We need to be more like Sweden (it's not what you think Corbynistas)

There's a picture we have of Sweden as, depending on our political prejudice, some sort of social democratic world of joy or else a sort of stifling, controlling, high tax dystopia. I suspect that we don't think of this:

Stockholm produces the second-highest number of billion-dollar tech companies per capita, after Silicon Valley, and in Sweden overall, there are 20 start-ups—here defined as companies of any size that have been around for at most three years—per 1,000 employees, compared to just five in the United States, according to data from the Organization for Economic Cooperation and Development (OECD). “What you see is that start-ups have a high survival rate in Sweden, and they have relatively fast growth,” Flavio Calvino, an OECD economist, told me. Sweden also ranks highest in the developed world when it comes to perceptions of opportunity: Around 65 percent of Swedes aged 18 to 64 think there are good opportunities to start a firm where they live...

Somehow the image of Sweden as a free-wheelin', creative place filled with start-up tech businesses runs counter to our stereotype of the socialist haven. So what's driving it?

Maybe this has something to do with it?

Sweden’s reforms were a response to a financial crisis in the 1990s, when GDP growth sank, unemployment spiked, and the government, in an effort to avoid devaluation of its currency, raised interest rates to 500 percent. To jump-start economic growth, the government deregulated industries including taxis, electricity, telecommunications, railways, and domestic air travel to increase competition, according to Persson.

Along with privatising primary schools, hospitals and old people's homes. And there's more:

The reforms of 1991 lowered corporate income taxes from 52 percent to 30 percent. (Sweden’s corporate tax rate today, at 22 percent, is much lower than the U.S.’s 39 percent, though few companies actually pay a rate that high.)

Gasp! It gets better too...

In the 2000s, Sweden also got rid of its inheritance tax and a tax on wealthy people, which further incentivized people to earn large sums of money and, often, invest it back into the economy. “There was more capital available, so angel investors started to appear,” Braunerhjelm said. Today, there are significant tax breaks for starting and owning a business; for example, entrepreneurs can now have a larger share of their income taxed as capital income, which has a lower tax rate.

So privatisation, deregulation, ending taxes on investment and cutting taxes on rich people seems to work. For sure there are other factors too - a strong welfare state, good education, high levels of technical literacy and the end of protectionism (joining the EU will have helped a bit here) - but it's a lesson that, if we want a successful, wealthy and open modern society that cares it's not done by attacking markets. Quite the reverse.

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Support your local grant farmer!

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Apparently there is a crisis of support for something called 'green industry'. This thing is our salvation and, of course, the planet's salvation too:

Green businesses and clean tech entrepreneurs are not receiving enough support from government, MPs will warn today, arguing the UK is at risk of missing out on a £3.4 trillion global market opportunity.

The report that has led MPs to "warn" us of dire things talks about the problems that 'green entrepreneurs' face transforming their planet-saving technological wizardry into part of that "£3.4 trillion global market". There is, we're told something called the 'valley of death' that prevents these whizz-kid entrepreneurs from bringing their product to market. Now Psalm 23 aside, this 'valley of death' through which the green innovator must walk seems to me a simple thing really - and indeed the 'entrepreneurs' concerned aren't real entrepreneurs either.

The first clue is from Tim Yeo MP, who (despite his substantial financial interest in so-called 'green industry') chairs the Energy and Climate Change Select Committee:

 "The government should be doing all it can to support innovative UK businesses in their efforts to access the growing global market for low-carbon goods and services."

And, of course, by support what Tim means isn't gentle encouragement but hard cash - the distribution of grants and soft loans. Indeed, the complaint isn't about the non-existence of these grants but that it's hard for budding 'green' business folk to get their mitts on the moolah.  So what MPs want is a simpler and easier way for people to access the cash - the very antithesis of entrepreneurship. It could even be said that any entrepreneur - regardless of hue - that requires government support to make the business work isn't displaying much enterprise or initiative.

The Department for Environment & Climate Change responds to the complaint, not by saying that 'green entrepreneurs' should do what regular entrepreneurs do and sink of swim in the real world of real markets, but by bragging about how much cash is lavished in grants on emerging 'green' technologies:

"...a DECC spokeswoman insisted the Department has beefed up its delivery of innovation programmes since 2010, with initiatives such as the Offshore Wind Accelerator highlighting how industry can pool resources with government support to address common challenges.

She also pointed to a £25m Energy Catalyst fund, which opened in May, to support technology development across the "valley of death" to commercialisation, as well as a Technology Innovation Needs Assessment process that allows LCICG to focus spending on those clean technologies critical to meeting the UK's decarbonisation and energy security objectives at the lowest cost."

We're not talking about real business here but what the Yanks call 'corporate welfare' - the business equivalent of the benefits scrounger. I prefer to use a different term for this activity - it's more evident in the voluntary sector (and what might be called the 'social economy') but what we see here is the extent to which millions of other folks' money is lavished on 'technology' start-ups. There is no 'valley of death' to cross - if the business plan is viable then there are plenty of ways to secure capital without holding out the bowler hat for a government department to fill it with gold.

