While many of us envy our European neighbors who flirt with socialism, little Finland can give us a lesson of the dangers of trying too hard to maintain a welfare state. At the highest incomes, income taxes are a staggering 45%. The government, trying to educate a formerly uneducated population, has made a university education free for Finnish citizens. The CIA World Factbook entry on Finland lists "N/A" for "percentage of Finns under the poverty line" due to large payouts to the unemployed. And don't forget about their socialized health care, subsidized day care, extended paid maternity leave, generous pensions and many other payouts.
The list goes on an on about how much money the Finnish government has been spending. And the price they pay for this? The World Economic Forum, for the past four out of five years, has listed them as the most competitive nation in the world (the US comes in second place). Of course, we know that you can't have a healthy economy and protect the environment, right? Seems the Finns rank highest in the World Economic Forum's Environmental Index, too. The US comes in a dismal 51st place.
If you check the CIA World Factbook (linked above) you also find out they have a higher life expectancy than the USA, half the infant mortality rate and, to add insult to injury, the Christian Science Monitor reports that Finland has been running a budget surplus for ten years.
After doing a bit of reading, one thing does stand out. It seems the Finnish people are happy with their system and work hard to support it. Here in the US, we worship the dollar and I'm sure there are plenty of nay-sayers who will happily explain why the Finnish model could never, ever work here. Unfortunately, I think they would be right that the Finnish model can't work here. You'd have to convince enough people to actually care enough about their fellow citizens to be willing to help them out and I don't think that's going to happen any time soon (because, you know, starving to death while unemployed builds character). Plus, we have to spend enough money to kill the brown people, too.
Really, in reading up about Finland, it sounds too good to be true. Anyone familiar with Finland able to provide a counterpoint?
Re:Proof that socialisim is doomed to failure
Ovid on 2005-10-27T04:27:54
Then hopefully they'll read my counter-argument, too. One primary tenet of economics (and one that's often not taught) is that in any given economic system, there tends to be an inverse correlation between efficiency and "fairness". If you go too far to either extreme, the systems can break down. One problem with many socialist countries is that they have strived so hard for "fairness" that they tend to be less efficient and economies like the US tend to dominate. Witness the economic doldrums of France as a classic example.
Unfortunately, every country's social structure, culture and resources are suitably different that a "one size fits all" economic system can't apply. The problem is that the laissez-faire zealots sometimes seize on this and loftily proclaim that isolated examples such as Finland are a fluke. What often they fail to realize is that laissez-faire also can't be applied as a general rule and there's nothing wrong with trying to find out if we can be more compassionate and efficient at the same time.
Re:Proof that socialisim is doomed to failure
mir on 2005-10-27T08:13:39
Witness the economic doldrums of France as a classic example.I guess I'll have to step up to the plate on this one
;--) Not being an economist, I won't comment on figures and if the French economy is really that bad though. I will just give an example of why I can't really comment
;--) My favourite economic example is a perfect illustration of a line that should be familiar to you: "There Is More Than One Way To Do It". See I used to work for Airbus, a German-French_English (with a smidgen of Spanish thrown in for good measure) conglommerate. They build planes. The French branch, which was state owned until recently, doesn't lay-off people. They don't even fire them. When I joined the company I was handed a leaflet from a union that asked for "stable jobs for us and our families",you would get a better chance to be hired if a member of your family was already working for the company. The business of selling plane is very cyclic, so there were years when finished planes would be stockpiled around the buildings, and people kept their jobs. Does it get more socialist than that? On the other side of the pond, their main competitor, Boeing, goes through phases where they lay-off 40 000 employees, only to hire back 50 000 a few tears later when the market picks-up again.
The 2 companies have had roughly 50% of the market for quite a few years now..
(Preemptively: I know about the state subsidies, both companies get some. I could also elaborate on what I think are the reasons for the similar performances of the 2 companies, but that is not the point here.)
Re:also a matter of culture differences
Ovid on 2005-10-27T04:56:07
Yes, cultural differences are a huge problem. On this side of the pond, we have a nasty habit of placing socialism on par with Satanism. I find that amusuing because most citizens of the good ol' USA are quick to condemn this economic system despite that fact that most of them don't know a damned thing about economics.
Re:Well, it is not that sweet afterall...
drhyde on 2005-10-27T10:52:50
Finland's receipts from the EU have been balanced by it's payments to the EU. So no, it's not subsidised to any great degree.
