Being poor in America is rough. I don’t think it’s because of a lack of government help though. I do believe they get a similar amount to what’s available here in Finland—maybe even more, especially when you consider purchasing power. And that purchasing power doesn’t exist in the Nordic socialist countries due to the constraining effect of high taxation.

Being poor in America is difficult for other reasons. For example, the infrastructure sucks; there’re few alternatives to driving an expensive car. Sure, public transit exists, but it’s sparse. Bicycles used for transit in the US: forget it, almost unheard of.

Here in Europe, poor people can have their apartments and not have to worry about how to get their groceries or how to transport their children to the necessary places. In fact, children can go there by themselves—anytime and anywhere— without having to beg rides with someone. For these reasons, it’s actually more liberating here in the Nordics, despite them actually being ‘poorer’ than their Americans counterparts.

America could achieved these things too. The wealthy economy with its enormous revenues could easily fund a more sensible and modern infrastructure—maybe not overnight, but it’s possible over a decade or so…and assuming it can figure out how to do it right.

No extra taxes would be needed; in fact, raising tax percentages would reduce overall tax revenues, like the case here in the Nordics. For America, it’s simply a matter of changing its priorities—and changing where it currently spends its public funds. It’s not a matter of changing income distribution. That would be a big mistake.

What is your source on that statement about all “Baltimorians” getting a townhouse to live in?

They tore down the last of the high rise projects of Baltimore back in the late 90′s. All the new projects are town/row houses, and quite nice. It’s a shame the neighborhoods are often dangerous and those new houses quickly look like hell in 10 years.

I love it !! can’t wait for the socialists and welfare nuts in this forum to argue against logic.

“What is your source on that statement about all “Baltimorians” getting a townhouse to live in?”

I can tell you they do have bigger living spaces than here. I’ve seen it first hand. And yes, a townhouse are common—probably depends on family size.

The difference though, is that the neighborhoods aren’t so wonderful. Crime is common there. Consider that, in Philadelphia alone, about 300 people are murdered each year. Baltimore has similar figures and so does DC.

That’s an example of America’s ghetto-planning. They’re usually restricted to those areas because they have easy access to public services, like medical care, etc.. In Finland, that whole environment is much cleaner and more integrated…for now.

It’s not a fair comparison though; a disproportionate number of America’s ghetto people are descendants of slaves. They’ve lived separate from European white society for hundreds of years. Can’t change it overnight.

Baltimore =! Helsinki
I’d guess Baltimore isn’t the biggest city with most heated apartment/housing markets in the USA. Other cities in Finland are cheaper.

And no, I don’t imply that poor people should be made to live in rural areas. The difference just is so huge that I was considering going to university at the 6th biggest city – and save 200 euros each month in rent.

Maybe Matti Vanhanen should be reading this rather than spending time chasing women. He also thoroughly dismissed Estonia’s flat tax scheme. Wonder when are people going to demand more from government officials like lowering taxes. This report already show that high taxes don’t make a difference

Poverty related issues are a ‘bit’ more complex than the writer & Phil present. Among other things, it’s a whole lot about possibilities and the feel of security. Both of which are not (in my opinion) quite as good in the US for people from different demographic groups as in Finland. Also the amount of the poor matters.

As mentioned in the original paper at stateofworkingamerica.org the poverty rate in the US is 17.0% compared to the 5.4% of Finland. The child poverty rates between US and Finland are even more bashing – 21.9% and 2.8%, respectively.

Going back to the possibilities, OK, Finland doesn’t have the possibility of the upside that the US has, but the urge for getting into the highest decile is a naive weakness of the human being anyways. Even the middle class and especially the higher middle class of both countries are historically doing pretty darned well.

At least one of the real problems in the US is the strong divide in standard of living. Of the blacks about 1 in 5 are poor (24.9%), of Hispanics over 1 in 5 (21.9%), and of the non-Hispanic whites about 1 in 12 (8.3%), as NPR reported yesterday in “Poverty Levels Stabilize; a First in 5″ (http://tinyurl.com/lavgt).

