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Source link: http://archive.mises.org/13732/the-bankrupt-finnish-welfare-state/

The Bankrupt Finnish Welfare State

August 31, 2010 by

Newsweek recently proclaimed Finland the “best country in the world.” But Kaj Grüssner reports first-hand experience with his homeland’s onerous taxes, skyrocketing national debt, and byzantine healthcare system. FULL ARTICLE by Kaj Grussner

{ 76 comments }

Ahto August 31, 2010 at 8:44 am

“All schools are run by the government, even the universities.”

No. Most comprehensive schools are run by municipalities with a considerable amount of autonomy and there are some private schools. The universities are mostly funded by the government but not “run” by it, they have internal autonomy. For example, Helsinki university is run by a board with elected representatives of students, professors, other personnell as well as representatives of the wider academic and business community, elected by the former three groups.

“One of the most basic laws of society is that the more administrative areas there are within one state, the more bureaucracy it breeds.”

So, you are for the world government?

I agree there are many problems with the public healthcare system but those problems rise mostly from the fact that only poor and disadvantaged people, mostly “difficult cases”, use that anymore because employee health care is funded by the workplace, often in private institutions. The other thing is that Finland is still a sparsely populated country and thus many remote areas do not have enough customers to get good market-based healthcare near them. That, however, is not a fault in the public healthcare system itself.

“Even during the 15 years prior to the collapse of 2008, a period referred to as one of continual economic growth, the national debt was not paid off.”

Because the debt was so tiny compared to other countries, there was no need to do that. Because of the economic growth, the debt as % of GDP decreased considerably. And if I remember correctly, in the early 2000s, some debt was paid off in considerable amounts.

“The healthcare system is severely inefficient and costly –”

What? It takes a fraction of the GDP compared to the system in the US.

“The national debt has already reached alarming levels.”

Still, a low level compared to many EU countries.

“This in spite of the fact that the tax revenues had remained stable and even risen from 2000 to 2009.”

As you can clearly see from the statistics, the amount of money received from state taxes went considerably down from 2008 to 2009 due to global recession and the amount of debt rose precisely in 2009. I think it’s impressive that Finland was able to keep the amount of debt practically the same from 1994 to 2007. During that time, the GDP increased, so the debt as % of GDP decreased considerably, as you can clearly see from the statistics.

Some of your criticism is clearly unfounded, although I agree that some of it is true.

The_Orlonater August 31, 2010 at 10:37 am

“I agree there are many problems with the public healthcare system but those problems rise mostly from the fact that only poor and disadvantaged people, mostly “difficult cases”, use that anymore because employee health care is funded by the workplace, often in private institutions. The other thing is that Finland is still a sparsely populated country and thus many remote areas do not have enough customers to get good market-based healthcare near them. That, however, is not a fault in the public healthcare system itself.”

Yes it is a fault of the public health care system because you naively assume the providing health care is a static method which can only be administered by the state. If your static, bureaucratic method fails, then you blame the people and how they choose to live instead of the state.

“What? It takes a fraction of the GDP compared to the system in the US.”

Portion of GDP spent on health care doesn’t mean anything outright. By that logic, we should spend 0% of GDP on health care.

J. Murray August 31, 2010 at 11:21 am

And again with this. The ONLY reason that the US spends so much on healthcare is BECAUSE our government is involved. I’m not going to go over the calculation (again for the 100th time), but here is the summary:

Private health care: $3,000 per person per year.

Government health care: $15,000 per person per year.

Estimated cost of US health care if government care was eliminated: $900 billion, or 6% GDP.

Finland spends 7.5% of its GDP on health care.

Does it look like the US spends too much because we aren’t universal?

The Messenger August 31, 2010 at 6:39 pm

“Some of your criticism is clearly unfounded”

It’s not uncommon on this site to find claims that are devoid truth. I guess it stems from a pathological urge to scapegoat the state for every inconvenience in life; regardless if the state does not perform an alleged function in x, y, and z.

Matthew Swaringen August 31, 2010 at 6:42 pm

Do you care to prove that assertion that the state doesn’t perform alleged functions in… something that the site has stated it does perform a function in?

It should be easy if it’s “not uncommon.”

The Messenger August 31, 2010 at 6:46 pm

“All schools are run by the government, even the universities.”

Matthew Swaringen August 31, 2010 at 6:57 pm

So you are saying the universities or university students aren’t subsidized by the government?
You are saying the government doesn’t regulate schools?

I think we have to define “run.” I’ll admit that you may consider “regulate and fund” not to be the same thing, but others here believe that “run” and “regulate and fund” aren’t so far apart.

If you can pull the funding, you have a significant place in directing school activities.

Ahto August 31, 2010 at 8:23 pm

“If your static, bureaucratic method fails, then you blame the people and how they choose to live instead of the state.”

Your argument doesn’t make sense. I believe that choosing a more market-oriented approach to health care would lead to some sparsely populated areas becoming more sparsely populated. I don’t say whether it is a good or a bad thing. I’m not in any way “blaming the people”.

I could be wrong to argue with GDP percentages regarding health care. However, I still think the author of the original article should have elaborated on why he thinks that the Finnish system is “costly and ineffective”. How should we measure the inefficiency here? Also, there are many healt care systems with varying decrees of government spending and with equally varying GDP percentages. I can’t draw the conclusion that more government spending would lead to less cost-effective health care system. This doesn’t proove that going for completely privatized health care system would be a bad choice, but at least it seems that some mixed systems are considerably more cost-effective than others. I don’t see why I should consider the Finnish system to be one of the less cost-effective.

“If you can pull the funding, you have a significant place in directing school activities.”

To some degree, yes, but it varies. For example in Sweden, the government appoints university rectors. That, I would call “running”. In Finland, they are appointed by the university board elected in a manner I prescribed in my original comment. This, I would call “self-government”. Also, if various business interests determine the university funding, they can excercise an influence within the academic world that could lead to undermining the impartiality of science. I’m not claiming that this could not happen with the state as the source of money, but going for completely non-state funding wouldn’t solve the problem either.

J. Murray September 1, 2010 at 5:38 am

So, the Finnish government has zero control over the school? Should that school decide it will do nothing but teach how to drink beer and play video games all day, the Finnish government will not pull its funding or make forcible changes in its behavior?

