Finland - A Prototype of Canada's Future?

[CaptainYooh]

Just got back from Finland. Visited Helsinki as well as small villages near Inari Lake north of the Arctic Circle. A cute Northern European country roughly comparable in size and population to Alberta and, in climate, to NWT/Yukon. Overall, a boring trip. There is not much to see there, especially, for a Canadian. Winter roads, lots of snow, reindeer. Significant evidence of remnant glory from the imperial Russia and imperial Sweden historical influences. Lots of Russian people pretty much everywhere; not sure, if they are tourists or residents, but there were more signs in Russian than in English, I thought.

I spent some time discussing life in Finland with a friend, who is a distinguished research professor at the University of Helsinki. Before I get to the point of the thread, I should mention that I have visited other Scandinavian countries previously (specifically, Sweden, Denmark, Holland) and I am familiar with the general political and cultural settings of these countries.

For those who think that socialism = Obama (or Trudeau or Notley), it is not a true equation at all. Without getting too deep into Marx's theory of surplus value and labour and its further theoretical development by Lenin and Trotsky, these following two principles apply:

• The fundamental stated principle of socialism is: "From each person in accordance with his/her ability; to each person in accordance with his/her labour contribution".
• The fundamental stated principle of communism is: "From each person in accordance with his/her ability; to each person in accordance with his/her needs."

Socialism was supposed to become a transitional period filling a historic gap from capitalism to communism, once the socialist phase helps a country to develop economically and to be able to support the communist re-distribution of wealth. In fact, as USSR was getting economically developed but not able to reach the coveted goal of communism, its ideologues have invented a term "developed socialism", but that's irrelevant.



OK, here it goes: Finland is not a socialist country. It is part-capitalist and part-communist. Something that neither Marx, Engels, Lenin or Mao had predicted. If you really think about it, the socialist stated principle makes a lot of sense and is, in fact, the same as capitalism principle. The difference is that the employers are not allowed to make unfair profits in socialism and the fairness of profit is determined by the state.


Taxes in Finland are astronomical. My friend told me that while he and his wife both work, they pay over 60% in total income taxes, plus VAT, plus local sales taxes. His after-tax earnings are less than 20% of what they make and they are all spent on basic stuff. They cannot save. Second employed person in the household is taxed unfavourably. In his situation, if his wife didn't work, their net financial effect would be zero. She works, because she's bored.


Those that don't work in Finland, get welfare, lots of it. In fact, they get pretty much everything that the working people get. Accommodation, food, medical, dental, optical, mental, psychological, training, education, even recreational services - are all available to the people on welfare. You do not need to be disabled, medically, to qualify for welfare. If you don't have work, you qualify. The only drawbacks to being on welfare - you can't travel abroad and you have to, well, humiliate yourself periodically to get some of the "extra luxury" services (i.e. massages) approved.


I asked, about the incentives to work? He couldn't come up with anything other than freedom and pride. However; he did say that young educated people have extreme difficulties finding work in most areas and get quickly discouraged and disinterested in looking for work. Even manual labour jobs are not easy to find.


Other than good hockey players, Finland is no longer exporting anything of value to the world. It used to export paper and mill products (one of the best quality paper in the world!); but the world demand for paper is weak these days. Finnish construction practices used to be in great demand in other countries, not anymore. High labour costs and payroll burdens made them noncompetitive to the hungry and little-regulated Polish, Turkish and Hungarian contractors. Finland economy has become primarily self-serving.


Now, self-serving isolated economies can exist very well but only when the welfare component is minor. In Finland case, this could be a Frankenstein. I remember a conversation with a supplier I had in Sweden 20 years ago. He said that paying 50% in income taxes is fair considering the amount of free Government services they get. I wonder what he'd say today? Free Government-sponsored services are sustainable only to a certain threshold. In Finland, this could be the last year that students don't have to pay for university education. Wait times to see a family doctor are increasing (2-3 weeks). Dental and optical services are no longer free to those who work (still free to those who don't).


Something's gotta give. What would it be? Obviously, it starts with the reduced quality of living and services. Also, later pensions and even more taxes. But then there is no more room to fund the welfare recipients, whose numbers are now so significant that they can elect a party to power. Just promise to keep the money flowing and get elected. Next - Greece?


Hence; my thought. Real Marxist Socialism is ephemeral; it doesn't exist even in those countries we have all thought of as exceptionally good and civilized examples of it. (Norway could be somewhat of an exception, but it had accumulated such an enormous amount of rainy day fund money saved from oil exploration, it may help it sustain at least some of their socialist policies for many years to come).



I have no doubts anymore that the world is going to replace hydrocarbons as a primary energy source in the foreseeable future. With the main source of export disappearing, what would make Canada different from little Finland in terms of being able to support its economy? In fact, it would be even more difficult for us. Geographically, Canada is much larger and more expensive to service. The percentage of its welfare recipients is growing steady and the politicians take note by pitching their platforms to them. The Liberals of today are significantly "lefter" than the Liberals of yesteryear. Plus, many of the First Nation people are getting the gist of what a good lawyer can do for them fighting the Government on every possible compensation issue.


