[P2P-F] Fwd: [gang8] Re: Notes from a small, successful country... Start-ups Say Ja to Socialism

Wed Apr 20 12:08:33 CEST 2011

---------- Forwarded message ----------
From: Dante-Gabryell Monson <dante.monson at gmail.com>
Date: Wed, Apr 20, 2011 at 5:35 AM
Subject: Fwd: [gang8] Re: Notes from a small, successful country...
Start-ups Say Ja to Socialism
To: econowmix at googlegroups.com

http://www.inc.com/magazine/20110201/in-norway-start-ups-say-ja-to-socialism.html

---------- Forwarded message ----------
From: Arno Mong Daastoel <amd at daastol.com>
Date: Tue, Apr 19, 2011 at 9:12 PM
Subject: [gang8] Re: Notes from a small, successful country... Start-ups Say
Ja to Socialism
To: Kevin Tighe <tighea2z at gmail.com>
Cc: Frederick William Engdahl <engdahl at t-online.de>, "Robert Locke (E-mail)"
<blocke at hawaii.edu>, "gang8 at yahoogroups.com" <gang8 at yahoogroups.com>, Ursula
Backhaus <ursula_backhaus at yahoo.de>

Dear Kevin,

Sounds great doesn't it.
Well, people are just as fed up about politicians here as anywhere else and
we have the worst infrastructure in all of Europe including Albania,
statistics tell us.
So there are many things the article did not mention.
;-)

We are very fond of being self-critical here, but I think this article is
correct and corresponds to more nuanced and researched views over here (-
also concerning poverty, relative to quite similar countries)

>With a strong social safety net,* the downside to starting a company and
failing is small. *As a result, entrepreneurship isn’t a lottery, so much as
a lifestyle choice

And there is more to this:

Whereas employees of the former USSR and the present USA are afraid to take
responsibility for fear of being sacked etc (I know from talking with
workers and researchers), a worker in Norway normally has a strong union and
employment law behind him, as well as social security, a non-hierarchical
organisation structure etc.
*This enables the rank and file worker to use his independent imagination
and take responsibility *without fear of being sacked.
Economically this is very effective.

The traditional high level of trust in Scandinavia is also effective.

There is more. In economic slopes, the government pays part of the salary
for the company in order to make the company able to keep its source of
competence (labour) intact - as in Germany and other parts of Northwest
Europe.

But, there are many things the article did not mention.
;-)
Arno

On 24.03.2011 20:25, Kevin Tighe wrote:

Contrast this to the American model.It seems to me to be a glaring weakness
in American thinking amongst 'movers and shakers' that an approach something
like this would never even be considered.. it would be branded as
'communist' and immediately buried. Wonder why?

Norway, entrepreneurial paradise

*JAN 20, 2011 10:25 EST*

*ENTREPRENEURSHIP*<http://blogs.reuters.com/felix-salmon/tag/entrepreneurship>
 | *SMALL BUSINESS*<http://blogs.reuters.com/felix-salmon/tag/small-business>

Max Chafkin<http://www.inc.com/magazine/20110201/in-norway-start-ups-say-ja-to-socialism.html>
has
a fantastic story in Inc magazine about how to structure an economy so as to
encourage entrepreneurship, full employment, and general happiness and
contentment, all while drastically reducing inequality. It’s easy, in fact:
all you need to do is become Norway.

There’s loads of great stuff in this piece, and I’d encourage you to read
the whole thing. But a few things stand out.

Chafkin starts with the tale of *Wiggo Dalmo, an industrial mechanic* with a
high-school education who chafed under his bosses, *set up his own shop, and
is now running a $44 million company with 150 employees*. That’s the kind of
story which should be common in the US but is in fact rare. But ask
yourself: in the US, how much would such a person be paying in taxes? *Dalmo
paid $102,970 in personal taxes on his income and wealth last year*, *which
is probablylowe**r*, not higher, than the CEO of a $44 million company would
pay in *taxes in the US.*

*The reason is that there’s much less income inequality in Norway*. *With a
strong social safety net, the downside to starting a company and failing is
small.* As a result, *entrepreneurship isn’t a lottery, so much as a
lifestyle choice*. If you succeed, you’ll get to run a large and successful
corporation. But you probably won’t pay yourself a monster income.