He who has the ultimate veto power is the one who owns and runs the institution. Lesser individuals may be given the illusion of control, but only the one who has the last word can truly be called the ruler.

bzik2 August 31, 2010 at 8:53 am

Oh my God! Has anybody at Mises.org reads these texts before publishing them? Has this author ever been to Finland? I’ve managed to read only the first part about education and I cannot believe this is supposed to be an academic text (or is it?). Facts not checked, it seems to be written by some opponent of the system with his eyes covered and mind shut for any new info.
Do you know that Nokia is Finnish? Do you know that a fashion and design company Marimekko is Finnish? Do you know that many other high-tech companies come from this country? And why? Because of government’s support for education, R&D, centres of research, motivation of young researchers, education of teachers etc. I am not Finnish and I am far from government’s influence into economy but after reading this kind of texts I am strongly pro welfare state

The_Orlonater August 31, 2010 at 10:41 am

Even when you have surpluses of people without any job market skills, they’re still considered to be “educated.” And secondly, this article wasn’t an attack on all of Finland’s public policies. You can’t simply conclude that since the state dumps money into education, that should necessarily produce successful corporations, in fact there are other factors.

Juraj September 17, 2010 at 6:02 am

And why? Because of government’s support for education, R&D, centres of research, motivation of young researchers, education of teachers etc

Read about the Broken window fallacy.

bzik2 August 31, 2010 at 8:54 am

Ah, sorry. The author is Finnish. But his blog is in Swedish. No further comments.

L July 22, 2011 at 4:16 am

and commenter is american

Steven Farrall August 31, 2010 at 9:10 am

Even if the articale if of doubtful absolute accuracy as regards Finland, you could substitute the UK and especially England, for Finland throughout. And for the Finnish IRS you can substitute anyone of the myriad unaccountable supra-legal UK bureaucracies, especially quangos like the Financial Services Authority.

I have not read it, but didn’t Mises predict this bureaucratic endgame?

Wille August 31, 2010 at 9:14 am

As someone who has Finnish roots (though not a citizen nor resident), I have spent extended time in Finland, and also garnered some professional and business contacts and experience from the country.

I would say that contrary to what the author says, health care, and also education in general is of a very high standard in Finland compared to the rest of Europe: Finnish graduates, at least technology graduates have a far better grounding in theory and practice than their peers in any other countries I have come across.

That being said, I think this has very little to do with the “utopian Social Democratic” politics of the country, and all the more to do with cultural factors and the fact that Finland is a very small and very homogenous country – comparing why things work in a country of 5 million with a country of 300 million is Apples and Oranges. You’d be better served comparing why or why not things work between Finland and similarly northern, rural US states such as New Hampshire or Maine.

J. Murray August 31, 2010 at 12:41 pm

The author didn’t say anything negative about tech graduates. The problem he was saying is that an unnecessarily large amount of resources is being diverted to “teach” subjects that have exactly zero economic value. What is the justification to forcibly divert resources because someone wants to learn how to read the Mesopotamian language?

Mäkinen October 20, 2010 at 7:31 am

Because everyone should be allowed to learn how to read the Mesopotamian language if they wish so, and not because there is “economic value”. Economy should be influenced by Society, not the other way around. Or else you have what’s happening in the US.
Of course you are so brainwashed you don’t see that “learning what they market want” in US or “learning what the State wants” in China is absolutely the same.
Americans praise so much self-interest and personal choices in everything, so why not in Education?

L July 22, 2011 at 4:23 am

I agree with Mäkinen on this point. Learning should happen. Without “frivolous” educational pursuits, we lose important cultural advantages. Also, the study of any subject lends to a differing perspective, diverse critical thinking skills, and that ability to “think outside the box,” which businesses seem to be so keen on, these days.

I will be the first to admit the quality problems in Finnish higher education, however. The politics of higher education tend to lead to these quality problems, and many of the lecturers are sub-par and undermotivated. Some of them aren’t even qualified to teach, but have some or other masters degree. The Finnish polytechnic system, in particular, needs to be reviewed; having a masters degree doesn’t mean you can or should teach.

Also, something in the Finnish culture has led to a less intensive approach to education. Information is learned by memorization, concept mastery comes second, and only if the student is very, very lucky are they expected to apply and practice what they learn. The result of this is a passive, uncreative populace who are shocked when one of their peers demonstrates basic creativity or critical thought. It’s not the emphasis on education that’s failing the Finnish people, it’s the way they’re being educated. A student must, must, must be engaged with the lesson in order to truly understand what they’re being taught, or it won’t stick. Even maths, even engineering, even pure sciences require some level of creativity, or all you get are human textbooks. Fix this by working with Finnish teachers in primary and secondary level institutions, and by hiring real professors for higher education. NOT. RESEARCHERS.

stop hiring researchers. they don’t want to teach, they want to research.

fundamentalist August 31, 2010 at 9:32 am

As far as education goes, Finland sounds like Oklahoma, where I live. OK has about 3.5 million people with about 20 universities and many more vo-tech schools and junior colleges. But the quality of education hasn’t suffered terribly because we import a huge number of students from Texas. OK is among the largest suppliers of graduates with degrees in education in the region. Our #1 export is college graduates.

L July 22, 2011 at 4:25 am

That’s because Texas Tech is sub par and UT has its head up its own butt! :D I wish I had gone to OSU. I would’ve payed the out of state fees.

Finland is looking into “export education,” where Finnish professors would be relocated to foreign cities for a limited time to train, for example, radiographers, medical technicians, IT professionals, and so on, in exchange for money from the hosting institution. Another variety of export education would bring students from abroad to learn in Finland for anywhere from 2 weeks to a year. This is rather dangerous, in my opinion; in theory, the money would be used to fund the Finnish education system. However, how long will it be before Finnish education institutions decide to start charging tuition fees from non-EU foreign students (mostly immigrants and the descendants of immigrants, therefore putting an already disadvantaged group at more of a disadvantage in the Finnish economy)? And then, when they see profit from that, how long before they start charging EU students? And because EU regulations require Finnish institutions to treat EU students exactly as they would Finnish students, that would mean charging Finnish students for their education, too, thus undoing everything previous generations have worked for, regarding public access to higher education.

It’s a scary direction. If you give someone a buck, he wants five.

Paul R. August 31, 2010 at 10:31 am

The amount of debt is really not as catastrophic as this article makes it seem. The retirement system isn’t a full-fledged ponzi yet, but it’ll be a serious problem within decades(though at least we’re doing something; we just cut retirement benefits for future retirees by about 20%).

The amount of PhDs, masters and graduates is indeed ridiculous. I can’t believe how people can’t see how crazy this system is(of course as a student myself, I love to take advantage of it).

Even though we have all of the problems extensive welfare states have, I still think the worst part about Finland(at least it’s the easiest to spot when you live here) is the amount of arbitrary regulation. Smoking and alcohol is heavily taxed, stores can’t be open when they want, the law is insanely complicated so no one wants to take any chances, I can’t bicycle without a helmet, I can’t bicycle drunk even though I’m really good at it and so on.

Jay Lakner August 31, 2010 at 8:36 pm

Sounds exactly like the insane amount of arbitrary regulations we have here in Australia.

newson September 1, 2010 at 12:08 am

drunken, helmetless cyclists are indeed a target in australia.

