The Joy of Stats

200 years of global development in 4 minutes - explained vividly by Swedish professor and statistics guru Hans Rosling.

The Clock is Ticking

More Ikea News

It's not just the Swedish hamburger chain Max that can drive McDonald's out of business* (which happened in the Swedish city of Umeå, or perhaps it was Luleå...?). Now Ikea's best-seller Billy bookcase is challenging the Economist's Big Mac index at providing the best global price comparisons.

According to the Billy index the United Arab Emirates is the place to go for a bargain Billy, while Billy lovers should avoid shopping in Israel. And the Swedish price is lower than average!

* Or perhaps it is Bloomberg putting the Economist out of business...
Source: The Local

Best Thing I've Heard in a Long Time

Read on Johanna's blog that Crocs, the company that makes the horrible* shoes with the same name, may go bankrupt. Unfortunately people will probably keep on wearing and buying them since there are plenty of copies out there :(

The same Wall Street article says that Borders is doing bad too and that is a real shame though. Hope they pull through.

* Okay, you can wear them in your garden but that's really it. Kids up to age 4 are off the hook too.

Creative Finances

Read something interesting in an old Economist (from September) about the financial system spiralling out of control:

American politicians have a lamentable record of intervening in setting [bank] executive pay. In the early years of the Clinton administration, Congress imposed a salary cap of $1m, beyond which firms faced a tax penalty. Pay rose, as one set of executives, beneath the cap, realised thay were 'underpaid' and another set gained from an outpouring of creativity, as consultants invented myriad option schemes, perks and pension benefits to get around the limit. This only made it harder for shareholders to know what was getting what.

I'm usually optimistic but when it comes to the financial crisis I think that unfortunately, once this recession is over and we're back to happy days again, those finance guys (the same or new ones) are going to grease the same old wheel again.

Nobel Guy

I was happy to hear yesterday that one of my favourite economists, Paul Krugman, won the Nobel Prize in Economics. I like the way he blogs about winning the prize, ""a funny thing happened to me this morning"!

Education: Big Money and Free Market?

The Swedish National Agency for Education has just published its latest report on the development of so-called independent or free-standing schools in Sweden. Since freedom of choice for pupils and freedom of establishment for providers were introduced in the early 1990s the number of applications for new independent schools and the number of pupils attending such schools have risen substantially. (I should mention that independent schools are still publicly financed; it is a voucher system of sorts.)

This year 560 applications reached the Agency for Education in its capacity as reviewer and approver of independent school licences. Today 9.1% of Swedish compulsory school pupils and 17.4% of upper secondary school pupils attend an independent school. In some bigger cities, e.g. around Stockholm, independent schools cater for almost 50% of the pupils, while some rural, often northern towns have no or very few independent providers.

Initially most of the independent providers were parent co-operatives or association and trusts, i.e. non-profit organisations, but today most of the schools are owned and run by big education chains, a development which has its pros and cons. Since independent schools in Sweden are allowed to make a profit and filter back that profit to its owners (often venture capital and similar organisations), it makes sense that more and more companies want to have a piece of the cake, and that they want to grow. Economies of scale, makes sense. By the way, this is a very different situation to the UK where profit in the education sector is not allowed. This has however not stopped the Swedish education provider Kunskapsskolan, which is making an entry into the UK education market.

The National Agency for Education, and others, have expressed concerns over the disrepancy between the legislation - and the intent of the reforms - and the current situation and the consequences for society's control over these schools and the school system as a whole. Swedish municipalities are responsible for the education of its minor citizens, but what happens when all or a majority of pupils choose another school? How do they keep the municipal school open or in other ways prepare for having to take in a substantial group of pupils when an independent school close down (for whatever reason: bankrupcy, withdrawal of permit, etc.)?

The Swedish education sector has changed over the last 15 years but the legislation regulating independent schools has not been amended since 1994. The law talks about independent schools as a complement to the municipal schools, for example other types of pedagogical methods, and not big chains with schools all over the country. Despite a completely new and different situation, the regulation about municipalities' responsibility and obligation for education provision has not changed. When an independent school has applied for a permit in a certain municipality the Agency for Education especially looks at the municipality's consequence assessment, including pupil prognoses and possible effects on the schools and education programmes already provided in the region. Unfortunately the quality of the consequence assessments is varying and some municipalities do not have the resources to do one.