Some call this economic segregation. Regardless of what you want to call it, it’s at least very strong economic inequality. And this causes many social problems including crime.

Of the presented stats I’m left wondering if and how different social benefits are included in counting the income?

Reading the original report I’m left with a picture that the “per capita income is measured on a PPP basis” (page 5) even though this is not clearly spelled out in the figure Phil referred to on page 25. And as further mentioned in the report: “it is worth noting that PPPs do not account for the cost of non-market social goods, such as education, health care, or child care, which are much cheaper or completely covered by public spending in many European countries relative to the United States.”

My conclusion as said in the beginning: the issue is a ‘bit’ more complex than the writer & Phil present.

Oh God, here we go.

1) The graph shows income adjusted for PPP, which means you are wrong that the American poor have more purchasing power. They have, by definition, 1% more.

2) You are correct that Finns get far more than Americans that are not included in income statistics. You are wrong, however, that the poorest 10% of Americans in practice get free healthcare.

3) Finns also get free higher education as you mention. That’s not just universities but polytechnics and other places of higher education.

4) Thses figures are old and contrast sharply with the latest CIA factbook figures, which show the bottom 10% of Americans getting approximately half the level of PPP adjusted GDP when compared to Finns. You can do the sums yourself.

I always thought that the lowest 10 or 20% income level Finns who were born with a plastic spoon in their moúths were the ones who “won the lottery”.

Is there an impartial historical explanation on how the tight distribution curve with respect to purchasing power/aftertax tax income developed in Finland?

Did the labour unions have a disproportionate share of negotiating power at contract talks and in the political arena at some point in Finnish history to accomplish this situation?

EDIT: “Of the blacks about 1 in *4* are poor (24.9%), of Hispanics over 1 in 5 (21.9%), and of the non-Hispanic whites about 1 in 12 (8.3%) *are poor*…”

As mentioned in the original paper at stateofworkingamerica.org the poverty rate in the US is 17.0% compared to the 5.4% of Finland.

Although they’re (the bottom 10%) are having the same amount of money. Because the U.S. has much higher average incomes, being “poor” in the states is different than being “poor” in Finland.

1) The graph shows income adjusted for PPP, which means you are wrong that the American poor have more purchasing power. They have, by definition, 1% more.

Yup good point, I missed that. I’m glad they’re using PPP, because I’ve said this all along, $1 in the U.S. goes a shitload further than it does in Finland.

You are wrong, however, that the poorest 10% of Americans in practice get free healthcare.

Medicaid.

3) Finns also get free higher education as you mention. That’s not just universities but polytechnics and other places of higher education.

Yes, and I’d love to know how many of Finland’s bottom 10% are actually graduated from these places.

4) Thses figures are old and contrast sharply with the latest CIA factbook figures, which show the bottom 10% of Americans getting approximately half the level of PPP adjusted GDP when compared to Finns. You can do the sums yourself.

I don’t think that’s the same statistic the writer is using. And I doubt too much has changed since 2000-2001.

I’m curious about the constant playing of the race card in the US. Do the blacks here really have it so much better? What’s the percentage of Somali poverty in Finland?

Peter:

Just tried searching for such book in English from university’s library database, Amazon and a few other places, but didn’t found anything promising. But if you read Finnish:

Suomen taloushistoria 2. Edit. Jorma Ahvenainen, Erkki Pihkala, Viljo Rasila. Helsinki 1982

Hjerppe R & Vartia P: Taloudellinen kasvu ja rakennemuutos 1860–1995. (Teoksessa Kansantaloutemme – rakenteet ja muutos s. 3–63)

“Yes, and I’d love to know how many of Finland’s bottom 10% are actually graduated from these places.”

There is one study that I could find on Social mobility, education and parental income in Finland between 1975-2000:
http://www.ru.nl/contents/pages/380214/erola.pdf

Education bit starts from page 11 onwards.

