On July 27 and July 29, we talked about Asian-Americans, pointing out that they are, as an identity group, the richest and most successful ex-patriots in the world. Comprised of at least a half-dozen ethnicities and nationalities, the common denominator of their success, we concluded, lies in their culture. They place a high value on hard work, continuous education, and saving.

 Today, we continue to explore successful identity groups around the globe and ask: “What do they know that we don’t?”

Is Sweden a Good Model for America?

Is Democratic Socialism Where We Want to Go? 

“If we heard that somebody starved to death in Sweden, we would be shocked.” – P.J. O’Rourke

I like Bernie Sanders.

I know very little about him other than he came from a working-class neighborhood in Brooklyn, spent his life as a crusader for blue collar America, worked his way up Vermont’s quirky political ladder to state senator, and ran twice for president as a “Democratic Socialist.”

I’m a free market Capitalist. And yet, whenever I catch a glimpse of Bernie on YouTube, I find myself smiling and thinking, “I like this guy.”

He reminds me of LF, a high school friend that drifted away from his privileged, upper-middle-class background and devoted his life to advocating for labor and the poor. I don’t agree with all of LF’s causes, but I write him a check every time he asks for one because he is earnest, humble, and plainspoken. Pretty much the opposite of most politicians.

I also like Sweden. It is a beautiful, civilized country, populated mostly with handsome, civilized people that are industrious, generous, courteous, and well-behaved. (I’m not sure how much they have contributed to the global scene over the years. There’s ABBA and Yngwie Malmsteen… but they’ve also given us Ikea and Skype.)

So you might think that if I like Bernie and Sweden individually, I should like Bernie-on-Sweden even more. But I don’t. Bernie’s idea of what Sweden is and represents – either out of naivete, ignorance, or deceit – is wrong.

Bernie’s Romanticized Idea of Sweden 

In 2015, when Bernie ran for president against Hillary Clinton, he presented himself as a Democratic Socialist. He called his vision for America a “political revolution,” and made it his goal to dismantle the current economic system and replace it with one like the Nordic Model of Sweden (and Norway and Finland).

He pointed out, correctly, that in Sweden – a country with 1/40th the GDP of the US – citizens and residents have access to publicly funded healthcare and education, as well as other welfare policies that do not exist at all or to the same degree for Americans.

For example, denizens of Sweden enjoy the following:

* subsidized doctor and dental care and free public hospital treatment

* subsidized prescription drugs and free life-saving drugs

* free maternity clinics, abortions, and sterilizations

* sickness and injury compensation for workers

* one-year paid leave for parents

* subsidized childcare and nursery school

* unemployment insurance that pays about 80% of previous income

* old-age pensions paid for by taxes and employer contributions

* full or partial disability pensions

* special payments to handicapped persons who are working or in school

* surviving spouse and orphan pensions

* housing subsidies for poor families and elderly pensioners

In the five years that have elapsed since Bernie started pushing the Nordic Model, it has been endorsed by many other politicians on the outer edges of the Democratic party. Just the other day, at the Democratic convention, AOC made the same point when she nominated him for president. She even suggested that her Green New Deal was based on the Nordic Model.

AOC can be forgiven for her ignorance of Sweden’s economy. She’s a sociologist, comfortable speaking with conviction about all sorts of topics about which she knows little or nothing. But Bernie should know better.

The Myth 

In recent years, many Americans have come to believe, as Bernie does, that America would be a better country if it eschewed Capitalism and moved towards Socialism. And since the Democratic debates, Bernie’s idea that Sweden is a model for modern, progressive, and prosperous Socialism has become widespread, too.

There are, no doubt, aspects of Swedish welfare that, on the surface, are very appealing. Universal access to healthcare and education are among them. A safety net for the sick, the disabled, and the poor could be added to the list.

But what Bernie and his followers don’t understand – or understand but don’t acknowledge – is that none of these social benefits are in any way free. And the way they are paid for in Sweden is very different from the way such services are paid for in the US.

