Mechanical

The Dangers of a Welfare State

While many of us envy our European neighbors who flirt with socialism, little Finland can give us a lesson of the dangers of trying too hard to maintain a welfare state. At the highest incomes, income taxes are a staggering 45%. The government, trying to educate a formerly uneducated population, has made a university education free for Finnish citizens. The CIA World Factbook entry on Finland lists "N/A" for "percentage of Finns under the poverty line" due to large payouts to the unemployed. And don't forget about their socialized health care, subsidized day care, extended paid maternity leave, generous pensions and many other payouts.

The list goes on an on about how much money the Finnish government has been spending. And the price they pay for this? The World Economic Forum, for the past four out of five years, has listed them as the most competitive nation in the world (the US comes in second place). Of course, we know that you can't have a healthy economy and protect the environment, right? Seems the Finns rank highest in the World Economic Forum's Environmental Index, too. The US comes in a dismal 51st place.

If you check the CIA World Factbook (linked above) you also find out they have a higher life expectancy than the USA, half the infant mortality rate and, to add insult to injury, the Christian Science Monitor reports that Finland has been running a budget surplus for ten years.

After doing a bit of reading, one thing does stand out. It seems the Finnish people are happy with their system and work hard to support it. Here in the US, we worship the dollar and I'm sure there are plenty of nay-sayers who will happily explain why the Finnish model could never, ever work here. Unfortunately, I think they would be right that the Finnish model can't work here. You'd have to convince enough people to actually care enough about their fellow citizens to be willing to help them out and I don't think that's going to happen any time soon. And, you know, we have to have enough money to kill the brown people, too.

Really, in reading up about Finland, it sounds too good to be true. Any readers familiar with Finland able to provide a counterpoint?
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The Swedish system is pretty comparable and I've always thought it a great way to do things. Of course, since the rich are taxed as much as everyone else, many have moved to Switzerland which has hurt their economy.
The income taxes are a 'staggering' 45%? We pay close to 35% some years, and we do NOT make THAT much money. We would be better off if we didn't have to pay over a third of our income back to the government.

And we don't even have state and local income tax here.
My grandfather is from Finland, and my best friend just returned from living there for 8 years, and so I can verify that these CIA "facts" about Finland are pretty spot on! They are also one of the most technologically advanced countries in the world as well. They definitely know how to strike a great balance with democratic socialism. And I agree, their system would not work here in the states - at least not on a federal basis - maybe more on line with a state-by-state type - but then again, Oregon tries too hard and fails (from an economic sense).
Oregon was hit hard by the collapse of the timber industry and later by the collapse of the high-tech industry. By concentrating on a few core industries, we are beholden to the health of those industries. However, diversifying our economy will take time and money. We'd have to spend a lot more than we currently do on education to ensure that our work force is attractive to other industries. It seems that when we do have the extra money to make this work, our congressman in Salem aren't too interested in long-term investment in the people.
If our taxes were raised to 45%, I'm sure that most of it will go towards military spending and pork projects for wealthy corporations. Meanwhile, the wealthiest 5% of the population will still get tax write-offs made just for them.
Back in the 40s and 50s and 60s, our highest marginal tax rates were much much higher than 45%. We used that money in part to create a large middle class.
"they have a higher life expectancy than the USA"

- I'm betting that would be due to lifestyle, not a superior medical system. Now, excuse me while I shove this Big Mac down my throat.

"Seems the Finns rank highest in the World Economic Forum's Environmental Index, too. The US comes in a dismal 51st place."

- I agree we could do better here, but it's not clear to me from that link how it takes into consideration a population of 5.2 million versus a population of 300 million.

"You'd have to convince enough people to actually care enough about their fellow citizens to be willing to help them out and I don't think that's going to happen any time soon. And, you know, we have to have enough money to kill the brown people, too."

- Finland has no illegal immigration issues to speak of afaik. As for the implication of racism you make here, Finland is effectively one language, one people one culture. Considering how the rest of Western Europe reacts when Poles and Turks start pouring in to "steal their jobs", it's really just the same old Europe, different day. I don't believe Finland would be any different if it suddenly had to stare this issue in the face.
I do feel that racism is part of the problem over here. I still hear people bitching about those "ragheads" over in the middle east. Were Iraqis white and speaking English in an accent we considered "charming", I suspect that the war would have even less support than it does today.

And your comments about Finland's one language, people, and culture are reminiscent of the comments people make about The Netherlands when they explain why their "harm reduction" program in relation to illicit drugs "would never work over here". The problem is, we just assume that it won't so we don't even try.

A lot of what this is about comes down to the four cornerstones of economics: land, labor, capital and entrepreneurship. Land is fixed, so that's not something we can play with too much. Entrepreneurship generally requires an educated work force, so that goes back to labor. Capital deals with buildings, infrastructure, machinery and so on. However, all of those things are built and maintained by labor. So really the only way to try and effectively make the most of your economy is to have the best labor force suitable for the conditions in your country (both current and desired). That means they have to be educated and healthy. Finland has spent decades making sure this is the case and it's paying off handsomely.

