In 2000, Robert Weil wrote a series of chronicles for the Swedish journal Dagens Industri, collecting his observations on society and economy. These articles are available here.




From Modernism to Capitalism

Robert Weil
Dagens Industri January 8th 2000

I grew up in one of the most modern suburbs in Stockholm, a place with the latest in modern architecture and innovative urban planning. Many progressive architecture magazines described it as a role model for suburbs. My father would send the articles to our relatives abroad to show them how progressive our country was compared to the rest of Europe. Our modern home was decorated with the most exciting design from the Fifties, and featured the most advanced household appliances of the time. My family’s furniture company produced well-designed curtains for the one million futuristic homes that were being built for modern people.

My mother managed to set aside a small savings – capital to enable me to study abroad as a complement to my primary education in the great Swedish public school system. I chose to carefully invest that capital in the Swedish stock market, that was very small in the late Sixties. Meanwhile, my teenage friends where busy with a cultural revolution towards their parents and the protective, safe society. None of them understood what I was trying to say when I told them about the industrial capital on the stock market was hugely mispriced. They were basically giving away stocks. At the same time, my American relatives tried to convince me to not invest in a stock market whose future didn’t look so bright. The value of the stocks on the American market didn’t rise at all between 1965-1981 (index 874 to 875).

For the sake of friendship, I joined my friends’ demonstrations in the streets of Stockholm to protest America’s involvement in Vietnam. I even went to Paris with them to be a part of the Cultural Revolution. At the same time as my friends enjoyed themselves and completed their PhDs, the savings my mother had started for my studies abroad turned into seed money for an investment company, which was ready for the stock market.

Then something happened that I never could have predicted. The stock market had its biggest rally ever. The market rose 87 times. For the next twenty years, the yearly return after inflation on the stock market averaged 19 percent, compared to just a few percent during the entire 20th century. My socialist friends that had taken my advice to invest in stocks now had small fortunes. That was lucky for them, because even though they have first class educations, their salaries haven’t changed much over the years.

Don’t ask me what’s going to happen now. Just as I had a hard time understanding why not everybody bought companies cheaply at the stock market in the mid sixties, it is now beyond me how anyone can accept today’s valuation of the stock market.




The MN-bank promises paradise

Robert Weil
Dagens Industri February 5th 2000

I often wonder why humans are so enchanted by utopian dreams. I was reminded of this when I saw the new advertising campaign for Marita Nordbanken. The campaign encourages young people to invest part of their salary into their retirement funds. The bank uses a 25 year old as an example: what does he or she get from her retirement fund when he or she is 65 years old? However, Marita Nordbanken is assuming that the stocks are going to increase in value by nine percent, year over year, for 40 years! To make this unlikely calculation seem realistic, the bank is basing its predictions on how the stock market has been performed during the latest decades. But those past gains (which I was fortunate to benefit from) were clearly an anomaly.

To prove that Merita Nordbanken’s new campaign is an illusion, and it’s not me who is crazy, I have made my own calculations. I start with the hypothesis from the bank, a nine percent raise in exchange growth. I added one percent in taxes and administration expenses, even though it should be two percent, but to make this as simple as possible, we’re assuming that there’s a ten percent growth per year.

The average annual growth of the economy over the last 100 has been 3.2% (GDP increase). The last 20 years, the growth has been 2%. But let’s be optimistic and assume that the world economy will grow by 4% over the next forty years. Let’s hope that the “new economy” will turn out to be the success we have been promised.

The profit of listed companies is approximately 9% of the GDP. Even if the GDP rises by 4% each year, the stock market gain that Marita Nordbanken predict would exceed the GDP within 30 years. I would, if this happens, get to experience a completely new political climate as a happy eighty-year-old man. My old socialist friends would find themselves in the ultimate capitalist paradise – no poverty, everybody living the good life fueled by the flow of capital. This careless way of misleading people who have saved their money should be compared to the way that the state handles our retirement accounts (a new mailing about this is expected in a few days) wherein Swedes have the option to place a small part of their retirement capital into funds that are expected to grow on the stock market.