Another current topic is how many schools does the sector have room for when the competition for pupils gets tougher? And how long can independent (and municipal) schools compete on different conditions? According to the Agency for Education the risk of over-establishment is huge and the number of applications is a surprise to them. The development in the Swedish school sector has occurred at a time when the age cohorts have been large and growing, but next year is the peak before the numbers start to shrink. The competition will lead to both independent and municipal schools being forced to re-organise or close down. To give an example, in one Swedish municipality last year's applications to start independent schools covered 7,700 education places in a town with only 4,500 pupils.

The Agency for Education argue that the municipalities are badly prepared for tougher competition. Since the municipalities by law still have the utmost responsibility for the education in the area they must always have a preparedness for a transfer of students from independent schools and for having to keep a school open despite a low number of pupils. As government organisations however, municipalities are more slow-moving creatures than independent schools and they cannot get rid of personnel or facilities easily, which means that the cost per pupil increases in such a situation. The ability to plan long-term is diminished. A municipality thus risks both school closures and increased costs for its pupils' education. Since the independent schools do not have the same obligations and responsibilities, they conditions are not the same for the two types of actors. The education market is not a level playing field.

In addition to the "market factors", there are also other differences in conditions between independent and municipal schools. The principle of free access to public records (the famous Swedish offentlighetsprincipen) does not apply to independent schools. The Justice Ombudsman or the Attorney General do not have jurisdiction here. The only inspection that takes place is that of the Agency for Education, and the municipalities have some right of insight into the independent providers in their area. This means that in municipalities with very many independent school the citizens have very little control over a major part of the local school system.

The government is starting to address some of these issues by looking at how to increase national government control (through agencies such as the Agency for Education) over the school system and how to make the conditions for independent and municipal schools more equal, but the "solution" is not obvious. There are also other negative aspects of the present competition in the education sector, such as the methods used by schools (municipal and independent alike) to attract students, for example, through flashy brochures and offering laptops and other perks, instead of competing on the quality of the education and pedagogy. But that's a topic for a future blog post!

Source: Skolverket/National Agency for Education

Your Carbon Footprint and How to Offset It

Wondering how you can save energy - and limit your carbon emission - in your home? These are the most energy thirsty machines in your home:

* Laser printer
* Plasma TV
* Projector
* LCD TV
* Playstation 3
* XBox 360
* Amplifier
* Ink writer
* PC
* Media PC

Turn them off - don't leave them on stand-by - and use them sparingly if you can!

And how you can offset not just your energy use in your home but also car journeys, air flight, etc? Here's a list of companies and organisations that offer reduction units, i.e. ways to climate compensate, that the Swedish Energy Agency recommends (NB! The list will be updated regularly):

Tricorona
Uwab (only companies)
Klimatneutral (only companies)
Atmosfair
Klimat Statoil
Miljobörsen
Svenska naturskyddsförening (Swedish Nature Conservation Society)
Utsläppsrätt (starting later this year

The organisations are recommended by either/both the UN and the EU.

I can tell you that I compensated the carbon emissions caused by my trip to London this past week! Although I didn't use of these sites but did it directly through British Airways. Hopefully the money goes to a useful project!

Childhood Poverty and Family Policy

Anne, a Swede currently residing in Oregon, writes about the cost of childcare in the US and the (negative) consequences for families and especially women. A job may pay $9 / hour but (licensed, authorised) childcare costs $15 / hour so you're better off just staying home. Even if you have a more advanced and thus higher paid job, $15 / hour doesn't make a huge difference when it comes to an incentive to work. Anne says that "You get what you pay for is something you often hear, in different contexts. It is considerably greater differences between what's good and what's bad [quality] so you'd better be careful. [sic] USA is the country with the best, most modern and luxarious but also the worst you can find. Everything is about money, no subsidies, discounts or support systems exist. Everything depends on how much you are willing to pay, you get what you pay for."

This week I attended several really interesting meetings on this very topic (at research institutions SOFI, CHESS and the Institute for Futures Studies). Some of the findings of international studies:

• There is a strong correlation between poverty rate and generosity of family provisions*

This means that countries with generous family policies have lower child poverty rates. And especially family policies that support dual earner families (i.e. families where both parents are working).

• Support promoting dual earner families is more efficient than support promoting traditional family patterns

This means that

• The poverty relieving effect of dual earner support works both via benefits and market income. I.e. the contribution may be direct through the amount of benefits paid, or indirect by supporting two earners and thereby raising the market income of the household.

