Innovation Celebration – The Power of Entrepreneurship with Mattias Svennson
The European Resource Bank Meeting for the first time offered breakout sessions with quite different topics: a live podcast recording on the power of entrepreneurship, a panel on the security in Europe, a pro and con session about the value of the nutri-score and an analysis of macroeconomics in times of inflation.
The first breakout session was hosted by the Prometeus Foundation. Angelica and Thomas Walker-Werth recorded an episode of their podcast “Innovation Celebration” live in front of the audience. In this episode, they interviewed the Swedish libertarian author and political commentator Mattias Svensson.
Svensson first explained how Sweden became a successful nation. At the end of the 19th century, Sweden was corrupt and poor. During the later part of the 19th century, Swedes were granted the freedom to start companies. People were initially fearful of liberalization in Sweden, but it has paid dividends to the nation’s growth. Swedish companies started to “cater to the plenty”, meaning that goods started to be mass produced rather than crafted specifically for the individual customer. Swedish companies H&M and IKEA demonstrate this principle and are successful to this day.
Innovation has boosted enormous progress in environmentalism. For example, Rönnskärsverken, a Swedish smelter realized that their metal production was causing the release of pollutant chemicals including sulfuric acid. The company decided to sell the discharged sulfuric acid to customers, lowering its emissions in the process. For environmental regulation to be successful, it must not curb innovation. Politicians ultimately stand in the way of innovation, as they have a misconception that people cannot think for themselves. Restrictions are usually counterproductive towards their goals. When Sweden restricted alcohol, people ended up drinking even more.
Svensson also discussed drugs and the potential of cannabis, when he joked: “I believe in the separation of drugs and state. The state can’t handle it.” Despite research indicating the benefits of medical cannabis, Sweden created a system of patents which made it expensive to develop new products.
The breakout session “Security in Europe” was hosted by SME Connect and SME Europe. Amanda Wollstad from ERB co-organizer Svensk Tidskrift moderated the panel.
HSH Price Michael of Liechtenstein stated that Europe has maneuvered itself into dependencies on Russia when it comes to oil and gas. And Europe’s security lies with NATO. Finland and Sweden want to join NATO. In addition to that good relationships with Non-EU member Turkey are essential to protect the south-eastern shores. Europe’s defense architecture does not work without non-EU members like Turkey or the UK. It might be pessimistic, but maybe the Ukraine war is a wake up call. Europe cannot give all the necessary support for Ukraine, because it has no retaliation capacity. Europe needs to understand that it needs to be able to fight for freedom. Freedom is not granted.
When asked about the relation between Sweden and the NATO, MP Pål Jonson emphasized that Europe needs to build a much better resilience against cyber attacks, disinformation, and espionage. Sweden’s policy of neutrality has been historical. Sweden obtained security by isolating itself from Europe, until 1995 when it joined the EU. But with Russia requesting countries like Sweden and Finland to cease military operations and refuse to join NATO, it threatens sovereignty. Close collaboration with NATO is not enough when it comes to war. NATO supports partners, but defends allies. And when Finland decided to join NATO, they decided for Sweden too.
Meelis Kitsing explained the Estonian perspective. The Estonian Primeminister, Kaja Kallas once said that people have a naive attitude towards Russia. Kitsing has been involved in scenario planing by the Estonian Parliament. They came to the conclusion that European cooperation is the key driver. Estonia has made a strong commitment to support Ukraine. Support is not just about weapons, but also about western collaboration and economic sanctions, finding a new energy source and diversifying energy suppliers.
The moderator asked Horst Heitz how these issues have affected business in Europe. It is essential to realize the importance of free markets and how to protect them. European SMEs forgot that risks are part of the game: despite earlier warnings, they invested in Ukraine and Russia, investments which are now lost. Western Europe didn’t believe that Russia would attack. And now it is not prepared to deal with the situation. Europe depends on Russia and China and has no strategy for the future.
The third breakout session was hosted by Competere, an Italian think tank that focuses on health care policies. Pietro Paganini, co-founder of Competere, started with the importance of the relationship between sustainability and nutrition. In the EU and globally, there has been a trend towards food labeling which allows consumers to make informed nutritional decisions. Since most food in the EU is imported from elsewhere, it is important that the supply chain is traceable, so consumers are aware of the origins of their food.
Per Frank stressed the importance of sustainability and nutrition to Nestlé, his employer. Nestlé has been working for decades to make their food healthier for the consumer, lowering the amount of sugar and salt in its products. Nestlé has embraced the Nutri-Score nutritional rating system and hopes that the EU will mandate it in the future. A mandatory Nutri-Score would be beneficial to consumers making informed nutritional choices.
Ralf Schneider disagreed with Frank. He believed that consumers should have discretion over what they want to eat, and politicians should not tell consumers what is good for them. The Nutri-Score should not be implemented for several reasons. Consumers have ignored the labeling in places where it has been implemented and the Nutri-Score is meant as a replacement of detailed ingredients. The better solution would be to educate children in school to enable them to make informed nutritional choices.
Paganini closed the session by once more stressing the importance of the nutritional debate, as obesity and associated diseases need to be addressed. However, Paganini was against taxing unhealthy ingrediences.
The fourth breakout session was hosted by New Direction. Moderator Robert Tyler set the stage with an overview of the current economic situation. Inflation is rising, but politicians and central bankers first denied it, then blamed COVID and Putin.
The first speaker Dan Mitchell argues that the rise of inflation was caused by the Fed and the ECB. The balance sheets of both banks show that they dramatically expanded their assets; they bought treasuries like mortgage backup securities and thus pumping a huge amount of liquidity into the system. The Fed expanded its balance sheet by 5 trillion dollars, the ECB by 4 trillion. With this action they did not create the same amount of economic output or wealth. The pandemic caused central bankers to panic, but when it became obvious that “we could ride it out,” they continued to pour money into the market.
Neven Vidakovic explained how to destabilize a country financially and how easy this can be done by trading with government bonds. Provided one has enough money. On a sarcastic note he continued why this good plan still cannot work: “In order to do it you need to have everything lined up perfectly. You need to have really high inflation, really high government deficits and high government debt, low interest rates and central bankers constantly lying.” The bond markets already show that they do not trust the ECB and its policies. He prophesized stagflation and economic degrowth.
Philip Thompson analyzed the situation in the US. Everything is blamed on the supply chain instead on inflation. There is talk about a shortage on a variety of goods, like solar panels, cars, houses or more regular purchased goods. But there are more than enough of say microchips for cars than needed. The extra money people received as government support caused increasing demand. Half of these people received more money from the state than from their employer.
Kyle Fowler is an American university student pursuing a business degree at Indiana University in Bloomington, Indiana, United States. He is passionate about discussions surrounding fiscal policy, monetary policy, and individual choice. Kyle is the spring 2022 intern with the Austrian Economics Center.
The AEC’s fundamental goal is to promote a free, responsible and prosperous society. Through education and improving public understanding of key economic questions, the AEC promotes the idea of a free market economy and the ideal of a free society.