The government calculates your retirement capital using a prediction of zero growth. If we assume that our 25-year-old receives a salary of 15 000 SEK each month, this person will, as a 65-year-old, receive 8 000 SEK in retirement every month, according to the calculation with zero percent growth. As an alternative, consider an analysis with a 2% annual growth. At this rate, the pension would be 16 000 SEK per month. However, if we believe Merita Nordbanken, the person would end up with a monthly pension of 100 000 SEK, taking inflation into account. Merita Nordbanken promises paradise, and I assume that many people actually believe them. Just look at the 60 counties in Sweden that have started investing retirement capital in stocks. According to a proposal from the government, AP-funds would only have to place 30% of their funds into interest-bearing securities. They are therefore allowed to own 70% in stocks. Today, they have 20% of their assets in stocks. Imagine the incredible expansion of the stock bubble if the AP funds would invest such massive amounts. That increases the risk of a giant correction that would need to happen in order to restore balance to the economy. The result of all this speculation might be that you will see a 0% growth of your retirement capital rather than Merita Nordbanken’s fictional calculation of 9% annually.

P.S. I use my own pension capital to buy index-linked bonds, which gives me more than 4% in return over 28 years.



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What are the politicians doing?

Robert Weil
Dagens Industri March 4th 2000

During the Fifties and Sixties – the golden age of Swedish design – glass manufacturer Kosta Boda developed a fruitful, close relationship with students from art schools. It was a mutually beneficial arrangement. But in 1968, the students – fueled by anti-capitalist sentiment – decided to end the collaboration. Kosta Boda’s management team, who up to this point had been focused on artistic development of the company’s products, were replaced by business people.

When I bought the company in the beginning of the 1980’s, it was nearly bankrupt. The problem wasn’t expenses. They had totally lost its unique artistic identity. Ideology and political considerations had ruined a collaboration that had been profitable for everyone involved, including consumers and society in general.

The students, with their anti-capitalistic enthusiasm, never realized that historic collaboration with Kosta Boda was the best offer they could get. They underestimated capitalism. Today, our schools, hospitals and other public institutions are being sold to private interests. Once again, people are driven by ideologies rather than common sense. Is there a chance that this time, we are overestimating capitalism? Politicians want to make the public sector private. The state is willing to privatize everything, because it doesn’t want to be held responsible for the quality of public services, a service that we are paying for through taxes.

Corporations believe that they can make money out of the public sector, and the politicians don’t want to be responsible for it. But in a political process, we, the citizens, can demand that the politicians take responsibility. After privatization, we have no one listening to our demands. The conditions change drastically when society turns all of its interests over to private corporations. In paragraph one of the Companies Act, it is stated that the company’s partners are not personally responsible for the company’s obligations. The main idea is to make it possible to get capital without the investors risking more than they’re willing (and can afford) to lose. The capital market of today consists of institutional capital, the so-called anonymous capital. This capital is very short term. The stock market capital is traded every 18 months in general. It takes decades to build a stable company.

Today, stocks are more expensive than ever in relation to the profits of the companies; this is because the stockholders believe in their future economic growth. Stockholder interests have switched from what to buy, to how quickly one can turn around stocks for bigger profits. The leaders of capital businesses are often experts on global companies rather than specialists in certain areas. Nowadays, the old technicians, and those who used to love the product, have been replaced by financial experts that speak the language of the capital market. Usually, investments driven by passion or rooted in physical products are seen as unfavorable for long-term growth, while the darlings of the stock market are often consultant and service companies. What is going to happen when corporations start taking over public service?

The activity of a private business is going to be focused on improving the “low profitability” of the public sector to meet the profits required by their investors. This will be the economists’ work. Doctors or teachers – people who are committed to providing good service and to love their products, will become less important. Consider for example if a service company like Securitas was asked to earn four or five times more than it does today to give investors the profits they want. They can achieve this through higher prices, lower costs or more sales. What will the public service companies to do to get more profitable? Will the dream that the private sector can solve all society’s problems become a nightmare?




Who do you think you are?

Robert Weil
Dagens Industri April 8th 2000

When I started writing this column, my goal was to contribute to public debate. I thought my background as a capitalist and my interest as a humanist might provide new perspectives on the discussion.