L July 22, 2011 at 4:33 am

Given that the taxpayer has to pay for stitching this jackass’s head up when he busts it on the taxpayer-funded multiuse path, and that the taxpayer has to pay for the cleaning service to remove his brain matter from aforementioned path, I think the taxpayer has the right to demand these “insanely complicated” laws. They also prevent drunk bicyclists from 1) crashing into the elderly patrons of such paths, and 2) suing the municipality for their own stupid mistakes.

On the welfare system, I believe this is why Finland isn’t too shy about accepting immigrants and refugees into the country. We have to pay taxes, too, which means that the system didn’t pay for our childhoods, but we’ll be paying for our own (and possibly someone else’s) retirement.

Juraj September 17, 2010 at 6:09 am

Smoking and alcohol is heavily taxed, stores can’t be open when they want, the law is insanely complicated so no one wants to take any chances, I can’t bicycle without a helmet, I can’t bicycle drunk even though I’m really good at it and so on.

This is because the government Mafia runs the healthcare and it is them who have to pay for your treatment if you get ran over by a car while cycling drunk or without a helmet – they take your responsibility and freedom away. This is precisely what will happen in USA if they won’t reverse their course – people will be banned from eating hamburgers, forced to exercise etc. Just wait for the Mafia-run or approved monopoly fitness centres.

Connie August 31, 2010 at 11:14 am

Ah Finland!…I remember watching the many stumbling drunk men going down the street….that is my impression of Finland…Helsinki….BUT a wonderful marketplace on the harbor!
Oh, and The discos!..Now there was a sight…beautiful women, I mean amazingly beautiful..and again, fat, drunken men…asking them to dance…and they usually refuse.
~~When you look behind these ‘so-called’ utopias…you see the result…of ‘everyone happy’…

Eric August 31, 2010 at 11:15 am

My guess is that you can afford a lot of welfare state-ism if you don’t have the imperial warfare state to support that the citizen in the US does .

And what about the drug war? Does Finland have one of those too? Do they have a huge prison population for, say, pot smokers?

Tommaso August 31, 2010 at 2:43 pm

I agree. The fact is that in Finland the economic production is “diverted” by the state to health and education. This can be somewhat inefficient from a systemic point of view, but you have the healthcare you need when you need, and you can study if you want. Most of the evidence used by the author is not strong enough: for example, if trade skill workers are rare, and consequentely expensive, this is a good incentive for many people to enter that market, if their aim in life is to be wealthier.

Old Mexican August 31, 2010 at 3:42 pm

Re: Tommaso,

The fact is that in Finland the economic production is “diverted” by the state to health and education. This can be somewhat inefficient from a systemic point of view, but you have the healthcare you need when you need, and you can study if you want.

That is, until you run out of victims to suck dry. Then they WON’T have the healthcare they want and neither the free education.

Markus Stocker August 31, 2010 at 11:18 am

I’m currently living in Finland and I was looking forward to read the article, expecting some interesting arguments. Unfortunately, aside a few points, this article is written to fit an argument which I believe little fits Finland.

Jonathan Baltazar August 31, 2010 at 3:28 pm

I agree. I want to believe it, but I can’t trust an article riddled with so many opinions.

For example, this type of writing really makes it feel unprofessional:

“Third, with higher education so accessible, it lures thousands of people every year to go for a degree, even though they have no business in the world of academia. This produces a great number of bachelors, masters, and PhDs who don’t have any value on the job market because they studied literature, art history, religious studies, or something like that.”

J. Murray August 31, 2010 at 3:46 pm

Probably didn’t occur to you that English is a second language to the author and isn’t fully in-tune with the nuances of grammar structure as you would expect a proficient native speaker.

Jonathan Baltazar August 31, 2010 at 8:37 pm

His English grammar is fine. My problem is with the content. The quote above is an example of several unfounded opinions that are found throughout the essay. In this case, he shows a strong distaste for certain academic fields. The tone makes me wonder how many of the problems mentioned in the essay are exaggerated.

Juraj September 17, 2010 at 6:15 am

The author has indeed an anti-state tone in that article.

However, is it incorrect to say that these occupations are not valued or needed in the market place and therefore the only job these graduates can get is in public sector, perhaps creating even more of the same graduates in perpetuity?

Ted Stein August 31, 2010 at 12:22 pm

I have to be honest. I’d rather have a beer with a highly educated, albeit unemployed, PhD in Philosophy, than a cynical, and fully employed, tax expert.

Matthew Swaringen August 31, 2010 at 1:10 pm

So you advocate theft from others so you can have this friend with a PhD in philosophy? How ridiculous. Is it any wonder that people are cynical when there are so many thieves out there looking to steal their money to spend on their own wants/desires?

Guard August 31, 2010 at 2:03 pm

I’ve noticed quite a few replies like this. Put words in someone’s mouth and then reply to them. This kind of comment has no place on this site.

mpolzkill August 31, 2010 at 2:13 pm

But Guard, I think Matthew nailed the meaning of the snarky comment and provided the deeper meaning of it that is hidden from most people.

Here we have a guy who is pretty clearly stating his preference for tax-feeders over a great friend of the well-informed tax payer.

Matthew Swaringen August 31, 2010 at 5:22 pm

Guard, to say my comment has no place on this site when I was replying to a comment that had nothing to do with the article begs the question, “what comments do have a place on this site?”

Obviously, the site has chosen to have almost all comments of even miniscule relevance to the task, it’s not highly moderated.

Your other contention seems to be that I’m being dishonest “putting words in someone’s mouth” but that isn’t true at all. What I’m doing is inferring from his statement what his principles are. His comment was snarky, my response was equally snarky, but I really do believe what I said about his words.

I admit the point is harsh, but that doesn’t mean it’s false. If you believe in a welfare state, you believe in taking from some people (stealing from them without question) in order to pay others. You can be the nicest person in the world personally but your viewpoint on the state is still all about theft. I’m not saying that person is mean, horrible, etc, but what I am doing is making a value judgment about the position based on the merits of the requirement for coercive violence.

Context is also very important here. If he said he liked philosophers more than tax advisors in a totally different thread or place it would make no sense to say what I did, but he clearly was challenging the author of the article by saying he’s a boring, cynical guy who isn’t nearly as cool as those PhDs that the author says exist in large part due to the state subsidizing their unmarketable degrees.

Old Mexican August 31, 2010 at 4:00 pm

Re: Ted Stein,

I have to be honest as well: I would rather have a beer with a cute girl than a PhD in Philosophy that has tenure. And I would rather listen to a fully employed tax expert that has first-hand information than someone who has romanticized the welfare state to the point of excusing State-driven thievery.

newson September 1, 2010 at 12:12 am

the shout’s on you, ted stein.

