
Two Brothers Making Millions Off the Refugee Crisis in Scandinavia - rmxt
http://www.bloomberg.com/features/2016-norway-refugee-crisis-profiteers/
======
rubidium
"For 2015, Hero Norway expects revenue of $63 million, with profits of 3.5
percent. "

Title correction: Long-time hospitality business entrepreneurs expand business
into providing refugee housing and services. The business made 2.2 Million
profits in 2015 operating highly efficient refugee care centers.

My guess is there would be at least that much money wasted if these centers
were run by less experienced people in that business sector (e.g. the gov't).
Also note: the government regulates the business.

Overall from the article, it seems like a good way to care for the refugees.

~~~
rmxt
Without access to their books, it's hard to evaluate their actual profit. But,
later in the article there is this quote:

"The Adolfsens claim that theirs is 3.5 percent, but Herning calls that figure
“highly unlikely. All the other refugee companies that I’ve looked at have a
much higher profit margin.” She says that in handling revenue from nursery
schools and nursing homes, the Adolfsens have played a shell game, shifting
profits from one business within their conglomerate to another. “I wouldn’t be
surprised if they were doing that for Hero as well,” she says."

Also, quick searches seem to indicate that for-profit prisons (in the US at
least), an analogous industry, have profit margins significantly north of
3.5%. [1] I wouldn't be surprised if the actual profit margins for the refugee
care companies, when all subsidiaries are included, are between 5-10%.

I don't know if there's a perfect solution to refugee care that optimizes
spending and societal harmony, but private enterprises running the show with
close government oversight (and no shell games), seems like a somewhat happy
middle ground.

[1] [http://www.cnbc.com/id/48675641](http://www.cnbc.com/id/48675641)

~~~
rayiner
Who cares if the profit margin is even double that (10-20%). Almost certainly
still cheaper than the government getting into the hospitality business, and
has the benefit of not creating a permanent bureaucracy.

~~~
will_brown
In 2007 a boat with 100+ Haitian refugees made it to South Florida. The
refugees were immediately detained, then sent to Krome Detention Center (no
women) and Broward Transition Center (men/women/children). However, between
the 2 facilities there were not enough beds and the remaining were put up in
private motels. Even in Miami/Fort Lauderdale Florida, where our main industry
is tourism, I think the private motels were far more cost effective than the
existing Government infrastructure/detention facilities. And the people making
the most money? The contractors of the detention facilities making 1,000'sx
profit margins on things like phone cards, sandals, and vending machine food
stuffs.

As a side, my legal clinic represented the Haitian refugees who were children
in asylum/visa hearings pro bono.

~~~
holdenk
Thanks for helping represent the refugees pro bono :)

------
kauffj
Many people seem to hold an intuition or belief that it is wrong to profit, or
profit "excessively" when providing certain types of services, particularly
related to "care", survival, or necessities (e.g. "price gouging" laws).

I think this is misguided for (at least) two reasons:

1\. Profit allows for the services to be sustainable, rather than charity-
dependent.

2\. The more profit, the stronger the incentive for entrepreneurs to enter the
market and/or innovate.

Figuring out a way to profit and reduce the problems of refugees in any way is
win/win for everyone.

~~~
clarkmoody
> 2\. The more profit, the stronger the incentive for entrepreneurs to enter
> the market and/or innovate.

3\. The more entrepreneurs in the market, the tighter the margins will become,
due to competition. The price for the service will fall as a result, and the
companies will become more efficient.

~~~
TeMPOraL
But also remember that:

4\. The more low-hanging fruits in terms of efficiency have been picked, the
more entrepreneurs will be pressured into saving money on quality of their
product - which in this case means quality of care. This is the stage when
serious abuse starts. The maximum benefit of a market solution is reached when
you can stop companies from progressing from 3 to 4.

~~~
jazzyk
Only if the barriers to entry into that market or product/service stickiness
are high. Otherwise, customers, unhappy with the quality, will flee to the
competition.