In my first article, I compared the development between salaries and the stock market over the last 20 years. I have also discussed the fund fantasies of Merita Nordbankens, and whether capitalists in the private sector are the best at managing our citizen’s money and looking after all of our interests in the public sphere. As with the Wallenberg family, I’ve been trying to participate and make myself visible. Not everyone is pleased. My political friends enjoy it. My capitalist friends have had their objections: “You shouldn’t be a part of politics!” “Are you trying to start a new career?” “A capitalist should stick to the stock market!” These criticisms amuse me. It has been a great pleasure for me to be visible and open. But as to not risk becoming a professional complainer, today I want to tell you about my world. I live in two metropolitan areas, Stockholm and Tel Aviv. They’re both small cities with no respect for boundaries. That’s why their size doesn’t matter. The intellectual distance between the two cities has ceased to exist. My dream is to build new venues where innovative thoughts, ideas and products can be explored and shared; places for creativity to flourish in all its forms.

Ideas about the future are not limited by who you are or where you come from. My company Proventus has always kept its independence. We’ve never followed trends. When the art exhibition hall Magasin 3 or the Jewish Theatre express what they are trying to accomplish in the future, they speak the same language as our design companies and the old rubber manufacturer Tretorn. The same goes for our investment bank in Israel, which has introduced young tech companies to the American market during many years.

Why is it so simple for people with different backgrounds to have a dialogue about their future? They are all different expressions of creativity. Creativity is as useful to cultural communication as it is to building industrial businesses. If the same type of creativity can transform both art and industry, it might be easier for the different cultures to connect

There is a two-day summit going on right now where Finnish industrial designers and architects meet with international experts on communication, technology and future science. They are laying the groundwork for our new company, Snowcrash, which will develop innovative products for the new world using all the new technologies, materials, production and distribution processes available to us today.

The teams at Magasin 3 and the Jewish Theatre are meeting with industrial businesses and artists who need new materials and techniques to do their experimental work. Our technicians and set designers’ knowledge about lighting and sound creates new ideas for solutions that can be used by our industrial designers.

Distribution and communication techniques are being developed at a rapid pace. It is exciting to see how they are being used, and what is happening within our culture and the industry globally.

Visionary thinking is changing the world faster than ever. But the frenetic tempo of the stock market and the online hustle is rushing faster than reality. Take it easy! Gather your thoughts! The future is dynamic, even if today seems hysterical.




Turn Paper Profit Into a Gift for Summer

Robert Weil
Dagens industri May 1st 2000

Isn’t Sweden fantastic? The bright summer nights, the sunny weather (20 degrees, once in a while) and to top it all off – the real Swedish summer gift: the Telia stocks, which sold with a vast profit on their very first day. I could have kept the stocks for long-term investments, but I don’t think anyone really thought of that. Due to the stock market’s long-term return requirements, Telia needs to have an earnings growth of 25 percent per year over the next ten years. Never before has a company achieved such growth in the history of moving from government agency to a popular tech company.

Let’s not talk about the economy, growth or reality. We should be happy. Not only for our summer gift, but also for the fantastic profits that we’ve realized during the last couple of years together. Five years ago, the stock market would likely have valued TeliaSonera at one tenth of its current value. Political knowledge about economics and the stock market has made us 250 billion richer: theoretically speaking. That’s 30 000 Swedish crowns per citizen. I don’t think the state will pay the speculative profits for Telia or other state-owned shares which we also made “paper” profits on during the last couple of years. All of this is thanks to the wonderful exchange economy. Maybe we should make a wish list so that some of this magically earned money can go toward giving us some collective excitement, pleasurable moments and joy.

This is my wish list. There are some fantastic proposals for new buildings for the square outside of Kulturhuset in Stockholm, investments that would probably make us even richer. But wouldn’t it be more exciting if this undeservingly despised area could be used for various activities and cool experiences? I’ve seen fantastic performance artists in this square throughout the years and it’s something that I would like to see more often. What if the square could be used as a place for crazy, playful, multidimensional artworks – to really challenge the limits of creativity in public places?

There are so many areas like this in the real world (yes, I know that the virtual world is more exciting). Both Swedish and foreign artists could take advantage of this opportunity; make us feel happy, dazed, angry or passionate about something. But our society must show an interest in buying and creating art for this to happen, similar to the way it was in the vibrant Fifties and Sixties. What if we had artists, musicians and writers as tutors for our children in every preschool and primary school? Our children need a creative and imaginative education to survive in the new world. We would need 50 000 active cultural workers and it would cost us 10 billion Swedish crowns after taxes, but it would probably be less since creative people often need some kind of support from society.

