How much is that silver lining in the window?

escherstairs.jpgIt was during my jog this evening, precisely as I wended my way under the Escheresque arches of Stadshuset, that it all began to make sense. How does Sweden manage to have both sky-high taxes and a quality of life that is the envy of the world? Where is the engine in this economy? If there is not some kind of virtuous circle operating, then where is the sleight of hand? Are Swedes climbing real stairs towards economic prosperity, or are they living in one of Escher’s illusory worlds, forever expending themselves on the climb, only to end up whence they came?

I could have found the answer earlier had I paid better attention to my own recent behaviour as an economic agent. Last week I bought myself a gorgeous Apple flat-panel monitor. Not because it was cheap, mind youSo it turns out this post was just lustful research in disguise.. On the contrary, I bought it because it was rather expensive. In fact, it turns out that the more expensive it is, the more I can deduct it from taxesSure, it’s akin to the old “sale” ruse, but it wouldn’t be old if it didn’t work, would it?.

That’s because I have an egetföretag, a legal vessel of sorts for paying taxes on the freelance writing, editing, developing and designing I do, both for fun and for profit. And boy are there taxes to pay. An example: Let’s say I charge 1,000 for an article. The buyer pays 25% VAT on top of that, in effect handing me 1,250. I end up paying the state not just the VAT but also around two thirds of the original 1,000 in taxes, both as corporate/income tax, and as payroll tax of sorts (I am my own employee). The remaining 350 or so is cash in the bank (or, should I choose to spend it at H&M, 25 further percent goes to VAT).

BUT. There is one glorious loophole. I can deduct the stuff I buy for my egetföretag from my firm’s pre-tax income. Continuing the example above, then: If instead of buying nothing — and being left with 350 — I buy a nice designer office chair for 1,000 plus VAT, I will pay exactly nothing in taxes. That’s because the VATs cancel themselves out, and my net income is effectively zero. But I did get a chair worth 1,000 for 350 in the process somehowBy the way, if my understanding of Swedish tax law is egregiously fallacious and I am committing multiple felonies, I DO NOT want to hear about it..

This explains a lot more than the purchase of my flat-panel monitor. It explains why virtually every single street-facing Stockholm office I can walk by is a showcase for the latest designer furniture. It explains Swedish companies’ aggressive upgrade cycles for technologies, their employees’ early adopter mentality, their Saab company cars and even their entertaining of clients on Stureplan.

Of course, other countries also let businesses, small and large, deduct operating expenses and investment spending from pretax revenues, but only in Sweden is the incentive to take advantage of the “sale effect” so hugeYes, corporate taxes in Sweden are below the European average, but payroll taxes are not. Employees are quite expensive to companies in Sweden, though they are also quite productive..

How might this microeconomic skewing of incentives have macro-level effects on aggregate demand? Although taking out “clients” for a 7-course tasting menu at Vassa Eggen might not lead to the development of anything but friends’ bellies, much of the other additional spending is in fact investment spending. Swedish companies are in effect being technologically innovative in order to avoid taxes. I think this means that for Sweden’s national income accounting, there is a smaller C (consumption) and a larger I (Investment spending) than there would be if there were lower taxes. And that is good for small countries that export to the world.

Of course, now that I am on a roll, let me ruin my theory by having it explain too much. For example, it could also explain why wages are relatively low: employees prefer to avoid paying income tax but instead get renumerated via company schemes (think company car, the work laptop at home, the company 3G phone…). Or how about letting tax incentives explain why Swedes are such famous globetrotters — perhaps because abroad, low-tax environments increase their buying power?

Or my favorite: I recently wrote an article (not yet published) on the occasion of 2005 being the Year of Design in Sweden, about the history of Swedish design. My thesis was that modern Swedish design is so successful because it is the result of a marriage between two specific historical traits — the older artisanal tradition that pushed quality, and the newer idea that design should serve to better the lives of the “common people.” IKEA, for example, leverages both notions.

But perhaps I was wrong. Perhaps good modern Swedish design got its break precisely because so much of it, like the Hasselblad camera or Källemo furniture, is so expensive, and Swedes collectively decided it would look great back at the office, where they could deduct it from taxable income.