~~~
TeMPOraL
To clarify my point - 4 is when _all_ competitors are pressured into saving on
the product itself. It's not just about barriers to entry or stickiness - it
can be simply because margins are very low. There will always be someone who
will sacrifice yet another value in order to be more profitable, and thus will
force his competitors to either give up on that value too, or to get
outcompeted.

~~~
caskance
If that is the decision they face, that means customers did not want the thing
that was sacrificed, and leaving it out is an improvement.

The danger most people worry about is when the customers are getting a better
experience at the expense of individuals who don't have any choice in the
matter, like in the prison scenario. But negative externalities are hardly
specific to this situation.

~~~
TeMPOraL
I think you may be underestimating just how much crap customers can deal with
before they say "enough" (and just how hard is it to coordinate them to say it
together). I don't think anyone is happy that they have to replace light bulbs
and electric kettles every other year, but we have no choice - the durable
options are _not on the market_. They have disappeared years ago. And in case
of housing, I think the conditions could reach a pretty horrible level before
people would be forced to seek something else.

My point is that market is _too good_ at making things efficient. Its goal is
to make things profitable. Which is a decent proxy for the peoples' goal of
making a product or service "good", but those two ideas start to diverge at
some point.

~~~
caskance
I know exactly how much "crap" customers are willing to deal with. The
difference is that unlike you, I don't take it as a given that they are wrong
to do so. Is your computer crap because it's not a blue gene? Are you dealing
with crap by driving a Honda instead of a Bentley? If people willingly choose
conditions you think to be horrible, try to at least consider the possibility
that you might be the one misjudging things and not them.

------
bjourne
So the idea is that private enterprises are able to run refugee centers
cheaper and more efficiently than the government. Unfortunately, it doesn't
work and is a myth. It's a myth that fits hacker news because we are all
entrepreneurs here..

Private companies have just as much waste as the government. One random
example: Pension funds. The private ones are all more expensive than the
government run ones. A share of the income needs to go to marketing and
profits -> higher prices. Common sense.

All across the board it is the same situation, and it has been shown in study
after study. Health care, train operators, retirement homes, banks,
military... , banks.. When private enterprises take over prices go up and the
service level goes down. Again, it's common sense, a number of private
companies fighting for market share and profits are more wasteful than one
government organization run with zero profit.

I forgot. One counter-example is telecom which has benefited from
privatization. But it is an area in which _a lot_ has happened in the last two
decades so it is not clear privatization is the sole cause of it.

I was asked for links:

[http://www.sns.se/sites/default/files/konkurrensens_konsekve...](http://www.sns.se/sites/default/files/konkurrensens_konsekvenser_pod_2.pdf)
[http://www.su.se/om-oss/press-media-
nyheter/pressmeddelande-...](http://www.su.se/om-oss/press-media-
nyheter/pressmeddelande-arkiv/sjuksk%C3%B6terskors-
arbetstrivsel-f%C3%B6rs%C3%A4mras-efter-privatisering-1.7179)
[http://www.railwaysarchive.co.uk/documents/McNulty_InterimRe...](http://www.railwaysarchive.co.uk/documents/McNulty_InterimReport2010.pdf)

Maybe use Google Translate to read them.

~~~
ersii
Please elaborate on your random example, being "pension funds".

What pension funds are you talking about?

Are you talking about AP7 (Which has two funds, one equity fund and one money
market fund)? (Swedish: "Sjunde Allmäna Pensionsfonden" English: "The 7th
General Pension Fund").

I would caution you to be less general and provide more specific statements
that you back up by facts. Currently it's hard to realize what you're trying
to convey and the provided documents aren't solidifying what you're trying to
convey either.

Speaking of the provided links, here are some context of the documents:

1) The "konkurrensens_konsekvenser_pod_2.pdf" document is in Swedish and has
the title "Konkurrensens konsekvenser" (English: "The consequences of
competition"). The document is 279 pages.

2) The su.se link is a press release from SU (Stockholm University) with the
title "Pressmeddelande: Sjuksköterskors arbetstrivsel försämras efter
privatisering" (English: "Press release: Nurses work satisfaction worsened
after privatization") and it's announcing an article published in "Journal of
Occupational and Organizational Psychology, 82, 45-65" by Falkenberg, H.,
Näswall, K., Sverke, M., and Sjöberg, A. (2009) by the name "How are employees
at different levels affected by privatization? A longitudinal study of two
Swedish hospitals" (Article in English).