While

• The support to traditional family patterns works only via benefits

Other important factors are

• Access to childcare

This includes extensive, accessible, affordable and high quality childcare (pre-school).

Another interesting - and strong - correlation is that between family policy generosity and infant mortality, i.e. generous family provisions lead to low infant mortality.

• What drives this development is strong dual earner support (e.g. childcare provisions).

I'm not going to bore you with all the tables and graphs but I think you get the gist from the above bullet points!

* Family provisions are policies such as tax deductions for families/parents (double or single parent households), parental leave/allowances, child allowances, right to and compensation for staying at home with a sick child, etc.

The Different Worths of Tax Money

Continuing on the issue of the difference between cheating the system and cheating the system, Åsa Petersen writes really well in Aftonbladet today:

"The radio news reveal cheating with household services [and the right to make tax deductions on hired services, introduced a few months ago]. Half of the companies called up by the radio station are prepared to write something different on the receipt so that the client can request a tax reduction for household services [such as cleaning, baby-sitting, gardening]. For example, you are allowed to make deductions for hedge trimming, but not for pruning trees. The tree is [conveniently] shrunk to a bush on the receipt.

Minister for Enterprise, Maud Olofsson (Center party) is not particularly worried about tax evasion. 'I choose not to see it as a huge problem. I realise that when you implement such a reform, it was like that with the [deduction for building and construction] also, it takes a while before you have a completely serious market. Before customers learn what demands to pose and before companies know how to act.'

Stop for a moment. The companies and the customers know exactly 'how to act' to cheat. They have read the rules and agree to write bush instead of tree, removal cleaning instead of removal transport, on the receipt.

The tax authority cannot do much to stop the cheating. To control all receipts is an administrative impossible. Maud Olofsson instead has her hope set on 'consumer power': 'It is important that the customers, that is, citizens who buy the services, are careful with posing demands. If we are going to buy these services it must be white, we are not going to cheat these rules.'

What if representatives for the government reasoned similarly when it comes to cheating with [other tax money]. 'It is not increased control that is needed in the social security system. Cheating with [temporary parental leave for caring for a sick child] and sickleave pay is not a big problem. The insured just has to learn what demands to pose on the Insurance office: to never get compensation for something they are not entitled to.'

That would be something. If Minister for Social Security Cristina Husmark Pehrsson said that. No, that will never happen. The Alliance government actually separates people from people. People with big resources, those who have big incomes or can afford to buy household services, can avoid closer scrutiny by the Tax Authority. People who on the other hand are sick or need to stay at home caring for a sick child are subjected to tougher controls. In addition new guidelines are coming that will narrow the sicklistings. Society cannot pamper those with migraines or those who have had heart attacks.

Cheating with welfare benefits is according to that logic worse than tax evasion. "Those down there" are assumed to have worse morale and fewer rights than "those up there". This "those down there" must be controlled, disciplined.

Please set about preventing evasion. But if so, consider all evasion with our common resources equally serious. That Maud Olofsson does not see incorrect receipts as "a huge problem', IS a huge problem."

I so agree with Åsa.

Just a Thought

It seems to me that people (read: the government) think that the worse thing you can ever do is to misuse welfare benefits (e.g. staying home from work even though you're not that sick or getting payments for caring for a sick child in the home even though the parent is the one sick as it pays better) while to cheat the system by not declaring (paying) taxes on labour and services (e.g. building work or cleaning services in your home) is permissable and in fact quite understandable and normal*.

But isn't the latter as bad since both scenarios in effect mean that you cheat the taxpayer? Either by trying to milk the system or avoiding to pay taxes you are supposed to pay.

* Especially among the centre-right government ministers.

Competitive Sweden

The IMD World Competitiveness Yearbook 2007 was published last week. IMD ranks Sweden no 9 out of 55 countries, a pretty good grade in my opinion! The comparison is based on 323 competitiveness criteria. The US comes in first like last year and in the EU Luxembourg scores highest (no 4 overall). In the Nordic region Denmark beats Sweden by four places and Norway can be found at no 13, followed by Germany (16), the UK (20) and France (28).

New Concepts

Apparently the EU is talking about older people's contribution to economic and social development as the so-called silver economy. Maybe it's an old concept and it's probably not the EU that coined it but was new to me! I like it!