HR August 31, 2010 at 3:18 pm

Kaj Grussner is a junior tax adviser who graduated from business school in 2007. He grew up on the island of Aland of which capital city of Mariehamn has 11,123 inhabitants. The main economic activities in Aland are farming and fishing. All this makes him a true expert on global economic and political issues. What a fucking joke……..
http://en-gb.facebook.com/vindician

Old Mexican August 31, 2010 at 3:35 pm

Another Bot?

Seth Martin August 31, 2010 at 3:47 pm

Somehow we have got to get people to see the wisdom in doing for themselves. Those that don’t want to do for themselves must experience some consequence. If you take current trends to their logical end, there is simply no way to survive the path that we have laid for ourselves and fellow Americans. We are becoming overrun by those that don’t care about their own liberty and freedom and therefore, would have others do for them, and what do we do? We oblige them at every turn. There is no way to slow it down, much less stop it. It cannot be fixed within.

Our system is corrupt from the top to the bottom. Our money is based on nothing and therefore can be expanded beyond economic reality to pay off interest groups, unions, corporate fascist who want the government to guarantee their dominance in a “capitalist” marketplace, even wage unlimited war. The whole shabby thing has become immoral and must go.

It is time for a Constitutional Convention to clarify the boundaries of our founding and restore our country to the once free place where man could rise as high and go as far as his work ethic would allow him. The Nanny State is robbing us of great achievement and the liberty it takes to produce that achievement. All men were created equal….NOT…. All men are equal.

J. Murray August 31, 2010 at 3:51 pm

Oh, it’s easy to stop it. For one person to be taken care of, someone else has to do the work. If everyone decides to wait to be cared for, there won’t be anyone left to be the caretaker.

Eric August 31, 2010 at 6:22 pm

I doubt we’ll see a Constitutional Convention since that would require state governments to all decide that they want to change something which state politicians have little incentive to change. It reminds me of my 1960′s youth when the catch phrase was “wait until the revolution”.

Nobody I know is starving – the worst case I personally know is a guy who has been on unemployment for a few years who is just now trying to recover from 2 knee replacements – while he struggles to lose some of his 400 pounds.

Clearly men were NOT created equal. Some have talent, some with wealth from their parents. Others have the will power to keep in shape. And although we’re in a relatively severe slowdown, I still find too many late model vehicles clogging up the freeways – with many young drivers. It’s not like people have gone back to walking or riding horses. It’ll have to get a lot worse before anything “revolutionary” happens.

As Milton Friedman liked to say, there’s a lot of ruin in a nation. I think it’ll take a lot more ruin to finally see any changes.

mpolzkill August 31, 2010 at 6:25 pm

I think that was Adam Smith who said that, Eric, maybe Friedman appropriated it.

Eric August 31, 2010 at 9:36 pm

Yes, I was going to say that Friedman liked to quote someone, but couldn’t remember who it was. So I took some poetic license :)

Finn August 31, 2010 at 5:04 pm

While I agree with the theme of the article in principle regarding the sustainability of the Finnish welfare system, I can’t help but note that the actual argumentation used is for the most part a load of nonsense written by someone with little understanding of the Finnish system beyond basic populistic views and simple anecdotal examples. Further, the article is so loaded with personal opinions that it loses all credibility in presenting serious arguments.

Without getting into a lot of detail, just picking a few points that really annoyed me:

“Even during the 15 years prior to the collapse of 2008, a period referred to as one of continual economic growth, the national debt was not paid off. In 1994, the Finnish national debt was 51.7 billion euros. In 2007, it rose to €56.1 billion. At the end of 2009, the debt shot up to €64.3 billion, and at the end of June 2010, it rose to €69.8 billion”

Seriously, someone who’s supposedly graduated with some type of economic degree uses these absolute numbers as an argument? Sufficient to say that during the period of 1994-2007 that the author uses, the government debt reduced from 58.5% of GDP to 31.2% of GDP. Even assuming that the “estimated” EUR 85bn of government debt at end of 2010 (unsurprisingly an unsourced estimate) would be realised, it would still be lower as a percentage of forecast GDP than the authors starting year of 1994. By the way, this level is lower than any of the G7 for instance…

“the healthcare system is bad even by the standards of universal healthcare”

While I would never call the Finnish healthcare system efficient, it actually does provide universal healthcare of relatively high quality at a relatively speaking low percentage of GDP. Obviously the system could be a lot more efficient and better run, but to say that it is bad by standards of universal healtcare simply isn’t true.

“Finland has some of the best private hospitals in the world, but because of our universal healthcare, very few Finnish citizens ever get to benefit from them.”
“The healthcare system is severely inefficient and costly, and stands in the way of normal people’s access to the truly great medical care provided by the private sector.”

Not quite sure how the universal healthcare keeps people from benefiting from the small number of private hospitals in Finland? Anyway, one needs to be very careful describing the Finnish private hospitals as best in the world. Yes, the quality of the private hospitals in Finland is high, but they operate only in relatively narrow fields of medicine. Apart from some specific fields (where the volume is sufficient for the private hospitals to get involved), the private hospitals do not provide specialist care. As an example, if you have an eye or ear problem beyond some standard issues, what will the private hospital do? They will send you to be diagnosed / treated at the public university hospitals where the expertise is…

Well, I can’t be bothered to disect more of the silly argumentation, but I leave you with a few gems that made me spill my coffee on the keyboard:

“As a tax consultant, I am frequently engaged in legal battles with the tax authorities, representing my clients and trying to protect their rights.”

I sincerely hope that things aren’t this bad at KPMG Finland, and their clients are still getting represented by competent people rather than naive fresh graduates.

“This produces a great number of bachelors, masters, and PhDs who don’t have any value on the job market because they studied literature, art history, religious studies, or something like that. In many cases, they didn’t choose their major because they actually thought it would give them a job; they chose it because it seemed fun or interesting, or it was easier to get into than law school or medical school.”

This was the funniest bit to me, it truly is shocking that people would study something that they find interesting rather than study something they have no interest in but while get them a job, because reluctantly studying something you don’t like will help build the quality and expertise in that field. I’m pretty sure that a well trained art history graduate with passion for their field is worth more also in the job market than a dime a dozen econ graduate… While I agree with the number of universities and their locations being ridiculous in Finland, surely the problem is overall volume and lack of quality than the specific “worthless” areas they study in? The comment did however help strengthen my stereotypical view of tax “experts”.

Good topic, good underlying theme, horrible article.

Old Mexican August 31, 2010 at 5:16 pm

Re: Finn,

Further, the article is so loaded with personal opinions that it loses all credibility in presenting serious arguments[...]

[...]While I would never call the Finnish healthcare system efficient, it actually does provide universal healthcare of relatively high quality at a relatively speaking low percentage of GDP.

Your opinion, no?

What’s this obsession with GDP, anyway? It is based on bad economics, first of all. It is quite useless as a metric of economic performance, second of all.