3) The "McNulty_InterimReport2010.pdf" document is in English and has the
title "Rail Value for Money Study: Interim Submission to Secretary of State –
September 2010". The document is 28 pages.

~~~
bjourne
The studies all support what I wrote. I guess you have to read them in full or
find their abstract and read that.

Regarding the pension funds, yes AP7 is one example. It is the fund with the
lowest management fee (incidentally has also been one of the highest yielding
pension funds). The usual excuse given is that it is a "lazy fund" and "just
following the index". But no private actor has been able to offer a similar
"lazy fund" with lower fees.

~~~
seivan
Does AP7 beat Stockholm index? Which is free on most Swedish brokerages.
Actually on NordNet all Scandinavian index-funds are free.

You're asking me to believe that a government run by Kaplan, Romsson,
100-dagar-Fridolin and that SSU-Douche who stole money will be the "competent"
part in your equation?

There is no black and white. Sometimes smart people in government do better.
Sometimes entrepreneurs do better.

You're biased from growing up with intelligent people running Sweden and
believe that to still be the case.

Sanandaji would like a word with you....

Both Avanza and NordNet allows you to get free Index-funds. When I say free I
mean with no courtage or cut from profits. No costs.

------
tremguy
The solution here I think is to open the market for more private providers and
let the refugees pick and pay for their service, with the government providing
a certain amount of financial assistance to the individual asylum seekers.
This way the reputation of a certain firm will rapidly hit rock bottom as word
about bad service gets out. This will keep pressure high to provide good
service.

~~~
digbyloftus
Solution to what? The profit margins the article quoted seem fairly
reasonable, for all we know the Government is already willing to deal with
others and no one else can compete. Seeing as the Government is the customer I
don't really see why they would want to move purchasing power over to the
refugees. There's no reason to assume they share goals.

~~~
tremguy
I wasn't so much disputing the reasonable-ness of the profit margins as much
as the policies of the providers. How are you supposed to keep track of how
much profit is actually earned? Balance sheets etc. are notoriously easy to
manipulate. By letting the refugees vote with their money we need not be
concerned with profit margins as the market would(ideally) take care of
itself. Win-win for both parties if this kind of system could be made to work.
It would essentially be removing the government as an intermediary.

------
kristofferR
> Neither Sweden nor Norway has plans to stanch the flow of newcomers

This is just ridiculously wrong, and taints the journalistic integrity of the
piece.

~~~
ersii
It could be that the piece was written some time ago. Or that they hasn't kept
up to date with recent developments (like the transporter responsibility to
verify IDs on trains/buses on all traffic going into Sweden).

In other words, it might not be intentional and the piece is still interesting
and well written in general - disregarding the mentioned quote.

I would like to see a piece about the private sector of refugee centers in
Sweden. That would be interesting as well. I have gotten the impression that
"Jokarjo AB" is (which "Bert Karlsson" is a proprietor of) a somewhat medium
or large player in the Swedish market.

------
madaxe_again
Yes, but the state, not the refugees, are the buyers.

This means that service and quality quickly become irrelevant, and the race to
the bottom begins. Before you know it, you have unscrupulous folks taking
government cash to lock refugees in a gritty basement without food and basic
facilities.

I'm not saying this is an inevitability, but it's the dynamic that this
creates - and that's why this should be the responsibility of the state - or
set up so the refugees have a choice where they're put.

~~~
Shivetya
so your claiming that if wholly government managed they would be more
accountable? Really? Who is a government agency ever truly accountable too?

The solution of all this is simple, government sets standards to be met and
has inspectors who insure they are met. If the standards are kept and one of
them can be a "happiness factor" who cares if they profit.

Plus the added benefit of these private groups is that can iterate faster, are
more likely to bring new ideas to the table, and improve the lot of the
refugees faster than government agencies which tend to persist problems to
extend their own existence

~~~
madaxe_again
Right, but if you give the refugees freedom of choice in which residential
centre they reside, market forces will eliminate poor providers. If you don't
give them choice, regulation is necessary, as you say, but you're then back in
the realm of self-perpetuating quangos, as you say.