In fact, to adopt the Swedish model in the US, we would have to dismantle both our welfare system and our tax system and replace them with structures that left-leaning politicians, media pundits, and even academics would consider to be anti-progressive, pro-Capitalist, anti-regulation, and systematically racist.

The Green New Deal is for raising taxes on the wealthy, increasing government spending, expanding government regulation, abolishing the voucher system for schooling, and nuclear power as an alternative to fossil fuels as an energy source.

So, what, exactly, is the Nordic Model? And if Sweden is an exemplum of it, how, exactly, does its economy work?

You may be surprised to learn that among Swedish economists, political scientists, or even political leaders, there is no argument…

 Sweden is not a Socialist country.

 Nor does it have a Socialist economy.

It’s not even close.

Sweden has a free-market, open-trade, Capitalist economy that is, in many ways, freer, less burdened by regulation, more friendly to business, and kinder to the top 1% than the US.

Sweden has more free trade, a less-regulated product market, no property taxes, no gift or inheritance taxes, no requirements for occupational licensing, no minimum wage laws, lower corporate tax rates, and generally less government participation in the economy. (Needless to say, it’s a very friendly place for billionaires. In fact, Sweden has more billionaires per capita than any nation on earth.)

But with all that economic freedom, Swedes enjoy high living standards and low poverty.

And perhaps most amazing of all: Sweden is doing all of it without printing fake dollars and robbing from its children’s futures.

How does Sweden do it? How does it provide so many social benefits for its population and yet remain prosperous? And what can we learn from its success?

I spent the last several nights researching the answers to those questions. The answers I found made me realize that Bernie has the right idea. Sweden does present a model for a better, safer, and kinder future for America. But the chances of that happening are next to none.

And that’s because of the big mess we’ve gotten ourselves into – mostly because of the very policies that the Green New Deal supporters are promoting.

But I’m getting ahead of myself. I want to share the results of my nocturnal studies with you: the reasons that Sweden is able to have one of the world’s most comprehensive social welfare systems without turning into a dreary, second-world Socialist country or an imploding  third-world country like Venezuela.

It’s an enlightening picture. We’ll look at it on Monday.

This essay and others are available for syndication.
Contact Us for more information. 

Note: The following essay is an excerpt from the upcoming new and revised edition of Ready, Fire, Aim. 

Don’t Get Stuck at a Measly Million Dollars in Revenues 

 “Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth.” – Peter Drucker

Businesses are often compared to machines, with structures and frameworks, designs and templates, and cogs and wheels. In my experience, they’re more like organisms that grow in organic ways.

In infancy and childhood, growth is fragile and must be both nurtured and protected. In adolescence, growth is rapid and must be guided and sometimes restrained. In maturity, growth slows and must again be stimulated to avoid senescence.

Today, let’s talk about how to “parent” your start-up through its childhood, as it moves from a solid mom-and-pop operation to a serious small business with big business potential. The key to doing that, as I said in my August 5 essay, is to develop a company culture of innovation and speed.

Innovation is about introducing new products to your market: both front-end (less expensive introductory products to attract new customers) and back-end (more expensive and more narrowly focused products to encourage existing customers to buy more).

But innovation is also about creating new and better levels of servicing your customers. And it’s about developing new internal systems and strategies to keep all the new products and services at pace with the ballooning production demand.

In Stage One (the infancy of your business), the primary goal is to sell a single product so successfully that it provides the cash flow you need to expand. This is done by constant testing in the most efficient ways possible until you can discover your optimum selling strategy (OSS) in the market you have chosen to compete in. To succeed in Stage One, the entrepreneur’s primary focus must be on testing and selling. The culture to support that needs to be relentless and myopic. Everything other than making that OSS work must be treated as a secondary task.

In Stage Two (childhood), your main goal is to dramatically increase cash flow by creating and selling more products. These include one or two more front-end products, plus six or eight back-end products.

That’s not easy to do. Getting a single lead product to work can take one or several years. Successfully developing and selling eight to ten more products in the same amount of time can be done, but it requires rethinking your business almost from scratch.