There are some downsides. Nokia accounts for 4% of their GDP and a much higher percentage of their R&D and exports. If Nokia has financial problems, it will have a disproportionately large effect on the Finnish economy. Thus, the government needs to work hard to diversify their economy as much as possible. Of course, they've done a lot of work on this, so my little post is hardly news to them.
I've been to Finland, and have been fascinated with it for a long time. I think homogeneity of population is definitely a significant advantage for them in some respects - people tend to be much more into shared community responsibility when the community is all pretty much like them. But that's neither here no there. Yeah, Finns seem to have things pretty good in terms of social support, health care, economy, and so on. Personally I don't think I'd trade that for the kind of diversity & weirdness we have over here - so many more kinds of food & music & art & subcultures & on & on. I hope that's not an either-or choice. You can have socialism+diversity, but perhaps there is some sort of creative tension between the two. And many countries that have probably struck a much better balance than today's USA.
I'd suggest getting a subscription to The Economist (or, I can give you my login info for their website... shhh...).

Rather balanced and fair reporting... then again, I am an economic moderate.

They've been doing some interesting reporting lately on the aging of Europe and what that means to their welfare states. As far as I recall, The Economist paints Finland pretty favorably.
The Economist is also very much pro-free market. It does taint their reporting though I will admit that their reporting is better than most.
(Anonymous)
But is it right to give away your hard earned money to people who are unemployed? I can understand that it is ok in case of a calamity to provide help. But in normal circumstances, "No Sir! Earn your own bread". I believe the work of a government should be:
1) Protecting sovereignity
2) Stop correction
3) Implement policies for development and creating more job opportunities (so that people who want to work can do that)

Any other activity from government, I will consider intrusion into my liberty.
Having a safety net for the unemployed goes both ways. You help them and, if you're down, they help you. Remember, part of the social contract is general agreements about how we should work together to survive. There is nothing immoral about people in a democracy deciding to help one another. If you disagree with helping your fellow human beings, remember that the vote is important and if the majority of people vote to have a bit of compassion, too bad.

One idle thought I should mention about those folks who claim homeless people are just lazy and should get jobs (you didn't say that, but it's a common refrain): let's assume they all snap out of it and want a job. How do they go about it?

Many years ago I was homeless. And you know what? Employers didn't want to hire me when I didn't have an address. They didn't like that I left the phone number blank. I had no washer and dryer so even basic sanitation was very, very difficult (I lived near a beach with public showers and would take showers with my clothes on). Given these problems and the fact that there tend to be relatively few public services available to help homeless people, how precisely is one supposed to get a job? Do you have any suggestions?

I was damned lucky to get out my situation and were it not for a very fortuitous series of events, I could have been homeless for a long, long time.

(It's also worth noting that until you've eaten your first meal from a trash can like I have, you have no idea how soul-destroying it can be.)
As someone else mentioned, Finland doesn't have problems with illegal immigration. Contrary to statements to the...um...contrary, it does have a significant ethnic minority—about 6% of the population speaks Swedish natively. (Linus Torvalds is part of that group.) Nor is it as much of a target as the U.S.—I haven't been able to find an Internet source describing a terrorist attack on Finland, and it hasn't been involved in any military engagements since World War II. (Granted, it doesn't have the sort of foreign policy we do, but I suspect that our size would attract quite a bit of attention even if we made a policy of trying to keep everyone happy.)

Finland has military conscription—mandatory eight months of duty for 18-year-old males. Its per capita income is about $10,000 less than the U.S. Oh, and a quarter of all households own a gun, which most liberals would object to. (I'm not sure if you would.)

Don't get me wrong—it sounds like a nice place. Just not a perfect snowy paradise.
Unlike many other liberals, I don't have a problem with gun ownership. Despite the courts generally issuing strict interpretations of the Second Amendment (long story which I won't go into right now), I think the the intent of our founding fathers was to allow everyone the right to keep and bear arms. Thus, regardless of whether or not we support it, I think we should respect the Constitution and guarantee this right. If we don't like it, we should change the Constitution, not ignore it.

As for whether or not we would be a constant target because of our size, I'm not convinced this is true. Regardless of whether or not we agree with the views of those who oppose us, they often have clear, very articulate positions about what they perceive as the bad things we have done. And let's face it, we've done a lot of very bad things. Iran exists in the form it does today in large part because of the dictator we supported there. The same can be argued for Iraq. In fact, there are many countries around the world who have people who resent us because of the brutal dictators who rule(d) them with our support. We reap what we sow.
I adore Scandanavian countries and attempted to defect to Denmark.

They thought I was kidding.
Their Santa walks around with 6-8 Big Black men beating up bad kids or kidnapping them to Spain.