~~~
TeMPOraL
No, market forces will not eliminate poor providers. It may eliminate those
who try to beat the market and drop their quality too quickly, but as the
options to cut costs are exhausted, _everyone_ will be pushed down to the
minimum quality level they can still get away with selling. Regulation can be
an effective way to establish a border below which the quality won't drop,
thus making the market solution potentially desirable.

------
nshung
Anti-refugee mood is on the surge in Norway. The government just appointed the
previous agriculture minister from the far-right party as immigration minister
and she recently proposes a slew of tough immigration rules, promised to be
the strictest in Europe, for the newcomers.[1]

There are many Norwegians who hate these two guys in Norway :) Take a look at
the comment section.[2]

1\. [http://www.nrk.no/norge/_-vi-kommer-til-a-fa-en-
asylpolitikk...](http://www.nrk.no/norge/_-vi-kommer-til-a-fa-en-asylpolitikk-
som-er-blant-de-strengeste-i-europa-1.12724216)

2\. [http://www.nettavisen.no/na24/tjener-to-millioner-i-
maneden-...](http://www.nettavisen.no/na24/tjener-to-millioner-i-maneden-pa-
asylmottak/3422811800.html)

------
ck2
Just imagine how much smugglers made off the boats or lifejackets in greece.

Have you seen the piles of lifejackets in greece? They are HUGE. Thousands
upon thousands of them across the entire shore. Where are they all coming from
and who bought all of them?

~~~
DanBC
[http://www.bbc.co.uk/news/magazine-34073196](http://www.bbc.co.uk/news/magazine-34073196)

[http://www.bbc.co.uk/news/world-
europe-34675552](http://www.bbc.co.uk/news/world-europe-34675552)

There's also a news story today about a factory making fake life jackets, and
stuffing them with packaging not proper floatation devices.

[http://www.theguardian.com/world/2016/jan/06/refugee-
crisis-...](http://www.theguardian.com/world/2016/jan/06/refugee-crisis-
turkish-police-find-factory-making-fake-lifejackets-izmir)

------
fiatmoney
I would be extremely worried in their position about personal risk & risk to
my property.

[https://www.google.com/search?hl=en&gl=us&tbm=nws&q=fire+ref...](https://www.google.com/search?hl=en&gl=us&tbm=nws&q=fire+refugee+center)

------
GeorgeMatthews
Amazing man, I wish I could meet them once

------
tosseraccount
Arming the refugees to fight ISIS may cost more now; but defeating ISIS will
be worth it.

~~~
seivan
Many of them didn't flee ISIS. They fled Assad.

Attitude towards ISIS borders between "don't care" to "they're alright"

Some may hate ISIS, but they like parts of ISIS. Like treatment of infidels,
women and LGBT.

[http://english.dohainstitute.org/file/Get/40ebdf12-8960-4d18...](http://english.dohainstitute.org/file/Get/40ebdf12-8960-4d18-8088-7c8a077e522e)

Getting radical muslims out of muslim cities has not proved to make them less
radical.

My parents wish more "quality control" was imposed. My parents were refugees.

~~~
gotchange
Where are your parents from? Iran?

~~~
dang
That reads like you intended it as both a personal and national slur, which
would be a bannable offence on HN. Please don't comment like this here.

~~~
gotchange
You have very low opinion of me to think that I was trying to insult him by
just inquiring about his parents national origin. His family name just caught
my attention "Heidari" and I thought it was the Persian "حيدرى", that's all.

I thought people here give other people the benefit of doubt and not judge
them based on mere speculation.

~~~
dang
I completely misread you. I'm sorry. Thank you for the correction, and for
repeating a core principle of HN that I also need to be reminded of.

Moderating comments like that is probabilistic, since they don't come tagged
with intent. In your case I guessed wrong because the form of the comment was
similar to nasty ones (edit: I mean by other users) in the past. Your intent
would have been clearer, and the comment more informative, if you had included
the detail about the names in the original bit.

~~~
gotchange
No prob :)

I know that moderating a large community like HN can be very time consuming
and frustrating at times esp. when mods aim to ensure a high quality level of
interaction here and I applaud and appreciate all the mods' efforts to achieve
that and if I could offer a suggestion to improve the quality even further,
I'd invite everyone when reading comments and replies to give the authors the
benefit of doubt and become more tolerant of polite dissenting view.

Thanks for all :)