And the country is set to become a net payer to the EU.
(sources: Helsingin Sanomat)Re:Well, it is not that sweet afterall...
freeplatypus on 2005-10-27T15:39:23
Ok, You are rights, I made it not clear that Finland is also contributing to the common budget, but this is somehow obvious.
While I have no personal knowledge of Finland, here are some fact and figures, courtesy of Wikipedia:
Socialism has many opponents, I'll let their arguments speak for themselves. I agree that taken to extreme, any ideology, including Capitalism, will do more harm then good. However I feel that Finland's welfare policy is too extreme and that it works only because of the several mitigating factors I listed above, as well as some others. As a case in point, Israel, the country I live in, had a similar, if much less advanced, welfare program until recently (recent governments have moved more to the Capitalistic end of the spectrum). However, Israel is almost the exact opposite of Finland in nearly every other point I listed, including, alas, corruption in the public sector. Needless to say, Israel does not enjoy the many positive points you listed for Finland (no poverty, competitive, etc.)
To sum things up, as you and others have said, one country's success in implementing a welfare state does not mean that all countries can and should use the exact same model. I'll add that Finland's success also does not mean that socialism is a successful ideology. To my eyes, Finland's success is in spite of, not because of, Socialism.
Oh, and of course, needless to say, Wikipedia rocks!
Re:Wikipedia to the rescue
Alias on 2005-10-27T08:57:52
Point 3 is a load of crap.
Last time I checked, Australia has the highest rate of migrants of any country in the world, over 25% of the country wasn't born here, and it works just fine thank you.
One thing I will say though, is that we don't have any major minorities (except for the aboriginal situation sort of...). There's no equivalent to the entrenched poor black or latino populations America has to deal with. At least, not amoung the migrants.
But again, if you look at the top cluster of countries, Norway, Finland, Canada, Luxumbourg, Australia, they are all relatively small countries. With the exception of Lux, who can avoid economic tragedy of the commons and exploit situations, all 4 have large relatively large empty spaces. I'd say all 4 also have pretty low corruption. And things like a reliable living amount (albeit not comfortable) for the long term unemployed, and government medical health care.
So... small enough to avoid being "lumbering", large enough to avoid being incompetant (a problem when you get down near a million or two), and relatively strong natural resources.
But the demographic homogeneity bit is wrong.Re:Wikipedia to the rescue
offerk on 2005-10-27T09:54:49
Point 3 is a load of crap. Last time I checked, Australia has the highest rate of migrants of any country in the world, over 25% of the country wasn't born here, and it works just fine thank you.I'm sure it does, but you can hardly say "Point 3 is crap" based on that - for one, thing, every point I listed is a contributing factor, changing just one may change the situation a bit, but the other factors will remain (as you yourself pointed out!).
Furthermore, Australia is very different from both Finland and the USA, a difference that can more then offset the lack of a homogeneous population. I'm talking about the fact that "20.3 million people occupy a continent the size of the contiguous United States" (Wikipedia).
Furthermore, according to WP Australia has been "privatizing many government-owned services and public utilities" and "has attempted to reduce union power and involvement in the workplace". Deregulation, privatization and decreasing union power are actions more consistent with a capitalistic ideology than a socialistic one. I think this more then offsets the lack of a homogeneous population. To summarize, I don't think point 3 is crap, nor do I think Australia is a good counter example, given the many other differences.One thing I will say though, is that we don't have any major minorities (except for the aboriginal situation sort of...). There's no equivalent to the entrenched poor black or latino populations America has to deal with. At least, not amoung the migrants.Thank you for shooting yourself in the foot for me
:)
First you claim that point 3 is crap, then you hurriedly counter yourself by admitting that the counter example you gave is not really the same...
At the highest incomes, income taxes are a staggering 45%.
As Frej pointed out, Finland's tax system is progressive, not flat, so this is a marginal rate.
Through the Kennedy Administration (IIRC), the US Marginal tax rate was about 60%. It was somewhat high until the Reagan administration, when the tax code was cleaned up and replaced with a three(?)-step rate structure (with oodles of shelters). That "high" tax rate was justified at the time because it was a 60% tax on all income above $1MM/year (back when $1MM was really a lot of money), the government needed money to fight the Red Menace, pay off the debts incurred fighting WWII, and fund the Marshall plan to rebuild Europe.
All told, high marginal tax rates aren't the most evil thing in +++ NO CARRIER