If the Canadian politics continue shifting left towards a welfare state, would Finland become Canada's future?

[peter12]

We are drifting towards a welfare state? What are we now?

[GGG]

If you measure the welfare state as taxes revenue as a function of GDP Canada has never spent less on social programs.

It's odd that people think more and more is being spent on social programs when the opposite is true. I don't see this Finland transition as occurring.

[Delthefunky]

Originally Posted by CaptainYooh

...I asked, about the incentives to work? He couldn't come up with anything other than freedom and pride. However; he did say that young educated people have extreme difficulties finding work in most areas and get quickly discouraged and disinterested in looking for work. Even manual labour jobs are not easy to find...

I went to school in Sweden over the last year and I am now back in Calgary. I loved it, and I love their social structure, and I would welcome it here in a heartbeat. I found most of what I was told about the negatives of socialism to be completely false.

I just wanted to add, to what you were saying, that I found Sweden, Norway, Denmark and Germany (countries I spent a bit of time in) to be very innovative and industrious. I was surprised that Sweden has more billionaires per capita then the USA. I remember being told the "socialism = laziness" thing in high school and it couldn't be farther from the truth. People get 'lazy' when there's no hope.

I think strategic government interference (invisible hand) is a good thing, especially when the people voting the government in are generally well informed/educated. People were really involved in politics there and really keep their political parties accountable.

Of course there were downfalls though, nowhere is perfect.

[Thor]

I'd rather Canada was more like Germany

[AltaGuy]

I was in New Orleans just last year and was thinking something similar. But... kind of the opposite.

[Itse]

Originally Posted by CaptainYooh

Taxes in Finland are astronomical. My friend told me that while he and his wife both work, they pay over 60% in total income taxes, plus VAT, plus local sales taxes. His after-tax earnings are less than 20% of what they make and they are all spent on basic stuff.

This is an extreme example.

Your friend is essentially the biggest loser of the Finnish taxation system, getting a big salary but probably no other incentives and unable to set up a company through which he could sell his services to his employer.

Rich people generally only pay the capital gains tax, which is 30-34%, plus tax evasion is rampant in higher incomes. Lots of people in the private sector who pull high salaries also have various means to avoid the income tax. (Lawyers being a prototypical example here in Finland.)

I drive a cab and pay around total 28% income tax, which I don't think is too bad.

[PsYcNeT]

Canadians have too many feelings.

[Itse]

Those that don't work in Finland, get welfare, lots of it. In fact, they get pretty much everything that the working people get. Accommodation, food, medical, dental, optical, mental, psychological, training, education, even recreational services - are all available to the people on welfare. You do not need to be disabled, medically, to qualify for welfare. If you don't have work, you qualify. The only drawbacks to being on welfare - you can't travel abroad and you have to, well, humiliate yourself periodically to get some of the "extra luxury" services (i.e. massages) approved.

Very little of the above is accurate, and most of it is flat out untrue.

First of all, you're not allowed to study while unemployed. It's literally forbidden, or else you lose your unemployment benefits. Student benefits are smaller than unemployment benefits, and if you already have one education you probably don't qualify for student benefits anymore. So for most unemployed studying is just not an option.

You are btw also forbidden to do any work in your field, even for charity, unless mandated by the unemployement office. Also, if you set up your own company and do any work in your own field, no matter how little money you make, you immediately disqualify for any benefits. In short, while unemployed you are forbidden to do anything that the unemployment office isn't telling you to do.

You don't get food. This is just not how it works in Finland, except if you're considered unfit to handle money by the social services. The typical unemployment benefits for the long term unemployed are very small. Typical things considered "luxuries" by the unemployed are for example cheese. (There are songs about it.)

"Training" for the unemployed is these days generally unpaid work. You go to work for six months, you don't get paid while in training, at the end of it you're replaced by another "trainee". This statistically almost never results in anyone actually getting a job. If you don't go on the other hand, you might lose your benefits. Even if the job isn't in your field. An academic friend of mine was essentially forced to work at an assembly line for example. Again, unpaid.

Finland has one of the biggest gaps in availability of healthcare services for working and non-working people in Europe. We regurarly get notes from the EU chastising us for the availability of many healthcare services for the unemployed.

Psychological services are pretty much not available at all unless you have really serious problems. For example it has proven impossible for me to get treatment for my ADD. As in, I have a diagnonis but I still can't get a recipe for medication. I can't afford to buy the psychiatric services from the private sector (unless I could find a doctor who was willing to just flat out write me a recipe without regular checkups, which is rare), and have been flat out told by the public sector that I'm not getting help from them. As long as I can work in my current job I'm not considered sick enough. On the other hand if I was unable to work, I'd simply be unemployed, in which case my treatment is also not paid because they only pay psychological services that support a persons ability to work.

The other reason to get publicly paid psychological treatment is if you're a threat to yourself or others. Suicidal or otherwise deeply disturbed. So most unemployed people are pretty much just s*** out of luck with their problems.

Recreational services are most certainly not available for the unemployed. There is some support for childrens hobbies, but that's pretty much it. You most certainly don't get a massage unless it's part of a physiotheratic treatment.