The Kungsholmare

“Because envy is the color of Kungsholmen.”

kungsholmare.jpg

— 60cl Absolut Vodka

— 20cl Rose’s Lime Cordial

— Top with Rekorderlig päroncider (sparkling alcoholic pear cider, may be hard to find outside Sweden) (but try anyway)

— Decorate with a kiwi slice

Build in a highball glass stacked with ice. Or, if you are in neder Kungsholmen, shake the vodka and lime cordial with fresh ice in a cocktail shaker, pour into the highball, then top with pear cider. Don’t forget the kiwi.

Notes: Päroncider is delicious, if a little sweet, and certainly underused when it comes to constructing cocktails. Adding Rose’s lime returns some of the tartness we expect from pears, and the combination can expertly mask copious quantities of vodka. This drink is delicious, and if stuck to all night produces very little by way of hangovers the next morning.

The Kungsholmare was invented last Friday; extensively product-tested to rapturous acclaim at a party shortly thereafter, and has just been submitted to drinkalizer. All ingredients can be found at the Kungsholmen coop or Systembolaget.

UPC: Useless Piece of Cable

Rant. You have been warned. This post is a wholly optional read.Having just moved into my seventh apartment in the two-and-a-half years I’ve been in Stockholm, I have been witness to several different solutions to providing broadband to Stockholmers. Most of the apartments I’ve lived in have an ethernet jack built right into the wall, providing a seamless and quite blazing 10mbps, or even higher, much like in a modern office. In a few other cases, I’ve had the misfortune of needing to rely on broadband via cable provider UPC.

If I had a choice, I’d not be using them at all. But they are the sole cable provider in my building, and in the building I lived in until last week, and in fact in most of central Stockholm. This is a wonderfully incumbent position to be in; in fact, why not abuse it? And so they did last month, deciding to take away my beloved BBC [PDF] from the basic cable package. Want it back? Please pay more.

This product downgrade was met with apparent resignation by UPC customers, as if they perfectly understand that a monopoly position naturally engenders a diminuition of service. But it bugs me. Strike one.

I ordered internet access from UPC well in advance of moving into my new place, not wanting to suffer a gap in connectivity. But by the day I moved in, there was still no sign of the cable modem they had promised to send me. So I went to a shop and got one myself, plugged it in and had my broadband. For 6 hours. Then it went down. That was on Monday evening.

I called them right away. Unfortunately, although their service goes down at all hours, their phone support is only up during business hours. The first person I talked to, on Tuesday, told me to wait a day to see if it went back up all by itself. Strike two. The second person, on Wednesday, eventually convinced himself there was a problem with their service, and promised to send someone. “In the next five days.” WTF??

Had I been able to speak my mind, I would have told them to stuff the six month contract I had been forced to sign with them and that I would take my business elsewhere. But there is no elsewhere. DSL really doesn’t sate my broadband appetite anymoreUPC’s cheapest “broadband” is 128mbps for $23 a month. I’m paying $57 a month for 4mbps. .

Well, now it’s Saturday. They don’t work on weekends, not even for emergency repairs to their network, so it will be Monday at the earliest, if they solve the problem, before I am wired again. I don’t blog at work, so here is the reason why this site has not been fed the past week.

Instead, I have been relying on the quite excellent Il Café, a real Italian café in the heart of KungsholmenJust off the corner of Scheelegatan and Bergsgatan that also has an Airport installed on the wall, with free broadband to all comers. It’s a brilliant investment on their part — the extra business they generate from laptoppers in a single day should foot their monthly broadband bill. I’ve dropped by there twice a day this week to pick up my email — the barista probably thinks I’m stalking her.

Googliography: Viola Ilma

An new occasional series on people, places or objects which have influenced me.(Or, confessions of a preteen philatelist)

During my first stint as a New Yorker, between 1976 and 1982, I collected stamps. Although my opinion on the merits of collecting anything has shifted since those years — from “presents for me = good” to the belief that an attachment to physical things Physical things other than my Apple Mac, of course. insulates against new experiences — I still think that the study of stamps can provide quirky comparative perspectives on geographical history. But the end of postal monopolies and the rise of email have, in my mind, added a closing bracket to the set of stamps that are culturally meaningful. Stamps have gone the way of coats of arms, seals and silent movies: Interesting as products of their age, but false witnesses to our own (unless you consider collecting authentic false witnesses a worthwile ironical pursuit.)