Finn August 31, 2010 at 5:24 pm

Actually not my personal opinion. What I meant by relatively high quality was that while the Finnish public system might not provide the best care in the world, relative to other universal health care systems, the care is of high quality (by all available measures which admittedly are limited) and delivered at a relatively (to the same other universal health care systems) low cost…

I do however agree with you on the validity of GDP as a measurement, but with the lack of any really good measurements across countries, it has to do as a proxy. Ultimately the point wasn’t really to argue about whether the Finnish system is a fraction more expensive or cheaper than e.g. the Swedish or UK systems, just to point out that saying that the Finnish healthcare system is bad even by standards of universal healthcare simply isn’t true…

J. Murray August 31, 2010 at 6:40 pm

It depends on what you compare it to and if you’re using the incorrect WHO metrics on things like life expectancy (it doesn’t adjust for accidents, murders, suicide, and other non-medical system factors), infant mortality (this is not calculated uniformly in each nation, giving an illusion of doing well or poorly), medical spending (the USA has highly inflated spending levels due to a large volume of international travelers and little overseas visits by our own citizens), and many other statistics that are thrown around in purely raw data form without any serious attempts to analyze it.

The problem is that no one has done any kind of serious or proper study. All we have is inconsistent data, information that improperly includes extraneous factors, and outright political manipulations. The last major effort of ranking health care systems was done by the WHO in 1999. Their “report” was so thoroughly discredited that they haven’t even tried doing it again out of sheer embarrassment of the final product. There is plenty out there on how laughably bad the WHO report is (which is what most nations still base the quality ranking around), but here is the summary:

- The report is weighted at 67% on how heavily socialized the system is. The more socialization, the better the ranking.
- The remaining 33% is results driven.
- A major driving force was “fairness” of the system. Nations with bad medical systems in the results category that uniformly delivered bad results to every member of society was ranked higher than nations with overall vastly superior results for all members of the population but was not equal in quality for all members of the nation was ranked poorly. For example, the United States has universally superior cancer survival rates than any other nation on Earth yet we were ranked poorly because blacks had survival rates that were 80% as good as whites even though the black survival rates were some 2-5% superior to the European averages (only Sweden was able to match the results).
- The WHO punished a health system if the patient paid the hospital or medical provider directly and gave bonus points if the medical payments were extracted as taxes. This was generated by a $3,000 “out of pocket” statistic. By the nature of the US medical system, for example, half of our expenditures are out of pocket and our private spending is a few dollars above the $3,000 level (our government spends $15,000 per patient, but that’s a different story). Universal care nations, even though some actually spend more than the private US citizen does, was ranked better as the money wasn’t spent by the patient directly but taxed out of pocket.
- The WHO gave negative marks for the “uninsured”. I don’t have what the WHO considers an insurance policy because I self-insure by putting premiums into a savings account. As it stands, there isn’t a medical emergency I can run across that I can’t afford. But the WHO said that because I didn’t have what THEY considered insurance that I was at risk for lower quality of life or death. All because I simply decided that what passes for “insurance” in this nation is a losing proposition for a health adult. Most people considered high earners in this country are in the same position as I am. Why waste money on “insurance” when it’s mainly there to fund people who show up at hospitals with a runny nose?
- The results statistic, which is considered fairly unimportant by the WHO due to it’s meager 33% weight, shows a wildly different outcome than the overall rating.

Ultimately, you accuse the author of anecdotal evidence but only counter it with an even weaker argument – you simply dictating that your opinion is true. And it is an opinion as the only “evidence” you’ve thus provided is driven purely by simply stating it that it is fact.

Finn August 31, 2010 at 7:35 pm

I think you missed my point completely. It was never my intention to argue the merits of the Finnish health care system, but to point out that the author’s assertation of the Finnish system being bad even by universal health care standards is his opinion rather than anything based on any fact. Furthermore, all the available measures (flawed as they may be), point to the opposite. Then I don’t know why you spend all that time discrediting a WHO study that no one has referenced, but interesting anyway. Actually I think you helped prove my point about the article, irrespective of my view being an opinion or not, the author’s certainly is an opinion, not a fact.

Finnish August 31, 2010 at 8:20 pm

While not perfect, I found the part about universities having educations that are worth NOTHING in the job market, completely true!

Not sure what finn is saying here, he thinks that you should study something you want that isn’t economically viable? That is called a hobby then. And sure you can study it if you think you can make it work… Problem is most people take these educations with the reasoning “my friends are there, it sounds cool” etc. rather than what makes economic sense.

That said, US probably has just as absurd educations, last time I heard they had even more people whose college education isn’t worth a dime there. Then again, US is really more socialist than most people believe, govt spending doubled in 10 years. That is radical.

And I just checked US spending is over 25K US dollars per capita this year and really increasing everyear (even though deficits are pictured to be lower every year -> not going to happen).

Link for that stat http://www.usgovernmentspending.com/per_capita I hope I interpreter it right… I am not sure what the “plus deficit means”.

I really would like to know how much finland’s government spends per capita. If someone finds some forms for this year, would be great. Remember to take the taken debt into account as well… Anyway my point is; I don’t think US is that far from the overly socialistic levels of finland currently… Factor in the inflation and the numbers are looking pretty similar probably.

Hmm I actually found such a stat, but it may not be accurate. The number is actually lower than united states at 18.5K US dollars, but I am not sure if it includes all of the taxes aka state/church/regional. But it does include some “obligatory” spending other than government. The per capita number was also counted as population. For the spending number I use wolfram alpha which gives 97 bil per year (compared to government budget which is only around 60 billion).

J. Murray September 1, 2010 at 5:42 am

That’s why the Mises Institute exists. Most of us here are disgusted by the hypocritical behavior in our nation. We have a population that unashamedly calls itself the land of the free, politicians constantly talking about expanding democracy over the planet, yet our lives are controlled heavily by the State itself. Our government consumes some 27% of the entire economy and virtually owns the entire thing. No one can do anything in this nation without asking for government position. Want to start a business? Wait 47 days (average) while asking for government permission. Want to get married? Pay the dowery to the State and ask permission. Want to access the Internet? Pay the State your access fee and follow the State’s rules of conduct while there.

The one thing the American Government does better than any other socialistic body is fooled the population into thinking it’s not socialist.

Dave September 1, 2010 at 1:10 am

Get this: In Finland, all income tax returns are public information. I guess it’s so you can make sure your neighbors and coworkers are paying their “fair share”.

MikkoAN1 September 1, 2010 at 4:43 am

“heavily subsidized student loans”

Nitpicking, but they aren’t strictly speaking subsidised but guaranteed, and the Gov’t money spent on this really isn’t very much.

“people are educated and civilized. Few things could be further from the truth.”

Really? By what measure are Finns uneducated and uncivilised? Giving the benefit of the doubt, this may just be the author expressing himself poorly.