I'm sorry but your friend obviously has almost no contact to the lives of actually unemployed people. (Which isn't surprising considering that as a professor he personally has only really known success in his career and he currently pulls around double the average salary). Plus he doesn't apparently read the news, which is a bit surprising for a professor.

The healthcare services are not free, and neither is medication. They are very heavily subsidized, but the costs are still significant if you're actually poor. Ynless you have an emergency, it can also take weeks to get a doctors appointment from the public sector. (Although that depends heavily on where you live. There are plenty of areas where the situation is better.)

Accommodation is not free. You can currently get benefits for up to 80% of your rent, but the rest you have to cover from your other benefits. There's a cap on how high a rent they'll support, if yours is more than that you also have to cover the difference yourself. In high-rent citys such as Helsinki it can be very difficult to get a flat that qualifies for full rent support.

[Itse]

Originally Posted by CaptainYooh

• The fundamental stated principle of socialism is: "From each person in accordance with his/her ability; to each person in accordance with his/her labour contribution".
• The fundamental stated principle of communism is: "From each person in accordance with his/her ability; to each person in accordance with his/her needs."

Communism is generally defined by the common ownership of the means of production.

Finland is most certainly not a communist society by any reasonable definition, not even a little. There are some government owned companies still, but they are rapidly being sold. (Generally on the cheap.)

[Itse]

Originally Posted by CaptainYooh

Other than good hockey players, Finland is no longer exporting anything of value to the world. It used to export paper and mill products (one of the best quality paper in the world!); but the world demand for paper is weak these days. Finnish construction practices used to be in great demand in other countries, not anymore. High labour costs and payroll burdens made them noncompetitive to the hungry and little-regulated Polish, Turkish and Hungarian contractors. Finland economy has become primarily self-serving.

Again, not accurate at all.

Finland has been regurarly ranked in the top 10 of the most competitive economies of the world, even occasionally hitting #1. International trade is about third of our GDP. Typical exports are for example chemicals and various machinery. (You have probably all ridden in a Kone-elevator.) We're also still one of the worlds top IT countries. We also have a smallish but rapidly growing gaming industry. (Clash of Clans and Angry Birds being the best known examples, but there's also companies like Remedy (Max Payne, Alan Wake, upcoming Quantum Break).

[peter12]

So, with the coming demographic collapse, places like Finland are going to have to figure out some decent reforms for the welfare state when there are no young people around to pay for it.

[CaptainCrunch]

No thanks, I wouldn't trust most governments to run a feaking hot dog stand let alone a entire economy.

To me governments should be in place to defend their citizens, support law and order and create a system of equitable justice. Build a countries infrastructure, and manage the environment, all while creating a fair and balanced system of trade and international relations.

[CliffFletcher]

Originally Posted by peter12

So, with the coming demographic collapse, places like Finland are going to have to figure out some decent reforms for the welfare state when there are no young people around to pay for it.

Yeah, I'm watching Northern Europe as an early warning signal of where our social welfare systems will be 10 years later. Nobody knows what will happen to public health care and the social safety net when there's one retired person for every three workers, instead of one retired person for every six workers (which was the ratio when these systems were set up). It's not clear whether we'll see a gradual ratcheting up of taxes along with cutting of services, or if the whole thing will just collapse.

[peter12]

Originally Posted by CliffFletcher

Yeah, I'm watching Northern Europe as an early warning signal of where our social welfare systems will be 10 years later. Nobody knows what will happen to public health care and the social safety net when there's one retired person for every three workers, instead of one retired person for every six workers (which was the ratio when these systems were set up). It's not clear whether we'll see a gradual ratcheting up of taxes along with cutting of services, or if the whole thing will just collapse.

As one of my poli sci profs said to the class way back when, "If you want to keep up the welfare state, stop using condoms or birth control, and everyone take up smoking."

3-4 kids per family, and lots of deaths around 65-70 would be just okay for the welfare state.

[longsuffering]

It's almost like Itse didn't post 4 replies that completely blew Captain Yooh's post and premise right out of the water.

Welfare state .... rabble rabble ......

[jayswin]

Wow, I haven't seen a fact checking beat down like that in years on CP. I'd be interested in CaptainYooh's response. Pretty tough to just move on with the discussion after that, although it seems some are.

[CliffFletcher]

Originally Posted by longsuffering

Welfare state .... rabble rabble ......

Welfare state isn't a pejorative. It's just a utilitarian word to describe the huge responsibilities governments took on post WW2, including public education, health care, subsidized housing, and pensions. And you certainly don't have to be against any of those things to express concerns about their long-term viability under the enormous demographic pressures they're faced with.

[PepsiFree]

That was the biggest swing-and-miss fear mongering attempt I've seen in a while lol.

Thanks Itse for bringing all sorts of real knowledge to the table, works a bit better than "I had a convo with a Fin over a beer and now I'm a bit worried" for actual substance.

[MrMastodonFarm]

Originally Posted by jayswin

Wow, I haven't seen a fact checking beat down like that in years on CP. I'd be interested in CaptainYooh's response. Pretty tough to just move on with the discussion after that, although it seems some are.

Went to Finland once, am expert.