(Originally published in Facebook 13th of February 2014, and now re-run here with very minor edits)
Finland is a tolerable place to live in. Like just about everywhere on planet earth there are good things, and there are bad things. Finland has its share of outright insane things and very very harmful things too. As an entrepreneur I have learned to strive for perfection where it counts, and apply the 20/80 rule everywhere else (20% of effort counts for 80% of results). Finland in many cases isn't putting in even the 20% of effort, and could relatively easily be a much more prosperous place. Thus through this writing I seek to offer input on how to progress things towards that goal of prosperity.
This is a small rant about why Finland could do better than our current sorry state of affairs. This is positive & hopeful constructive criticism with the aim of hoping to collectively do better:
Finland is a control freak country, ultimate nanny-state, wishing to dictate every aspect of life with absurd, unwelcome and overkilled precision. Perfect playground for mentally ill bureaucrats long since gone wild and unchecked. We start with the default of freedom and every new law (about 1 new law per day at current rate) and rule (many more new rules per day than just 1) restricts that freedom and makes life harder and more demented. Finland is not a model country when it comes to upholding human rights, and some of these "new rules" trample all over basic human rights and twist bureaucracy closer to the inhuman absurd level.
The typical consequences are everywhere we look: less variety in choice, higher prices across the board, and lower quality. Overall sluggishness and slowness of things. The absence & opposite of fast and dynamic. Wonderful characteristics, courtesy of regulation. Think for example: food markets, motoring, or all to do with real estate. Everything that possibly can be expensive, is expensive in this country (with virtually no exceptions at all. There are things that are seemingly cheap: like fighting a legal case to the court of appeals, but even in those cases somebody else pays for the cost, and often that "somebody" is the society, as in we all through our taxes..) According to official statistics Finland is the most expensive Eurozone country in consumer prices. And to be precise: everything is regulated, ensured by regulation, to get more expensive in the future as well. petrol, cars, real estate, food, alcohol, tobacco, energy, etc etc.
While simultaneously we have the amazing combination of;
One of the lowest income differences on this planet (there are no "rich earners" in Finland as nobody makes any significant money. Even the best performers among us earn about the same. Remember that I'm talking about income here (as in salary, bonuses, tax free travel daily allowances, etc) and not profit accumulated through risk taking, investing your hard earned wealth and accumulating capital gains from your already taxed money).
Combined with one of the highest decrees of regulated & forced income transfers in Europe (transferring what little extra a high performer earns, away from her to the less performing folks).
And finally trice combined with one of the lowest net purchasing powers in Europe (meaning that people are not wealthy, they have no savings, no huge disposable income, no investments, no net worth, and their net purchasing power is abysmally small - all that while the prices of everything around them are high!).
As an anecdote; a friend of mine has for years asked Swiss and Austrian people (among other Europeans and Americans too) to guess what's the threshold of the top 10% earning salary in Finland. They frequently guess numbers like 14,000€ a month, or 15,000€ a month, some even 20,000€ a month. And they are totally in shock and silence after hearing that with a meager salary of about 4500€ you are already in the national top 10% earning bracket..
The silence deepens and evolves into total disbelief when they realize that simultaneously this country has extremely high taxes overall: If you buy a new MacBook Pro for 3000€ from your hard earned salary; all throughout the chain you paid about 66% of taxes in average. Meaning with zero tax you would have had 3 MacBook Pro's for the price of one, or one for 1/3 the price.. That same system of tax-on-top-of-tax chain with my salary amounts to about 81% Tax if I buy a MacBook Pro with my net salary.. 81% Tax is so much that the only conclusion can be the realization how unfair the punishing system is and how much it is robbing private individuals of their wealth and hard earned possessions.
We are not only low earners (in the eyes of Swiss etc), but also piss poor & broke concerning our wealth & savings, while paying one of the world's highest % of taxes.
Our national debt in relation to our GDP still is nowhere near the level of Greece (at least some light in a dark dark tunnel) - however if you look at our national debt in relation to the wealth of Finnish households (savings, investments, purchasing power) the only conclusion is that we are in deep trouble. Take the Italians for example: they are a lot more wealthier than us, and while it's true that they have even more debt than we do (both in € and in % of GDP) they are still so wealthy that Italian households combined could pay back the debt relatively easily. Extreme example is Japan: truly rich households with a lot of savings, investments and purchasing power. Lots and lots of national government debt too, but so much wealth that it's not really a serious problem for them. Not so much with Finnish households: we are too poor to have this staggering amount of debt! (and just shy of 10bn€ more of it each year, hell yeah!).
We have one of the relatively highest spending public sectors in the world; public spending to GDP ratio is near 60%. Each year we take in massive additional debt, not to invest (no no, that would be too positive..) but to simply eat the money in our running expenses. It is spending gone mad and amok. It's like a startup company applying for a 10M€ round of funding not for product development, market expansion or product launch, but simply to waste the money on strippers and parties by the management and to pay salaries to all those people the startup hired to occupy the very costly office building, not to mention all those fancy sport cars for the managers..