“Second, the multitude of universities and polytechnics brings the overall level of education down, because such a small population can’t possibly maintain a high standard of education in so many different places. There simply aren’t enough competent people to go around, not to mention that many of the universities and polytechnics are located in less than desirable places.”

This is just stupid! Taught knowledge isn’t finite at this level and there are plenty of academics capable of teaching at undergrad and Master’s levels to go around. The author himself disparages the number of people with academic degrees and then says that there can’t be enough of them – how could there not be at the rate they are being educated?!

“Only very few of the Finnish universities can lay claim to a really high standard of education. Of course, the economics education is subpar across the board.”

Really? I realise that economists like to portray their profession as on par with sciences, but it is in fact a social science and as such just a collection of theories. In other words; if the budding economists are taught a good selection of theories and the history of trends, actions and reactions etc. in this field, it can’t really be subpar; the others don’t know any better! As we all know, economists were created to give meteorologists better PR.

“Third, with higher education so accessible, it lures thousands of people every year to go for a degree, even though they have no business in the world of academia. This produces a great number of bachelors, masters, and PhDs who don’t have any value on the job market because they studied literature, art history, religious studies, or something like that. In many cases, they didn’t choose their major because they actually thought it would give them a job; they chose it because it seemed fun or interesting, or it was easier to get into than law school or medical school.”

Now we’re getting to the crux of the matter; I’m leaving aside the author’s blatant snobbism towards the arts and humanities people (believe or not, there are other reasons for people not going to law or medical schools, like…ummm… not WANTING to do law or medicine), but would point out that even though he may find it difficult to put a price tag on culture and therefore not understand the value of it, does not mean that a society can’t see the value of it. Who would want to live in a world where only financially contributing culture is supported (apart from the author, I suppose)?!

“the healthcare system is bad even by the standards of universal healthcare.”

Is it? I understand it’s not in the top-5 in the world, but pretty close to the top anyway. Out of how many countries? Quite a few…

“This has led to numerous cases where people have been shipped around from one place to another, at taxpayer expense, to accommodate these administrative rules.”

And I suppose if they were kept at the original treatment location the author would accuse the state keeping citizens away from their families… Would the author give some indication on how many patients’ care has been jeopardised by transferring them once they are out of immediate danger to their health?

“One of the most basic laws of society is that the more administrative areas there are within one state, the more bureaucracy it breeds. All these healthcare districts must of course have their own administrations, which in turn have to liaise through the healthcare officials in each municipality of the district, and they all have to coordinate with the administrators of each hospital and health center. And then you have to have healthcare officials, a whole department full of them, at the national level to top things off.”

And this wouldn’t happen in a national system? Isn’t also a basic law of society that the nearer to the citizen the decision is taken, the better it affects them? Ie. aren’t the health care professionals (and even the bureaucrats) on municipal and district level better placed to judge what’s needed in their local area? Is the author seriously suggesting that centralised systems are always more efficient?

“Any country that wants a universal healthcare system should not look to Finland for an example to follow. One of the real tragedies of this fiasco is the fact that Finland has some of the best private hospitals in the world, but because of our universal healthcare, very few Finnish citizens ever get to benefit from them.”

So providing adequate universal healthcare to everyone but also allowing private healthcare to those who want the option to pay more for the deluxe care is not something, say, the Americans would like?

“As a tax consultant, I am frequently engaged in legal battles with the tax authorities, representing my clients and trying to protect their rights. In these fights, I encounter the arrogance, and in some cases the sheer malevolence, of the taxman, completely uncensored. I never cease to be amazed by the ignorance and the callousness of this particular department of the state.”

Taxmen have been despised since they were invented. The taxed don’t want to pay taxes and will lie, cheat and do their utmost not to pay any taxes. Would you rather have the laissez-faire taxmen of Greece? To put simply: it’s a shit job but someone’s got to do it – would you rather efficient people or useless people do it?

“Finland, the maximum marginal income-tax rate for individuals is over 50 percent.”

Might be nice to point out what this includes as taxes as levied in a different manner in different countries; ie. 50% income may or may not include municipal taxes or not, and municipal taxes themselves fund different services in different countries, eg. healthcare. Although that would of course look less unacceptable.

“What has brought the Finnish welfare state close to fiscal calamity is its ever-increasing government spending.”

Nonsense; Finnish Gov’t debt is incredible cheap resulting from the rating agencies’ calculations that Finland is not close to fiscal calamity – quite the opposite, really – mainly because the Gov’t owns so much property. To be truthful, as recent years have proven, the rating agencies aren’t always exactly on top of their work, but luckily Gov’t finances are a lot simpler to assess than the financial products that caused the recent problems.

Conclusion
This article is nothing but rhetoric masquerading as thought-out, facts based reasoning – and as such fails at both.

If the author ideologically disagrees with free education and universal healthcare provided through higher taxation, that’s absolutely fine – It’s just that Finns on the whole seem to be pretty happy with their society…

Not Me September 1, 2010 at 5:54 am

If one can not put a price tag on all those useless (art, sociology etc) degrees, then how do you determine how much the students are subsidised by and how much an art lecturer is paid ? All the great people in history who produced great works of culture did not need university courses to produce their great works. I am more than certain that your famous Finnish artists, writers were not products of your University arts department sausage factory.

MikkoAN1 September 1, 2010 at 10:40 am

Ok, I’ll treat this as a sincere comment at its face value;

By ‘culture’ I (of course) meant something more than just art.

And had I meant only ‘art’, I could point out that art also needs preservation and not just creation. I suspect, though, that on this website art might not deemed worthy of preservation unless someone is willing to do it on their own dime.

What I was getting at, is that it is certainly a viewpoint that Universities should only concern themselves with sciences that can serve the economy directly. History isn’t such a ‘science’ – should history not be studies at Univerisites? Finns, amongst others, think it should, and I believe they are happier for it.

Once the decision is made that not only history, but all sorts of arts and humanities subjects benefit the culture, society and nation, then it seems to be pretty straightforward to come up with academics’ payplans.
I suspect that You, sir, are a person who might well know the price of everyhing but – alas – the value of nothing.

Juraj September 17, 2010 at 6:37 am

I could point out that art also needs preservation and not just creation.

Says who? Preservation depends on whether people value something enough or not to preserve it? Preservation of anything per se is nonsense.

I suspect, though, that on this website art might not deemed worthy of preservation unless someone is willing to do it on their own dime.

Art is a service just like any other. People vary in how much they value it. I love music, for example, so I pay for it more than I pay for seeing abstract paintings. If no one values music, it will disappear.

Once the decision is made that not only history…

By the bureaucrat, state, of course, and not through the market place.

I despise the stupid mindless TV shows we’re fed with, pop music etc. but I would never stooped so low as to dictate to others that my passion has the moral high ground and therefore deserves subsidies.

MikkoAN1 September 20, 2010 at 9:19 am

“”I could point out that art also needs preservation and not just creation.”

