The World Today for January 31, 2018



Breaking the Rules

Conventional wisdom has it that low taxes spur businesses to invest and grow, and that social-welfare programs breed lazy people looking for handouts. Sweden’s booming startup scene – call it Silicon Valley North – suggests otherwise.

Known for multibillion-dollar firms like Spotify and King (the developer of the Candy Crush games), Sweden also boasts one of the world’s highest tax rates and most robust social-welfare systems. Yet its capital, Stockholm, is home to more “unicorns” – or startups with $1 billion valuations – per capita than any other city in the world, the Independent reported.

Gothenburg, too, is spawning a new generation of promising startups. And Sweden’s success has spilled over into Norway, where Oslo’s startup scene has gone from nonexistent to thriving, partly thanks to government investment, over the past five years.

They’re not all “fun” firms like Spotify and King, either. iZettle, a commerce platform that competes with Paypal, is also knocking on the door to the unicorn club. TechCrunch reported last month that iZettle had recently attracted an additional $47 million in investments and valued the company at $948 million.

Local entrepreneurs say the social safety net actually encourages Sweden’s culture of innovation by reducing the risk associated with failure. Meanwhile, a tax system that limits inequality, transparency policies that make salaries public knowledge, and a culture that discourages the flaunting of wealth have helped foster the collaborative spirit that’s key to startup success, they argue.

“In Sweden, you have more people who aren’t from a wealthy background that are daring to create startups,” said Victoria Bastide, who moved back to Sweden after working in Silicon Valley for 15 years to join Lifesum, a health-tracking app company.

The Milken Institute, a think tank based in California, recently ranked Stockholm as Europe’s second-best-performing city when it comes to offering opportunities for prosperity, reported the Local Sweden, a website for Sweden-based expatriates.

“Stockholm has one of the top ecosystems in the world for creating and launching new firms, with a thriving early-stage financing community that would rival American tech centers such as Austin or Portland,” the think tank concluded. Among the main factors: government investment in education.

“Its educated population is an asset; 38 percent of working-age residents have tertiary qualifications (7.3 percent above the European average),” the institute noted.

Interestingly, the recognition of Nordic success comes as Silicon Valley is taking heat for a so-called “bro culture” that breeds sexual harassment, the Independent noted, and as rising inequality is driving far-right and leftist populist movements around the world

In 2017, allegations of inappropriate relationships and harassment hit Google’s Andy Rubin and David Drummond, as well as Uber’s Travis Kalanick and Amit Singhal, along with a number of others. Meanwhile, a 10-page memo written by former Google engineer James Damore exposed the race and gender fault lines running under Silicon Valley after it was leaked to the internet.

Does that mean California has something to learn from Sweden?

Maybe, bro. Maybe.



Splitting at the Seams

The Saudi-led coalition battling Iran-backed rebels for control of Yemen fractured over the weekend, as fighting broke out between Saudi-backed forces loyal to the internationally recognized government of President Abed Rabbo Mansour Hadi and Southern separatists backed by the United Arab Emirates (UAE).

The Southern Yemeni separatists seized control of the port city of Aden on Tuesday after two days of fighting, confining Hadi’s government to the presidential palace, Reuters reported. Hadi himself is in Saudi Arabia.

The splintering of the coalition could be disastrous to their combined fight against the Iran-backed Houthi rebels, who seized much of the country, including the capital Sanaa, three years ago.

The UAE-backed Southern Transitional Council (STC) has accused Hadi’s subordinates of corruption and incompetence, the New York Times reported. The STC also wants to once again create a separate state in southern Yemen, which merged with the north in 1990.

The fighting in Aden also interrupted humanitarian aid work.


Go Ahead and Cry

Argentina President Mauricio Macri announced plans to deepen his austerity drive on Monday, but foreign exchange traders remain wary of an apparent disconnect between those plans and the actions of the country’s central bank.

Macri announced a wage freeze for executive branch government employees and said he will eliminate one out of every four “political positions” appointed by ministers, Reuters reported. Eliminating those posts should save the government $77 million a year.

The peso is in free fall as other emerging markets currencies soar against the dollar, however, due to growing concern that Macri is pushing the central bank to waffle in its fight against inflation, Bloomberg reported.

Last week, the central bank unexpectedly cut interest rates after Argentina increased its 2018 inflation target to 15 percent from 10 percent.

Elected in 2015 on a pro-business platform, Macri has scored a few legislative victories. But the passage of his pension reform bill last month badly damaged his approval ratings and the country’s unions oppose his plans for labor reforms.


Alternative Government

Kenya cut off television broadcasts Tuesday as tens of thousands of people gathered in Nairobi for a mock inauguration symbolizing their continued discontent over last year’s presidential election.

Former Kenyan Vice President Kalonzo Musyoka said shots were fired at his home and a grenade was detonated just hours after he was blocked from attending the mock ceremony for opposition challenger Raila Odinga, the Associated Press reported.

Musyoka called the incident – which happened after his police security detail was removed – “an assassination attempt.”

On Tuesday, Odinga took a symbolic oath of office before thousands of supporters, who say not only the original August election but also the repeat performance ordered by the Supreme Court were marred by irregularities, Reuters said.

The authorities didn’t stop the ceremony. However, they did cut off the live broadcast over television and radio and declared the opposition “National Resistance Movement” a criminal group, paving the way for potential arrests.


Sniff It Out

Native English-speakers have a robust lexicon when it comes to colors but often can’t find the words to describe complex scents.

According to a study published recently in the journal Current Biology, lifestyle might have something to do with it.

To reach that conclusion, European researchers started with two distinct groups on the Malay Peninsula, Smithsonian Magazine reported. The two groups spoke similar languages, but one was a group of hunter-gatherers, while the other was agrarian.

The researchers asked participants from each group to identify 80 different colors and 16 different scents, then created a “codability score” to reflect how many people gave the same answers for each smell and color: A zero score meant that all members of a group gave a different description, while a one denoted that they all responded the same.

In line with similar studies, the hunter-gatherers were more adept at describing what they’d smelled.

Scientists posit that’s because their lifestyle of trekking through the jungle to find food, evading predators at night, requires a more refined nose – and a richer vocabulary to describe scents.

More sedentary lifestyles don’t require such nuance.

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