But email was far in the future when I started my stamp collecting career, described here from my perspective as a 10-year old: (Click to enlarge)

I think some of those sentences really were mine; the rest was likely redacted by well-meaning grownups eager to portray children as uncorrupted adults. But that was my story, and Viola Ilma did play a large part in it.articlesmall.jpg

I have fragmented memories of Viola Ilma. She was a big gregarious older woman, at least to my skinny preteen self, and I remember her always with cigarette in hand, or else with one at hand. She lived alone in an apartment near the NY Collectors Club in Murray Hill, and on weekends my parents would drive me there. The weather was always overcast, somehow. Most often, the two of us would sit at the kitchen table, with the rain titter-tattering against a window made up of small square panes. The apartment would be quiet and dark. Perhaps she had a cat. Her tea mugs, like her fingers, were stained yellowish brown.

Viola Ilma, my sister Francesca, and me. Dad took the picture.

There would always be a new shipment of stamps to examine, or else there was work to do on my presentation on stamps depicting the work of the World Health Organization, which I would eventually exhibit at several philately shows. I had figured out early on that Viola was some kind of philatelic evangelist, and well known among “pro” stamp collectors. But there was also an international connection that I could not quite fathom. I vividly remember a picture of Haile Selassie, the last emperor of Ethiopia, hanging on a wall. I was under the impression she was related to him, for some reason. In one of her thousands of books a letter from Einstein acted as a bookmark, which impressed me greatly. I remember hoping with a children’s logic that she would give it to me one day — probably because she was generous, which to a child soon creates expectations.

When my family left New York in 1982, I lost touch with her. My interest in stamps waned, and I now wanted a Commodore 64, though I never lost the perspectives I gained in her kitchen. I suspect Viola saw stamp collecting as a means to an overarching internationalist end; googling her provides tantalizing hints of a remarkable life in that vein. Some annotated results follow:

ilma.jpeg/A picture of Viola Ilma taken in 1933 by the photographer Arnold Genthe and now in the collections of the Library of Congress.

/Viola wrote the Funk and Wagnalls Guide to the World of Stamp Collecting: The Joys of Stamp Collecting for the Beginning and Advanced Philatelist, published in 1978, right around the time I knew her.

/A letter from Eleanor Roosevelt to a soldier, dated 1942, that mentions Viola Ilma. I reproduce the letter here as the site is selling it:

1942letter.jpg

The page further explains:

Another such letter. Viola Ilma’s name also crops up in Eleanor Roosevelt’s papers.During World War II, FBI Director dubbed First Lady ELEANOR ROOSEVELT “Rover” because she traveled so much. She visited U.S. military bases to help raise the morale of the men. Mrs. Roosevelt visited the battlefront (in a Red Cross uniform), ate with the soldiers in their mess halls and spent countless hours in hospital wards. Upon her return back to the White House, she would call families of soldiers she had met or write to them. VIOLA ILMA was Executive Director of the Young Men’s Vocational Foundation.

/Viola wrote And now youth!, published in 1934 and edited by Robert O. Ballou, who was also John Steinbeck’s editor at the time. The page selling the book notes:

The American Youth Congress was “arguably the most significant mobilization of youth-based political activity in American history prior to the late 1960s,” according to this National Park site.The founder of the American Youth Congress analyzes youth problems in the depression, urging youth to support Roosevelt’s New Deal as an alternative to traditional capitalist democracy, communism, and fascism. She also urges youth to fight against war, though she opposes isolationism and favors collective action. Noting that Nazism, fascism, and communism gained their strength in Europe from youth, she calls for mobilization of American youth and opposition to totalitarianism. (The author withdrew from AYC when a coalition of communists and socialists won control.)

/At this point, it is still possible to entertain doubts that these Viola Ilmas really are all the same person — it’s an original name, but that’s no guarantee with Google. Then I found this blurb about a book called The Political Virgin. It turns out that this extraordinary woman wrote an autobiography:

I am going to have to buy that book, clearly. (Anne Morgan was most likely the philantropist daughter of JP Morgan.)Viola Ilma is remembered as the brashest, most imaginative, and most unpredictable youngster of the nervous thirties. Her autobiography presents the story of a girl with an insatiable appetite for life and an enormous interest and faith in people. Ilma, granddaughter of a noted Swiss missionary in Ethiopia, startled 1930s Depression Era America with a new magazine called MODERN YOUTH, organized the first American Youth Congress & was a close friend of Anne Morgan & Eleanor Roosevelt.

The Ethiopia link removes any doubt in my mind that these Violas are the person I knew.

/There is another connection between her and Ethiopia. It seems she wrote on Ethiopia’s political and economic situation in 1959-60 for CD Jackson, Speechwriter and Special Assistant to President Eisenhower.