Phil: “I’d love to know how many of Finland’s bottom 10% are actually graduated from these places (of higher education).”

Um, I think the point is that the children of the bottom 10% can get a higher education for free, something which is out of reach for most families in the lowest decile in the US. Also, many people in the bottom 10% are actually enjoying the free education at the present time: university and polytechnic students make up a big part of the (currently) poor people in Finland.

“Yes, and I’d love to know how many of Finland’s bottom 10% are actually graduated from these places.”

Many of the people calssifies as poor in Finland (earning under 1000e/month) are students. Most of them’s socioeconomical status rises sharply after graduation.

Stats.fi shows that 62,7 % of finns have complited some degree from university, polytechnichal, vocational or high school. Untill 44 years olds’ cohort, the figure stays above 84,2 %. Many of the poorest pensioners don’t have a degree.

The really intresting (and challenging) question is how to help those unemployed people of all age groups without a degree or work experince. It was in the news that every year there’s 300 people who don’t complite comprehensive school (which doen’t automatically say they are unemplyed, but still sounds alarming) and many students drop out from vocational schools.

How “Poor” are America’s Poor? – Heritage.org

* 38 percent of the persons whom the Census Bureau identifies as “poor” own their own homes with a median value of $39,200.

* 62 percent of “poor” households own a car; 14 percent own two or more cars.

* Nearly half of all “poor” households have air-conditioning; 31 percent have microwave ovens.

* Nationwide, some 22,000 “poor” households have heated swimming pools or Jacuzzis.

“Poor” Americans today are better housed, better fed, and own more property than did the average U.S. citizen throughout much of the 20th Century. In 1988, the per capita expenditures of the lowest income fifth of the U.S. population exceeded the per capita expenditures of the median American household in 1955, after adjusting for inflation.1

Better Off Than Europeans, Japanese
The average “poor” American lives in a larger house or apartment than does the average West European (This is the average West European, not poor West Europeans). Poor Americans eat far more meat, are more likely to own cars and dishwashers, and are more likely to have basic modern amenities such as indoor toilets than is the general West European population.

“Poor” Americans consume three times as much meat each year and are 40 percent more likely to own a car than the average Japanese. And the average Japanese is 22 times more likely to live without an indoor flush toilet than is a poor American.

There is lots more in the article. Like this:

Ignoring Billions of Dollars
A key reason that the Census undercounts the financial resources of the “poor” is that, remarkably, it ignores nearly all welfare spending when calculating the “incomes” of persons in poverty. Thus, as far as the Bureau is concerned, billions of dollars in in-kind benefits to poor Americans have no effect on their incomes. Out of $184 billion in welfare spending, the Census counts only $27 billion as income for poor persons. The bulk of the welfare system, including entire programs that provide non-cash aid to the poor, like food stamps, public housing, and Medicaid, is completely ignored in the Census Bureau’s calculations of the living standards of the “poor.” The missing welfare spending that is excluded from the Census Bureau poverty reports comes to $158 billion, or over $11,120 for every “poor” U.S. household.

Oh dear, this idiotic thing is going around here as well? Saw it last week on an American blog. I guess the definition of your standard libertarian/conservative is these days “someone intellectually dishonest”. Well, you takes your pick: would you rather have yourself and your family living in a typical US urban slum or in Kontula or Mellunmäki… Think about the crime, education, health care, social mobility, etc. etc. etc. No contest there I think. The US is these days a great place for the upper and upper middle class. The rest of the middle class is struggling to stand still and the rest are desperately struggling to survive.

On second thoughts I think it was another blatantly misleading statistics that I saw last week – this is even worse. What is it in the modern conservative mentality that produces this utter shrillness and these totally confused arguments? In the real life things are going fairly well for the conservatives (meaning of course badly for the majority of people), I suppose it rankles to be continuosly bested intellectually by the liberals and left wingers, but why should that matter? Anyway, I guess I need another Phil break – this is basically the only site on the net that gets me ranting like this.

