.php?ReportID=258

 

(p. A10) WASHINGTON, Oct. 4 — Buoyed and battered by globalization, people around the world strongly view international trade as a good thing but harbor growing concerns about its side effects: threats to their cultures, damage to the environment and the challenges posed by immigration, a new survey indicates.

In the Pew Global Attitudes Project survey of people in 46 countries and the Palestinian territories, large majorities everywhere said that trade was a good thing. In countries like Argentina, which recently experienced trade-based growth, the attitude toward trade has become more positive.

But support for trade has decreased in recent years in advanced Western countries, including Germany, Britain, France and Italy — and most sharply in the United States. The number of Americans saying trade is good for the country has dropped by 19 percentage points since 2002, to 59 percent.

“G.D.P. growth hasn’t been as dramatic in these places as in Latin America or Eastern Europe,” said Andrew Kohut, president of the Pew Research Center, referring to gross domestic product, the total value of the goods and services produced in a country. “But worldwide, even though some people are rich and some are poor, support for the basic tenet of capitalism is pretty strong.”

 

For the full story, see: 

BRIAN KNOWLTON. "Globalization, According to the World, Is a Good Thing. Sort Of."  The New York Times   (Fri., October 5, 2007):  A10.