/Finally, with a resume like that, what are the odds, you think, that she would not also be this Viola Ilma, cast member of Broadway play, Cloudy with Showers, performed in 1931?

With the hindsight provided by Google, Viola’s willingness to spend hours and hours teaching some random kid now seems entirely in character. I still don’t know when she was born, and when (or even if) she died, but I have contacted other people who knew her, and there are a few more leads to explore, so I will report back when I know more.

Nyordslista 2005: iKapsel, förnischad, framtidig

Hade middag med Steffanie, Jonas och Erik hos Jenny ikväll, och snart började vi argumentera om svenska webb ord. Vi alla höll med att blogg behöver ha två g. Men vad gör man med svenska versionen av “to email”? Jenny sade maila, Erik sade eposta, och Steffanie sade mejla. Jag bara frågade, vad säger man då när man vill säga “web site” på svenska: web site, webbsidan, eller webbsajt? Jag tycker att man skulle antingen använda det engelska ordet, eller annars den svenska översättningen, men inte den svengelska versionen.

Vad är de svenska översättningarna för andra engelska teknologiska ord? Om “memory” blir minne, och “hard drive” blir hårdskiva, skulle “Firewire” blir Eldtråd? Och vi alla bestämde oss att vi behöver ett riktigt svenskt ord för våra iPod: Det skulle bli iKapsel, eller hur? Och vi alla ville ha den nya iKapsel hasa.

Fler ord som uppfanns: Från Jenny (update: Steffanie?) kom förnischad, som betyder att ers nisch är för liten. Och jag trodde att framtidig var ett svenskt ord som betydde “to be ahead of one’s time.” Det var det inte, men det är det nuupdate: Erik bloggade förnischad också, men har en bättre definition..

Och jag var otroligt glad när jag upptäckte att det finns ett svenskt ord för “mullet”: Hockeyfrilla! (Jag hade redan upptäckt den fantastiska kotlettfrilla, en av nya ord i 2004.)

NoFollow bug

Really geeky Movable Type post. No apologies.I noticed several hours ago that for some reason the trackback section of my index page was no longer marked up properly. Such things are invariably my fault, so I started tweaking my stylesheet, then the template — all to no avail, and things really took a turn for the curious when I looked at the rebuilt code: all “class” attributes had vanished from tags inside <MTPings> tags, as well as entire <span> tags with class attributes inside <MTPings> tags.

BTW, apologies for the site’s most recent current look — it’s a bit of a shambles, and I may not be able to tweak it into submission for a while.This, of course, is impossible. And yet there they weren’t. The discovery was followed by a series of progressively more outlandish attempts to coax recalcitrant code into revealing itself, without success. What really hurt was how the comments, which were encased in the exact same html code structure, performed flawlessly. Then I remembered I had installed the new “nofollow” Movable Type plugin earlier in the day. I removed it, and my problems were goneMore about “nofollow” here..

I briefly considered being a hero and repairing the plugin, but then I saw the grep pattern that adds the “nofollow” rel attributes to comment and trackback links, and it is a monster, so I’ll settle for flagging this bug. FYI, I tried the “nofollow” plugin without the “mt-pingedentry” plugin and can confirm it’s not due to a plugin conflict (I had flashbacks of OS9 there).

Are Apple's European prices reasonable?

CNET reports on an online petition lamenting the price differential between the US and Europe for Apple products, just as I had made a mental note to myself earlier this week that Apple Europe’s local prices had never looked as good as now. What is the price differential, then?

Using a cool new free calculator (for Mac), I set to work. I used online Apple store prices before VAT in the US, Swedish and Irish store.

Mac mini: USD 499 – SEK 3,756 – EUR 429.

Implied exchange rates: 10kr = $1.33, 1 euro = $1.16, 10kr = 1.14 euro.

20 inch screen: USD 999 – SEK 7,676 – EUR 866.94.

Implied exchange rates: 10kr = $1.30, 1 euro = $1.15, 10kr = 1.13 euro.

20 inch iMac: USD 1,899 – SEK 14,369, EUR 1,594.21.

Implied exchange rates: 10kr = $1.32, 1 euro = $1.19, 10kr = 1.11 euro.

So the average implied exchange rate across the product range seems to be pretty constant, within a range of 2.5%.

