28 April 2014

Why Slovakia and Sweden are two superwealthy countries

According to Wikipedia, "at the most general level, economists may define wealth as anything of value". But what is value?

People mistake price for value. Why would you do that, if you don't plan to sell your stuff? I paid a lot for my skiing and mountaineering equipment, but I would be willing to pay 5 times as much, since it had brought so much fun to my life. And I would feel even more wealthy, if I lived closer to mountains and could use it more often.

Most of my skiing and mountaineering equipment on one pile
On the other hand, I wouldn't pay even 1/10 of the price of some other things, because they have very little value to me. Diamonds are a good example: I have seen more beautiful stones in nature and they are overpriced anyway, thanks to a cartel and heavy marketing.

We also value things that don't have a price attached to them, like friends and family. It's impossible to sell a friendship, yet we benefit a lot from it.
Not everything that can be counted counts, and not everything that counts can be counted. – William Bruce Cameron
If you ask me which countries are superwealthy, I might say 30% of them. The world is a great place right now:
  • Global poverty has been decreasing faster than ever. In 1950, the average American household spent 30% of its budget on food while it's only 13% now (I suspect similar progress in the rest of the world, too).
  • The world is most probably the safest it has ever been. Even with the two world wars, the 20th century was mostly likely the most peaceful century so far. If you were a man in a hunter-gatherer society more than 10 000 years ago, you had about 25% chance of being killed by someone else. This number has been estimated to be at most 3% in the 20th century and it will mostly likely be lower in the 21st century.
  • We live longer and we almost eradicated some diseases through vaccination at some places.
  • Societies around the world are more tolerant and free. A few centuries ago you were stuck in the same social class as your parents. In the 1950's in the US, black people were still subject to heavy discrimination. If you lived in the communist block in 1989, you could not travel out of your country freely.
With so much prosperity and development, it's surprising to me that we keep consuming and working so much. One measure that is not getting better, is happiness and a contributing factor is materialism.
I hope everybody could get rich and famous and will have everything they ever dreamed of, so they will know that it's not the answer. – Jim Carrey
We also keep hearing that we need consumption to keep the economy going, but this is one of the most common economic fallacies. Mr. Money Mustache wrote a great explanation of it in What if Everyone Became Frugal?. The world gets richer by saving, not by consuming.

Slovakia and Sweden are two countries where I have been living permanently, so I know them pretty well. Here are a few reasons why they are superwealthy in my opinion and it has little to do with material wealth.

System for talented students, a point for Slovakia

TopCoder is an American company organizing regular programming competitions. Each person has a rating, similar to the one used in chess or tennis. If you have rating above 2200, you reach red color, which is a status that only about 300 people on Earth have at one time. A couple of years ago, someone made a ranking of countries by the number of red programmers per capita and Slovakia was first. I don't think this is a coincidence.

Slovakia has a great system for talented high schoolers in many scientific disciplines. This tradition started already when Slovakia was part of the Austrio-Hungarian Empire. In the historical rankings of International Mathematics Olympiad, Hungary is number 4 and in International Olympiad in Informatics, Slovakia is number 7. Both countries are very small compared to other countries in top 10 (Russia, China and USA are dominating both).

This system is so great that I decided to contribute 1% of my income forever to Trojsten (thanks Kubo for inspiration). Trojsten is a foundation that organizes competitions and training camps in math, programming and physics for high schoolers. When I was at university, I helped running it, giving back what I got when I was in high school.

Additionally, my alma mater, Comenius University, was very good. Sometimes the talented Swedish high schoolers ask me for school recommendations and I half-jokingly recommend Comenius even before MIT or Oxford. At Comenius you are not swamped with homeworks and projects, so you have plenty of time to do other things, like volunteering or part-time work. Even though the course load was low, we still learned a lot from the courses.

Psychologists claim that children these days spend too much time in organized activites and play too little, leading to underdeveloped social skills and creativity. I think there is too little play even among university students. Some of them spend a lot of time in classroom, while they could be doing something else, learning valuable skills that can't be learned while sitting in the classroom. When we organized our week-long training camps, there was often noone older supervising us. This was our way of playing and we had a lot of fun doing that. In many ways, what I learned there is now more valuable than my formal university education.

As you can see, if you are a talented student in Slovakia, you have plenty of opportunities for development, but unfortunately such system for talents doesn't work in Sweden. For example, the Swedish programming olympiad gets only very little money from the state (33% of my income taxes last year).

I have been told that the reason is the famous Swedish striving for equality. As is often the case, the Swedes get the equality wrong: since we are all equal, there are no talents. Contrary to this statement, the Swedish state supports sports and young talented sportsmen with a lot of money. I have been competing at international level in both sports and programming/math and I think there is very little difference between the two. Talent is very important but you also need to train a lot, you need a good coach and a community of other competitors to stay motivated.

At KTH Royal Institute of Technology in Stockholm, there is such a community for university students with coaches supported by the university. A couple of years ago I invited few high school students living in Stockholm to our trainings at KTH. These students are so talented and hard-working, that they already won the Nordic Championships in programming, beating all university students in Scandinavia, while still being in high school.

Ironically, the Swedish equality ideal only leads to inequality of opportunities. If you are a talented high school student living in Stockholm, you are lucky and can get great coaching and meet other talented programmers. We want to improve this by organizing a training camp where students from the rest of Sweden could come, but getting money for it is hard.

Level of trust, a point for Sweden

Last fall I spent a couple of weeks in Berkeley and one weekend we decided to go to Yosemite. We booked a car and the rental company was supposed to pick us up and drive us to the rental station on the other side of town. They were late, so I called them twice and they promised the car would be there soon. The car didn't arrive, so I called again and it turned out that they were lying to me, the car was not on the way and we had to take a bus instead.

How could anyone lie to me like that? Then I realized that I have been in Sweden for too long. In Scandinavia people don't lie that much and there is little corruption, which leads to trust in strangers and public institutions. Scandinavian countries top the list of countries by the level of trust.

When people don't lie, steal and corrupt, there are very few lawsuits, they don't have to install expensive protection in their houses and the government is more efficient. In the end people are more productive and can work less than in countries with lower trust. Such countries are in fact richer even with a slightly lower GDP.

Slovakia is far behind in this regard but things are improving. During communism corruption was often the only way to get things done, but the number of people giving bribes has been steadily declining for a while.

Nature, points for both

Both countries have amazing nature. Here are two photos made by me for illustration.
My friend Martin and Tatras, the highest Slovak mountain range.
Frozen lake in Tyresta national park. In winter a ski track is prepared on the lake.
Nature has many benefits even though we don't have to pay for using it. You can have a week long camping vacation in the mountains for free, provided you have the right equipment. Such a holiday would be more fun for me than a lazy week on the beach that costs a lot. Spending time outdoors in nature also has many measurable benefits, like improved mood and concentration.


This was a highly subjective list but as I said earlier, each person can define wealth in their own way. For example, the value of the Trojsten community is that it gave me many great memories and valuable friendships. I'm excited to meet many of them in a couple of days in Italy.