“Says who? Preservation depends on whether people value something enough or not to preserve it? Preservation of anything per se is nonsense.”

This was in response to the suggestion that artists of old didn’t need academic education to produce their art (which itself was mere hair-splitting; historically artists certainly did apprenticeships etc which universities etc have now replaced, but that’s beside the point) and I only pointed out that old things deemed worth preserving also need expertise to preserve them.

As to your claim that preservation in itself is nonsense I can only disagree with puzzlement; to me it is clear that simply because something has fallen out of use and/or fashion, it still might be a good idea to preserve a sample for later generations so that they can learn what was before them, take inspiration and maybe even learn not to repeat the old mistakes. I think that museums and archives should continue to preserve eg. all historical religious texts because.

But again, I suspect that without a price tag You’re not interested.

“Art is a service just like any other. People vary in how much they value it. I love music, for example, so I pay for it more than I pay for seeing abstract paintings. If no one values music, it will disappear.
[…]
“I despise the stupid mindless TV shows we’re fed with, pop music etc.”

Might that not have anything to do with culture being driven by the bottom line, ie. reducing culture to the lowest common denominator for maximising your audience and therefore the profit?

“By the bureaucrat, state,”

Hath not a bureaucrat eyes; hath not a bureaucrat hands, organs, dimensions, senses, affections, passions; fed with the same food, hurt with the same weapons, subject to the same diseases, healed by the same means, warmed and cooled by the same winter and summer that a You are? If you prick them, do they not bleed? If you tickle them, do they not laugh? If you poison them, do we not die?
(with apologies…)

Once you class bureaucrats as the enemy of the people in order to justify smaller state, rationality ends. Luckily this attitude hasn’t and isn’t taking hold in the Nordic nations who seem to be a pretty happy and healthy bunch.

Maija Haavisto September 1, 2010 at 7:04 am

Finland is not a part of Scandinavia, no matter how many people claim it is.

“If the author ideologically disagrees with free education and universal healthcare provided through higher taxation, that’s absolutely fine – It’s just that Finns on the whole seem to be pretty happy with their society…” Yeah, most Finns may be pretty happy with this shit, because most Finns are deluded enough to believe the mantras about the education system and healthcare being excellent, even though they’re rubbish. And don’t even mention human rights, because they only exist on paper.

Me, I couldn’t be happier I’ll get out of this hellhole in less than a week.

MikkoAN1 September 1, 2010 at 10:50 am

“Finland is not a part of Scandinavia, no matter how many people claim it is.”

When discussing society, for all practical purposes, it really is.

“because most Finns are deluded enough to believe the mantras about the education system and healthcare being excellent, even though they’re rubbish. And don’t even mention human rights, because they only exist on paper.”

Perhaps you should give examples of the educational and healhcare systems that are so much better than the Finnish ones to justify calling the Finnish systems rubbish. Now your assertion is only on par with the original author’s drivel.

I suspect that you’ve been failed by these systems, which – regrettably – happens in all systems; people will get incurably sick and we will all die some day and not everyone is academically minded. (And as to your claims about human rights, I ‘m guessing you’ve not been coping with authorities either.)

“Me, I couldn’t be happier I’ll get out of this hellhole in less than a week.”

Samaa paskaa se kaikkialla on; Siperia kylla opettaa!

Butterfly September 1, 2010 at 7:14 am

“Because of the way the municipal healthcare system is set up, a sick individual had to be driven more than five hundred miles to a different hospital”

The example you had might be a real story but this is just ONE case. Besides, no one that is THAT ill would be driven out of a hospital. This woman has eather been well enough to travel by herself and get more treatment at home or she has been provided a drive by a helicopter or an ambulance ride. This is the same as if a Finn gets ill aborad, you get the emergency treatment on scene/ in that country but as soon as you are wll enough to travel home you will be shipped off.

Beisdes, did yo ever hear about e.g. cancer children being provided care in Helsinki, no matter where they are from in Finland? And there is a home for the family to stay in during the treatment period. And when and if they need to move the person getting treated it is always by ambulance.

Finnish September 1, 2010 at 7:34 am

I have to correct few points:

You can put a price tag on a culture, and it really is terrible how in finland we subsidize culture that just isn’t worth it. Pretty much every corporation / whatever that deals with culture is govt subsidized. This goes from instrument teachers all the way to ballet and opera performers to athlete teachers / just pros etc. (Of course only “approved by governmnet” art is subsidized. So this creates shortage in “alternate arts” as well, needless to say, to compete private teachers are doing it off the table).

The results = Not enough manufacturing, because obviously the “service sector” part sucks the economy dry. Whoever thought that any “sector”(subsidized) type of economy is efficient is quiet stupid. Especially subsidized service sector economy is bad, because you can’t export services. So this just creates shortages of “real stuff”. We have been pretty good off, but things are getting worse and worse slowly, as many are coming to the “china realization”, which means no more manufacturing and huge amounts of debt as everything depends on the manufactured goods.

MG September 1, 2010 at 11:25 am

Thank you for an interesting article. It might add some lines of research.

For example, far from the problem being too many Colleges, the US has a third more proportionate to population and twice as many if one includes higher vocational schools. Despite alarmist news articles, the costs if one shops around are low to nothing. Perhaps a better argument is that Finland is actually underserved by the absence of more private schools, and the costs are higher than they should be?

It certainly seems Finland could do with a massive tax rate cut and review of how tax cases are handled at the least.

herviews September 1, 2010 at 12:19 pm

The problems has more to do with the politicians and the bureaucracies they breed than the “government welfare” itself. This type of system calls for a scientific approach to management instead of a political or bureaucratic approach.

Ohhh Henry September 1, 2010 at 12:56 pm

Next year, we Finns go to the polling stations to elect a new parliament. I hope the outcome of the election will reflect this important and new-found realization.

If you spend any time studying the internal workings of political parties and the way that elections are planned, executed and counted, you will find that there is virtually no chance of any positive change resulting from your next election. To put it simply, the statists have a million tricks and if those tricks are ever stymied, they will invent a million more.

One of the reasons for this is that the people who are preyed upon by government, by definition, have real jobs and real responsibilities. They are too busy to sit around thinking of how to organize politically and win an election. But the government parasites have literally nothing better to do than to sit around all day making schemes to steal the wealth of the gainfully employed.If by some chance you ever succeed in electing a government which campaigned on a platform of fiscal responsibility, you will very quickly have the wool pulled from your eyes. The leaders of that party will be revealed as liars and hypocrites, or you will find that they are the dupes and puppets of back-room political manipulators. Or even if they are sincerely devoted to fiscal reform, they will be neutralized if not destroyed by political, legal and even terroristic action taken by the government parasites who cannot imagine how they would make a living in the real world.