For one thing, you can’t do it alone.  You will need to surround yourself with a small team of very smart, very motivated, very hardworking people. You will have to work with them as a team. And you will have to persuade them to hire their own smart, motivated, and hardworking people to support them.

You’ll need brilliance too. You’ll need at least one person that is brilliant at conceiving of new products. You will need another who is brilliant at selling them, another that can intuit who should do what task and according to what time schedule, and someone else with a deep commitment to your customers who will constantly remind the team of the “why.” And you’ll need a drill sergeant that is not afraid to put lots of pressure on everyone to move things along at a breakneck pace.

Six brilliant teammates? Does that sound unreasonable?

It should, because it is. Taking a business from $1 million to more than $10 million in three to four years is an unreasonable goal. And yet, as a Stage Two business leader, it should be your goal. The opportunity to grow so much so fast isn’t always there in the lifespan of a business, but it is almost always there at Stage Two. So you have to seize the day. Unless you have that unreasonable goal – and make it everyone’s goal – the chances that your business will one day break through the $10 million barrier and into Stage Three become almost nonexistent.

So, you need a superstar team of six amazing people – each with a different skillset. What if you don’t have six superstars with those skills?

There is only one answer: You have to play those roles yourself.

Not to worry, though. If you led your business through Stage One, you’ve probably been plying several (or even all) of those roles already.

I’ve been involved in more start-ups than I can count. In almost every one, I was the SOB that pushed the team to work harder than the team members wanted to work. But I was also frequently the product developer, the marketer, and the customer ombudsman. Any entrepreneur or start-up CEO worth his salt can play two or three roles at a time. And do a good job with them. But you can’t do that forever. As the business grows and revenues double and then double again, you will need great people to take over some of those roles for you.

If, when you enter Stage Two, you realize that there is no one on your team that can rise to the level of taking over some of these roles for you, you’ve already made a terrible mistake. If you work 18 hours a day, you may be able to push your business to grow for a while. But that growth will be stunted compared to what your company could do with a superstar team to help you.

And it’s not just the superstar leaders that have to buy into the new culture of innovation and speed. It’s a job that the entire workforce must embrace. Make all of your employees understand that, from now on, change will be their constant companion. Every day, there will be new problems. Every week, new challenges. Every month, they will have to come up with new systems and solutions. And every six months to a year, you will all have to get together and change the way the business works in some fundamental way.

Be sure they understand that all of that change will bring stress – and that if they want to grow along with the business, they have to learn to tolerate stress and embrace change.

And don’t think that you can grow a culture of innovation and speed by making speeches and putting up signs and offering recognition to employees now and then. You have to lead by example. That means coming in earlier than anyone else and leaving later. It means openly encouraging new ideas and insisting on responsive and speedy execution of the objectives you agree on. And as problems mount, you must keep your cool. Identify mistakes quickly, but don’t berate mistake makers. Ask them for solutions. And hold them responsible for putting them into place immediately. Adopt the maxim of accelerated but intelligent failure.

A company in fast growth will make mistakes. The trick is to make them quickly, keep the damage minimal, and learn from them so they are not repeated.

Teach your employees to share what they have learned. Let them know that errors and failures are inevitable for a growing company. Challenge them to be open about problems and challenges and to communicate with one another.

When you come upon an employee that seems committed to second guessing every new idea and is reluctant to move forward, get rid of him or her as soon as you possibly can.

Being a leader of innovation means showing your employees that change is stressful, but it can be fun. Teach them the difference between stress that comes from self-imposed challenges and stress that comes from doubt and resentment. Make sure they understand that although they may not cause every problem they encounter, they are at least partially responsible for solving them.

And be respectful of the online workers that do not have the fun of choosing their own challenges. Insist that all your company managers respect the work that these implementers do. When something works well, be sure they share in the praise and the compensation, if there is any.

Never allow your business to become divided between innovators and implementers. (If you do, you may discover that too many good ideas are subverted by accidents, unexpected obstacles, and competing obligations.)

In short, take the lead in preaching and practicing innovation and speed, and make every employee a part of the company’s commitment to those values.

This essay and others are available for syndication.
Contact Us for more information.