10 billion Swedish crowns might be enough to fulfill these wishes. It’s just a few percent of our collectively saved money. This shouldn’t just be a dream; it’s already happened in Great Britain. Their cultural life has changed due to profits from a public lottery fund, which was created a few years ago. My own wish list could have been longer, but the reader can continue it by his or herself. I’ll assume that lower taxes for wage workers are high up on your wish list. It’s probably a good investment but not as cheap as my proposal for the gift of culture.




The Museum of Modern Art and the Stock Market: My Two Universities

Robert Weil
Dagens Industri May 20th 2000

The Museum of Modern Art in Stockholm has an exhibition called “Rethink:

Art on the Verge of Architecture and Design.” The exhibition itself is an invitation for discussion. There are also workshops on the topic of how communication and technology influence art, architecture and design. I appreciate the idea that museums are a place where art, communication and new technologies meet.

The Museum of Modern Art was my first university. I could never have dreamt of one day being on its board. The museum was a standout in the Sixties. It was right in time: provocative, avant-garde, wild, untraditional, and rebellious- showcasing works by Duchamp, the Surrealists, Niki de Saint Phalles Hon, Andy Warhol and other American artists. But, it was far from perfect. The “golden” days, often seen with a nostalgic glow, were in fact a period of contradictions and constant conflicts. Is there anyone who doesn’t remember the debates about Hon or the conflict about purchasing Brancusi’s The Newborn?

Thinking positively, I wish that the “Rethink…” exhibit will herald the beginning of a new era, wherein the Museum of Modern Art becomes the global epicenter for new ideas and influences within the arts. If so, The Museum of Modern Art could have the same impact on new generations of creators and consumers in the new economy, as it had on me in the sixties.

Unfortunately, the exhibition was created with limited resources. The new building, with its high rent and almost non-existent budget for exhibits, has made it difficult to develop the operation of the museum. But if we look at some examples from the past, these difficult beginnings do not have to limit its potential. Take the Bauhaus school; founded in 1919, in a wounded and humiliated Germany, just after World War I and two years after the Russian revolution, the school was revolutionary. It was strongly influenced by the revolution that, in a short period of time, allowed for a creative explosion within the culture. The Bauhaus became the epicenter of theater, art, architecture and design. The movement was industrially oriented, and it unified the technology of the time with artistic progress. National socialist men shut down this important institution in 1933. Nothing like it has existed since.

My second university was the stock market. The famous Yiddish writer Scholem Alejchem taught me a lot about the stock market. He was a investor in the nascent Eastern European industrialism in the late 1800’s. It was the new economy of the past so to say. He recorded his thoughts and experiences in Spekulanten, which has been a faithful companion to me through the years, its simple ideas are almost prophetic.

In one passage Menachem Mendi describes the stock market in Jehupets to his skeptical wife, saying: “Secondly, I must tell you that it is moving forward with the speed of the wind, it goes up and up. Many people envy me, for what I buy today will be more expensive tomorrow… But it doesn’t pay off to sell yet; the value will rise even more. There’s a rumor that foreign countries wants our papers… Today there is an abundance of money in the world you see. The interest rate is very low, four or five percent a year.”




An Important Task for the Fall

Robert Weil
Dagens industri August 5th 2000

Summer, summer, summer… it did not turn out as expected. The Telia stocks only rose for one day and a large part of the Swedish population suddenly became long-term stockowners in the company. The weather forecast was not what we expected either. More rain than sunshine there too. But the lack of sunshine gave us all a chance to think about the future.

Inspiration can come from the most unexpected sources. One of the music festivals in Sweden, “Music from Siljan” tried to get us to view the future with an open mind, not only through music, but also through a conference about humanism and ethics arranged by Bo Ekman. I got to know Bo when Kosta Boda needed saving in the early eighties. He had just been elected as a member of their board. At that time, Bo worked with business strategy for the Volvo CEO, PG Gyllenhammar. Gyllenhammar ran the company with intellectual openness and grandiose visions; he tried to create a brand where Volvo’s traditions would represent a conscious life style. A quality product manufactured by a proud car engineer in the best working environment. He wanted consumers to love every aspect of their purchase.

In the Seventies, Volvo became the socially conscious family car you drove if you were an American university professor. Volvo was sophisticated, sensible, and politically and economically correct. I wished that the old glass manufacturer would use this approach to gain new inspiration for their designs. Not necessarily turn their backs on tradition, but to shake it up a bit. Bo brought his American friend Ira Magaziner to the board for support. Magaziner had helped the both the Swedish government and Volvo to analyze the serious effects of the oil crisis during the Seventies. Later, he worked as a strategist for Hilary Clinton as she tried to overhaul the American health care system. If it had been implemented, it would represent one of the most radical changes for health care in the country’s history.