Not only is our public spending world record high, furthermore if you take the number of households where a minimum of any single one family member has ties to the public sector (is a public sector worker in any capacity, is a school kid, daycare student or student in a public school, is in the municipal council, receives grants to businesses or receives grants to agriculture, etc) - it includes almost all households in the nation. There are virtually no households left with zero ties to the public sector: so the resistance to change is irrational and massive. Public sector is "untouchable monster" because everyone's household is a part of it. A system of evil destruction reinforcing itself.
Everybody's playing the same roulette game and thinking that they are the winners and the others who pay for their winnings are the losers. Guess what: it doesn't play out like that. We all lose. We also own the (unprofitable) casino where we play in, and could change the rules if we wanted to..
Solution is obvious: no weak cuts of ~3bn€ are enough to reverse a situation this bad. We need much much bigger structural overhaul and change. Lately the public discussion has been starting slowly to take a turn towards the better and moving away from minor cuts and tweaks to proposing real actual restructuring. This is a "no shit Sherlock? said Captain Obvious" -moment for Finland, as the burning need for a big restructuring is very much apparent & obvious.
Cutting just a few billion and executing no structural change at all solves nothing. "Austerity" alone is a failed road. So is the utterly laughable and mentally retarded Keynesian proposal of doing nothing and just taking more debt and keep on spending like there's no tomorrow. Cutting spending alone is like an alcoholic who is drinking 10 bottles of Koskenkorva Vodka a day, and now we deny him two bottles (he is left with just 8), only to see him drink the full 10 bottles again tomorrow. There NEEDS to be structural change, a proper rehab, dietary-, and lifestyle change for our collective alcoholic state, and in a big way.
Finland cannot increase taxation and tax more (not now, not in the future); because there's nothing to tax. People have low income, low purchasing power, no wealth.. There's just nothing that could be taxed and confiscated to pay this overwhelming level of government expenses. Nor there ever will be more as the current regulations and taxes make sure that nobody can accumulate wealth easily, and certainly not quickly or in any meaningful way as far as the whole economy is concerned. Taking more debt now is simply future taxation spent today (and would have to be taxed back tomorrow). Thus the road of increasing taxation is entirely spent: in fact the state has overstepped already beyond to the territory where it is outright destructive to tax this much (remember my 81% Tax on the MacBook?). The only manageable road can be the change of the entire system - the hard & freefalling road would be not to change and see the whole nation collapse under impossible circumstances.
The UK has a "1 in, 2 out" rule regarding regulation: for every new rule, two old ones must be removed forever. Finland would need a "1 in, 10 out" rule for starters. Getting rid of all that crap forbidding everything and anything, dementing and strangling us.
We live in an absurd country where the state owns a horsemanship school and a catering company for no good reason (how exactly is that free market economy if the state competes with private providers with those entities?). Also if you use a chainsaw in your work you get a -40% deduction in your income taxes just because that's a silly rule.. (almost wrote: "just because, fuck you, that's why" but censored myself ;)) etc there are endless examples of absurd non-justified stuff all around us. To pick a few more: public sector workers have for years been earning leaders in the Finnish economy, getting the biggest salary increases. According to the OECD Finns have 58 healthy years in their life expectancy (lowest in the Nordics), while the Icelanders have 69. The explanation I offer is that; when you punish by tax, make everything healthy very expensive, and dement your people through rules it shows; people live short and miserable lives. Could go on with the examples, but stopping here for now.
Restructuring our broken and sorry state of affairs is the top priority. And a major part of the restructuring effort is to set up a better system that runs lean and costs much much less than our current behemoth of world record high public spending. No cuts to spending only; but rather restructuring that leads to replacing the old and expensive with the new, lean and affordable. Some objectives regarding that:
Public spending to GDP ratio needs to get to a semi-healthy level of below 40% (big cuts in spending, between 15-20bn€, or rocket-fast GDP growth of private sector primarily - I'm aware that public sector productivity is also a part of GDP, tho a minor part), and quickly after that to a much more healthier level of less than 20% (massive cuts in spending, around 30-40bn€, or lighspeed fast GDP growth of private sector primarily). Finland could run lean with a 10-20% public spending to GDP and get great amazing value for that taxpayer money. There are countries out there who do it today and show us the example.
Good benchmark nations for Finland in this would be countries of similar size in population, like: Singapore, Hong Kong, Switzerland, New Zealand and even Denmark to some extent. Also Sweden & Austria, and smaller nations too: Estonia in particular. Perhaps some selective aspects of Ireland too.
Enough of us see what needs to be done - and that's why I'm positive and think we can do better than this! It's about time to start renovating and building a better Finland for us all for all of future to come! Because I hope we haven't given up on our country just yet, right?