And what if your fiscally responsible (sounding) candidates are not elected? Then your vote for them, your participation in the system, will be interpreted by the statists as a concession to the principle that “winner takes all”. They will say, “If you had won you would have fired us from our government jobs, but we won so please give us your paycheck.”

I can’t say what is the best method for you to peacefully remove this unbearable weight of government parasites from your back, but I’m pretty sure that trying to vote the scoundrels out of office will have no effect. After all, voting is how you got into this mess.

Zorg September 1, 2010 at 1:11 pm

I find it extremely difficult to unravel the arguments concerning
which welfare state is better/worse at a particular thing and why
based on %GDP and debt, and how “happy” people are.

What we really need is a scientific way to test the actual difference
between a state-run system and a free one. So I propose that one
country in the world be designated as a free country where people
can be actually free to spend their money as they please on
education and health care. Then we can compare results directly.

Oops! Fatal flaw. People aren’t allowed to be free. Anywhere.

Never mind. : (

Nicholas September 1, 2010 at 3:39 pm

This has probably already been said, but discussing education as a right as a practical matter is missing the point a bit:
If someone views education as a right, it is not because education provides job skills. The education is viewed as inherently good for its own sake. That’s where majors like literature and philosophy come from. They don’t fail at job training anymore than my car fails at flying, they just aren’t designed for that purpose.

michael September 1, 2010 at 3:50 pm

In 2008 Finland had a GDP of $272,700,000,000, with over a third of it going to the export trade. This was divided between a population of only 5,250,000. So the average was $52,000 per person– man, woman and child. (sources readily available on the web)

Compare that with any other nation on earth. Is Finland socialist? Maybe, maybe not. One thing you can say, they sure know how to produce and sell stuff to the world.

In 2009 the economy crashed, along with most of the nations of Europe. With an export-led economy you need trading partners. When they’re broke, you’re broke too.

The author says “The increasing deficits and national debts are not the result of a shortage of tax revenues.” But obviously they are a result of precisely that. In 2009, GNP fell by an unprecedented 7.8%. Tax revenues haven’t been curtailed? I think they have.
http://stat.fi/ajk/tiedotteet/2010/tiedote_003_2010-03-01_en.html

Finland will pull out of its tailspin as soon as its customers start buying again. It knows how to produce more competitively then just about any nation anywhere.

Vanmind September 2, 2010 at 10:04 am

“In many cases, they didn’t choose their major because they actually thought it would give them a job; they chose it because it seemed fun or interesting…”

Ha, as if there is any other valid reason to study something other than it being fun/interesting. Anyone who makes a decision about their education based on possible future income is already a failure in life.

Oh, wait, I forgot about all those people studying economics. Yeah, big remuneration potential there — for politically-connected Keynesians, anyway. Ha. Maybe the thousands of people who come to mises.org to learn legitimate economic theory aren’t actually interested or think it’s fun but rather believe that it’ll get them a good-paying job. Ha, again.

Vanmind September 2, 2010 at 10:07 am

New motto: “The Mises Academy: courses for those who want a good income — not.”

Joel September 3, 2010 at 4:43 pm

A lot of the comments people are making on education are misguided.
The point is not that particular fields of study, e.g. literature, are useless *as a whole.* The issue, as always, is not the value of the whole but at the margin. The issue is that there is over-investment in particular fields (and thus underinvestment elsewhere). Students and prospective students are necessarily making uneconomical choices because the economics of it (the cost) does not factor into their decision. People would have made different choices if they had to consider (i.e., pay) the cost. Resources (including both the redirected funds and the students’ time) are necessarily being malinvested.

Torsti Forsman April 1, 2011 at 3:01 am

I read Your excelent article about the Finnish wellfare state. I could not agree more with You.
I am a citizen of this wellfare state , profession an entrepenuer for 30 years.
I hope I will not bore You with my numerous examples of the best country in the world .
Therefore I try to be a breach as possible.

I had investmets in USA. According to the standing law each country could withdraw full tax of capital income, and refund this after the tax declaration been filed according to mutual tax agreement.
I filed in the tax declaration within the same week. I received a check from IRS within 4 weeks.
I asked about the refund from our tax office after 8 months. After 2 years I received an answer that my reclaim has not yet been considerd. And it never was.

I have a document where our tax officials do ground their tax decision on secret facts.
Official decision in black and white.

As an entrepenuer I have been strugglin with public procurements, without any result however.
8 years and one ECJ case and one reasoned opinion and three formal notices , has been the result, without any practical achievments.
It all started when we were obliged to send our tenders to our competitor, regarding government procurements. Common practice in Finland.
If You read the case C194/04 , You will notice that the government of Finland actually commited perjury in front of ECJ.

The European Central Bank did notice in their suvey , in 2003 that the effeciency of the public sector of Finland was second to worst among all OECD countries.

Since then has the productivity in our public sector decreased further with 10%

All this has increased my interest in to the stability of this wellfare state. The more I study the more I am astonished.

We are very eager to give an impression that the debt level an deficit is low in Finland, I do not agree. Finland received an extemption in to the rules of ESA95 . We can calculate our private social security funds as a part of the public sector. Without this extemption we could not achieve the stability pact criterias. This has led to an interesting statistical end result . Between years 2001 and 2008 we filed an surplus on 41,6 billions euros together, according the Eurostat statistics.
However our national debt did increase during these years from 59,1 billions to 63 billions.

Finland is hidding debt and manupulating statistics,there is no doubt about this.

Here is ashort example of the common procedure.

Municipal Ikaalinen had difficulties to close the books of 2009. This municipal sold its drain net work to Ikaalisten Vesi Oy, a water and waste water corporation owned by municipal Ikaalinen .
Ikaalisten vesi Oy did not have the sum of 1,25 million so it had to borrow this from the Municiplas Funding center , Kuntarhoitus which is owned by the municiplas.

Lets now assume that this particular sum is the which is paid as pension insurance to KeVa, which is the municipal pension fund. Now as the surplus of pension funds is calculated in the national account as surplus and subtracted from government deficit, this sum is now subtracted from the government deficit. Orginally 1 million deficit has now turned to become 1 million surplus.
The debt for the water treatment corporation is not calculated as apart of the national debt.
But when KeVa , this pension fund , buyes a bond from Kuntarahoitus , this funding organization, it will not be calculated as a part of the nationa debt , it will be subtracted. All debt from pension funds to public bodies are subtracted from the national debt as a part of internal debt.
Ikaalisten municipal has practically 1 million les funds, and has not increased investments .
In´the national registers this will lead to a situationwhere the national debt is decreased and the surplus increased.
Helsinki city did this same procedure in 2010 with a sum of 950 millions.
All together it is estimated that municipals have reorganized their assets with a sum of 20 billions.

Our wellfare state does not exist. we only pretend to be a wellfare state with lended money.

Best regards Torsti Forsman
P.S
I have endless examles equal to this regarding national accounts.

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