Why not? Well, for one thing, *you won’t need to pay yourself a monster
income*, since things like *healthcare and college education* — even through
grad school, even outside the country — are *covered by the state*. Another
part of the reason is that income, in Norway, is a matter of public record.
And then there’s the fact that *money which would otherwise be going to the
top of the pyramid is instead going to the bottom*, where it does much more
good:

In a country with low unemployment and generous unemployment benefits, *a
worker’s threat to quit is more credible than it is in the United States,
giving workers more leverage* over employers. And though Norway makes it *easy
to lay off workers in cases of economic hardship*, firing an employee for
cause typically takes months, and employers generally end up paying at least
three months’ severance. “*You have to be a much more democratic manager*,”
says Bjørn Holte, founder and CEO of bMenu, an Oslo-based start-up that
makes mobile versions of websites. Holte pays himself $125,000 a year. His
lowest-paid employee makes more than $60,000. “You *can’t just treat them
like machines*,” he says. “*If you do, they’ll be gone*.”

Incentives matter, of course. But *not all incentives are purely financial*.
And there are serious problems with the US system where the incentives seem
to be structured so that a large number of people are competing to become
one of a very small number of monster success stories — multi-millionaire
startup founders, or sports stars, or CEOs. Most of us, it turns out, have
problems with the idea of playing that kind of lottery. As Chafkin reports:

I also became convinced of this truth, which I* have observed in the
smartest American and the smartest Norwegian entrepreneurs: It’s not about
the mone*y. Entrepreneurs are not hedge fund managers, and they rarely
operate like coldly rational economic entities. This theme runs through
books like Bo Burlingham’s *Small Giants*, about *company owners who choose
not to maximize profits and instead seek to make their companies great*; and
it can be found in the countless stories, many of them told in this
magazine, of founders who leave money on the table in favor of things they
judge to be more important.

*There’s a lot of talk, in the US, about how small businesses are the engine
of employment growth* — something we clearly desperately need. And *it looks
like Norway has cracked this nut*: it leads the world in the creation of
small businesses, and it has just *3.5% unemployment*, not to mention
essentially *zero poverty*.

Raising taxes on small businesses in and of itself won’t help the rate of
small-business creation — but it’s actually unlikely to hurt it that much,
either. (And interestingly, *taxes paid by an employer in New York are
actually **higher<http://www.inc.com/magazine/20110201/comparing-labor-costs-in-norway-and-new-york.html>
** than those paid in Norway*.) What *would* help would be a much stronger
social safety net, so that someone who starts a company doesn’t need to fear
a life of poverty in the event that she fails. *Encouraging small businesses
necessarily means encouraging failure* — but the cost of failure is very
high, in the US. Instead, we spend far too much time worrying about tax
rates on the successful.

*There is precious little evidence to suggest that our low taxes have done
much for entrepreneurs*—or even for the economy as a whole. “*It’s actually
quite hard to say how tax policy affects the economy*,” says Joel Slemrod, a
University of Michigan professor who served on the Council of Economic
Advisers under Ronald Reagan. Slemrod says there is no statistical evidence
to prove that low taxes result in economic prosperity. *Some of the most
prosperous countries*—for instance, Denmark, Sweden, Belgium, and, yes,
Norway—*also have some of the highest taxes*. Norway, which in 2009 had the
world’s highest per-capita income, avoided the brunt of the financial
crisis: From 2006 to 2009, its economy grew nearly 3 percent. The American
economy grew less than one-tenth of a percent during the same period.
Meanwhile, countries with some of the lowest taxes in Europe, like Ireland,
Iceland, and Estonia, have suffered profoundly. The first two nearly went
bankrupt; Estonia, the darling of antitax groups like the Cato Institute,
currently has an unemployment rate of 16 percent. Its economy shrank 14
percent in 2009.

*You can’t blame all of Estonia’s problems on its low taxes, of course *—
the currency issue (Norway’s kroner is floating, while Estonia just joined
the euro) is also huge. *And Norway does have all that oil revenue*, too. *But
looking at Estonia’s* housing bubble and bust, one sees an economy
where *people
are striving to get rich quick, in contrast to Norway’s culture of simply
trying to be as happy and successful as possible*. Which turns out to be
extremely successful

http://www.inc.com/magazine/20110201/in-norway-start-ups-say-ja-to-socialism.html
In Norway, Start-ups Say Ja to Socialism

We venture to the very heart of the hell that is Scandinavian socialism—and
find out that it’s not so bad. Pricey, yes, but a good place to start and
run a company.

By Max Chafkin <http://www.inc.com/author/max-chafkin> |
@chafkin<http://www.twitter.com/chafkin>
 | Jan 20, 2011

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