The petition uses a EUR/USD exchange rate of 1.32 to make its case. The latest interbank rate currently puts the euro at $1.30. Of course neither consumers nor Apple can ever get that rate. We as Europeans first need to convert our euros to dollars if we want to buy in the US instead of in Europe, and Apple needs to convert its revenues back to dollars when it sends them home as well. For us, the quoted credit card rate, at interbank +2%, lets you buy dollars at 1.28 to the euro and 1.41 to 10 Swedish crowns.

At these exchange rates, the $499 Mac mini would cost a European 390 euro in the US Apple store, vs 429 euro in a European store — a price differential of 39 euro. The European mini is thus exactly 10% more expensive than the US mini at current exchange rates.

The $499 mac mini would cost a Swede 3,539kr in the US Apple store, vs 3,756kr in Sweden — a price differential of 217kr. The Swedish mini is thus only around 6% more expensive than the US mini at current exchange rates.

So Swedes are getting a better deal than (the rest of) Europe. As far as I am concerned, a 6% price differential is practically negliglble. If the dollar were to strengthen back to 1.32 for 10 crowns, a rate it was at as recently as September 2004, Swedish Apple store prices would match US store prices.

The petition makes some claims that I do not think stand scrutiny. For example, European operations — both Apple’s and its retailers — almost certainly experience higher employment costs and corporate taxes than in the US. If Apple wants to maintain its and its dealers’ margins, this would translate into higher prices, even before exchange-rate fluctuations work their strange voodoo. Apple may even be giving Swedes a break, due to the fact that corporate taxes in Sweden are below the European average.

And finally, Apple doesn’t set Europe’s VAT pricesVAT is 25% in Sweden, Europe’s highest rate. I didn’t know this, but the lowest VAT an EU country can charge is 15%, by EU law.. For that, Europeans have to blame somebody else.

I think Apple’s European prices are the very model of reasonableness, so no, I shall not be signing this petition.

Bloggöl

Even if you don’t speak a word of Swedish, do show up next Monday, 7pm, downstairs in the back. If you’re in Stockholm, that is.Erik och jag tänker “ta en öl” (dvs vodka gimlet, i mitt fall) nästa måndag, 24 januari, på Tranan, kl 19.00, och alla är välkomna. Det vore bra att ha en bloggkväll för att inviga året 2005 och träffa igen gamla bloggare, men nya bloggare och bloggnyfikna får också komma, naturligtvisst. Vi ses?

 

2005: The year in preview

Taking the adage “Think globally, blog locally” to heart, here are my predictions for what will happen this year in the Swedish blogosphere:

By the end of February, Sweden’s liberal bloggers collectively decide on a new tack for their online debates. No longer do they try to bolster their critique of the Swedish model with evidence of the country’s economic decline. The main problem with this tactic was that such evidence is mighty hard to come by — in fact, Sweden unhelpfully manages to stick tenaciously to the top of almost any league table you care to mention. Instead, liberal bloggers decide to argue that Sweden is doing so well despite the economic baggage of the Swedish model, and that market reforms would allow it to perform even more competitively, which is crucial for the future.

In March, Sweden’s left-of-center bloggers collectively decide that basic economic terminology is not in fact capitalist propaganda, and begin using words such as “comparative advantage,” “terms of trade,” “multiplier effect,” and “structural unemployment” in their blog posts when discussing economic policy. It becomes widely accepted that these notions apply to all economies, from Hong Kong to North Korea. The overall quality of economic and political debate rises drastically as a result.

In May, Bloggforum 2.0 disintegrates into a huge bullefight half-way through when someone is accused of being a proffsbloggare (pro blogger), and this person retorts by calling his accuser a noll-bloggare (nullbloggers, referring to the number of comments the typical post accrues). The conflict rapidly escalates — proffsbloggare and noll-bloggare battle lines are drawn, and both sides lobby the small but crucial popular-amateur blogger faction for support. The conflict simmers for the duration of the summer.

In August, eventhough it’s because it’s the middle of summer and newspaper editors are desperate for any kind of content, we get a first proper blog post to opinion-page article transplant.

In September, Stockholm gets its first commercial city blog, replete with targeted local ads. The people writing it had never even heard of blogs back in January. It gets written up in the press, and by the end of the year, it will be the first Swedish blog to consistently get over 5,000 visitors a day.

In October, Jinge is unmasked as a Timbro operative. It turns out he was paid to make the enemies of capitalism look paranoid.

In December, a Swedish blogger will use the word “blogg” in a conversation with civilians and they will know what she is talking about. She will blog the occasion.