I call this 'grant farming' - the process whereby ill-formed and barely viable technology projects can be turned into vehicles for attracting grant funding from government (local, regional, national and EU). There is an entire industry dedicated to processing and securing these grants and very little, if any, evidence that they result in new technologies reaching the market more quickly. Or in those technologies proving to be sustainable (in the true financial sense rather than the 'living-in-a-yurt' sense).

The 'green' economy has become the great cash cow for these grant farmers as millions is hosed at a thing called 'decarbonisation' (I'm sure my Dad used to do this to his motorbike once a year). And, since economic success isn't the aim, the resulting grants do not work to create a new 'green economy' but establish and exploit a sector wholly dependent on those grants or subsidies.

In essence Tim Yeo MP isn't urging backing for real business but instead crying out that we should support our local grant farmers. Not surprisingly Mr Yeo is one of those grant farmers himself!

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A glimpse of another Africa

Nairobi

You're all familiar with the Oxfam picture of Africa. The starving children, the smiling farmers kept from death's door by the good work of one or other 'aid programme', the wells dug and the women with bundles on their heads.

This is the Africa of development charity marketing and of the politicians' justification for the international aid budget. It's a rural, poor Africa where food crises are only a dry month away and where fair trade evangelists bring the good news - you can stay on your smallholding barely scraping a living for another year!

And the image is something of an insult - dare I say it, a rather neo-colonial insult. The implication is that, without the expertise of us rich, clever Europeans those Africans are condemned to a life of malnutrition, disease and desolation. It is wrong.

Think back to the terrible events in Kenya back in October - not the terrorism but the target of the terrorists. It was a Westfield shopping mall. Hardly the Oxfam image of Africa. This is another Africa, an urban Africa that isn't filled with subsistence farmers and big-eyed hungry children but with trade, with making, buying and selling things and with entrepreneurs:

I present to you Africa’s brightest young entrepreneurs. These are the ones who are making the most dramatic impact in Africa today in manufacturing, technology, real estate, media & entertainment, financial services, agriculture, fashion and the service industry. They are impatient to explore new possibilities and slowly but surely, they are building empires. 

OK, it's a bit gushing but this is a positive, exciting, growing Africa not the supposed basket case that the likes of Oxfam would have us believe. An Africa with people like Christian Ngan:

After working in financial services in France, first as an analyst at French investment bank Quilvest Group and as an associate at Findercord in Paris, Christian Ngan returned home to Cameroon to start his own business in 2012. With $3,000 of his savings, he founded Madlyn Cazalis, an African hand-made bio cosmetic company that produces body oils, natural lotions, creams, scrubs, masks and soaps. Madlyn Cazalis products are sold and distributed across more than 30 chemist stores, beauty institutes and retail outlets in Cameroon and neighboring countries in Central Africa. 

And with Seth Akumani:

Akumani, 30 is a co-founder of ClaimSync, an end-to-end claims processing software that enables hospitals, clinics and other healthcare facilities all over the world to automate patients’ medical records and to process records electronically. Claimsync’s solution allows these healthcare providers to easily prepare medical claims and send electronically to health insurance companies. In 2013 ClaimSync was the sole African company to participate in the high-profile, IBM, Novartis, GlaxoSmithKline backed Accelerator program HealthXL in Dublin. ClaimSync was recently acquired by GenKey, a Dutch-based biometrics company.

These men and women - more than all the international aid, fair trade campaigns and guilt-tripping charity appeals - are the future hope for Africa. But we never talk about them preferring instead our cosy little colonial myth. Believing it when we're told - again and again - that Africa is filled with poor farmers whose only protection and hope is the caring, kind and white face of Oxfam. That somehow the sort of society we enjoy - of urban wealth rather than rural poverty - is not something Africa can attain.

Africa has a long way to go - it's still too rural and too poor. But the answer isn't propping up poverty with subsidy but rather promoting business, entrepreneurship and trade. Backing the continent's entrepreneurs to do what entrepreneurs did for Europe, Japan and the USA - make us all, compared to today's Africans - rich.

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What the hell is a social enterprise anyway?

David Floyd (beanbags and bullsh!t) presents a witty little contribution to the debate about the “social enterprise” badge being promoted by Rise asking what all the fuss is about and why such a badge – the “social enterprise mark” – is needed.

As it happened I had been talking with a colleague about how much I hate the term “social enterprise” oozing as it is with superiority and smugness (although my distaste for this term is dwarfed by my loathing of the term “third sector”). Are all the world’s other enterprises anti-social just because they have the gall and cheek to make a profit?

Now it seems, some organisations that fit a preordained set of requirements can stick a shiny new badge on their headed paper declaring to the world that they have achieve the elevated “social enterprise” status! Well forgive me for not sounding my horn or waving flags to celebrate this new initiative.

We need to drop the wholly artificial distinction between a “social” entrepreneur and the ordinary run-of-the-mill sort of entrepreneur. It always was a nonsense, it belittles the creation of value (or rather places greater emphasis on one type or measure of value) and shoves aside the vital importance of private enterprise in making places work.