Bo Ekman’s summer conference focused on humanism and ethics. He described how economists, long viewed as old-fashioned, were mortified when leaders from abroad talked about Goethe, Plato and van Gogh. But knowledge and creativity are the building blocks of today’s companies. The workers are their biggest assets – not raw materials, capital or energy. Humanism, according to Bo Ekman, is about dialogue and creating room for the individual to grow. It is not a very demanding humanism, a good education and creativity is enough. The point is that humanism is good for growth, and it helps you to sell more.

How about that! Volvo’s 20-year practice can be applied by anyone in today’s economy. But what does all this talk about humanism and ethics really mean? Is it a new sales strategy? Or are global companies truly deciding to act in different ways to benefit humanity?

Nokia is possibly one of the world’s most successful companies right now. Their slogan “Connecting people” illustrates the importance of communication between different people. In Sweden, Ericsson wants to build relationships with their slogan “Make yourself heard.”

This all sounds good, but isn’t it time for a discussion about what humanism and ethics really mean to the economy, to the relations between companies, individuals and society as a whole? Perhaps this is our biggest challenge this autumn.




A Fair Wage Policy – But for Whom?

Robert Weil
Dagens industri September 2nd 2000

More than a year ago, I tried to breathe life into the slumbering salary debate. I asked the question: How is it possible that salaries haven’t gone up at all during the last 20 years; or at best, increased 0,5 percent each year, which is equal to a quarter of the growth rate?

Also interesting in this context is that the employees’ tax burden increased from 35 to 45 percent of the total taxes. The capitalists’ won and the employees lost. I believed the party should be over, that the workers should finally be able to take advantage of the economical growth, and that the capitalists should pay for it.

Some of my old friends got very upset, while others supported me. I was the capitalist who said no. Unfortunately, my prediction didn’t really come true. The stock market has risen by more than 50 percent since then. The capitalists should be happy, but what about their employees? Did they get raises? I’m pretty sure that the lack of nurses and teachers is a direct resulted of those workers choosing to find new, private sector careers with better salaries. And I’m sure that we’re talking about a lot of people.

This past year, I’ve had many interesting conversations with Hans Karlsson (Negotiating Secretary at Landsorganisationen (LO) in Sweden), and P-O Edin (Economist at LO). Both of them are now leaving LO. These discussions haven’t given any concrete answers to why salaries are lagging, although our analyses have been interesting. I had hoped that discussing the subject more openly in large groups would make it possible to break open some old conventions.

But when I read Hans Karllson’s article “The growth of the socialistic party threatens LO” published in DN debate, I want to put my two cents in. Karlsson asks, “Will the working class maintain and strengthen equality so that Sweden can continue to be one of the world’s most equal societies? We will probably be able to answer that question by looking at two other very important questions. Will the Social democratic party be capable of preventing the left party to grow at their expense? And will LO be able to generate a more equal wage politics?”

I would rather pose these questions in a different way: Have perhaps current wage policies prevented LO from pushing this question forward for the last 20 years? Is it possible that the capitalists have made the greatest profit here, and everyday workers have lost? Many members of the LO are highly qualified people who easily could use their competence to negotiate higher salaries. I understand that it might be difficult to push the salary question in less profitable companies, but on the other hand, no country in the world has been as good at restructuring their business as Sweden. Why should the employees stop fighting for the best possible salaries? The capitalists are used to competition; only the best investment outlook and the best returns attract investors. Why wouldn’t employees also negotiate for the best results?

I would also like to question P-O Edin’s arguments. I’m reading an article in DN, which says, “P-O Edin’s work over the past years has been focused on restraining the collective salary requirements. According to the “Edin-norm”, Swedish salaries should develop at the same rate as European salaries, 3.5 percent each year.” The whole idea about a “norm” is difficult to understand.

Why should salary negotiation be a monopoly in which salaries are controlled by a national economic theory? Let’s pretend that companies couldn’t charge market prices on their goods. What would then encourage them to grow and improve their products? Isn’t it time for the workers, who have been economically abused over the last 20 years, to finally get salaries and taxes adjusted to the reality we’re living in?