I would imagine that both Finland and Sweden have a far more accurate idea of exactly who is in their territory and how much each person are earning (due to the efficiency and accuracy of the tax authorities in both countries and also of the population registries in countries which both have smaller and therefore more ‘trackable’ inhabitants).

I should imagine a lot of the USA’s poor simply are not counted in the survey. Certainly, even in the most deprived areas in the Helsinki or Stockholm suburbs, you will never find some of the scenes you will find in the most deprived areas of some towns in the United States.

So, in summary I fear that the statistics probably are flawed somewhere.

Im not going to comment on the study, as I cant understand anything of it. Im sure Phil or someone in the comments is probaply right.

Instead, Im going to comment on that heritage.org quote by Fred Fry.

* Nationwide, some 22,000 “poor” households have heated swimming pools or Jacuzzis.
It comes to me that swimming pools might be not feasible because of higher population density or colder climate.

Poor Americans eat far more meat, are more likely to own cars and dishwashers, and are more likely to have basic modern amenities such as indoor toilets than is the general West European population.
They said that they talked about WEuropean of average income. If average income WEuropean dosent own water closet, thats purely individual choice and has nothing to do with money.
Cars are much more than just their money-value; its also the price of gas and the use of the car in foreseeable future. I think the step to buy a car might be higher in Europe than in America.
About meat; I think half of the teenagers these days dont eat meat… it might also have to do with whats seen as “good” ammount of meat to eat on dinner and whatnot…does meat cause obesity? I dont know, but it would be nice conclusion to make.
Dishwashers? They are probaply right. I know I dont own one. On the other hand, Im student and I live alone.

“Poor Americans eat far more meat,

I agree with the meat part for sure. In Finland, poor person’s meat is processed meat (e.g. Lihapyörykät). It’s cheap, so they can afford it. But Finnish companies profit by putting significant amounts of non-meat products into it. So the Finnish poor get ripped-off.

In America, you’re likely to get real meat.

“…are more likely to own cars”

Unfortunately they need cars. That’s the problem with America’s infrastructure that I mentioned previously. Needing to drive a car is not helpful when you’re poor. In fact, if a poor person’s budget is 10K per year, then the car accounts for at least 1/3 of that amount. That leads to skirting the system by not having insurance, etc.

“…and dishwashers, and are more likely to have basic modern amenities such as indoor toilets than is the general West European population.”

I’m pretty sure we’ve all got indoor toilets now! Even the poor!

But if there’s a difference in amenities in general, then sure, that’s probably true. Of course, you have to consider the entire home’s value. Americans—even those in multi-unit housing—live in cheaply built, pinewood framed structures with thin plastic siding tacked to the outside. When your neighbor walks across the floor, your dishes rattle.

Conversely, in Europe, buildings are made from steel and concrete. It costs more, so it’s smaller. It also affords better privacy from neighbors as well as protection against fire. Amenities such as clothes washers are situated in basement washrooms. Poor people don’t need to buy them, so I guess they don’t. Otherwise, they’re not that expensive anyway.

I do agree with your premise that American poor people have more material possessions. I also believe there’s an adequate amount of funding that goes into government programs. The problems are infrastructure and approach—poor people aren’t integrated with the rest of society. But that’s not something that more government money can fix. That’s very much a societal issue.

Fred,

September 21, 1990?! Didn’t you find anything more recent or has the situation deteriorated after George Bush Sr. & Jr.? Or have they upgraded their Jacuzzis to have plasma screen HDTVs?

Did the labour unions have a disproportionate share of negotiating power at contract talks and in the political arena at some point in Finnish history to accomplish this situation?

There are two somewhat separate issues: the steep pogression and the equal income distribution, and respectively two main agents: the government and the unions (and the employer organizations). But let me try to say a few words about the negotiation power of the unions.

It all started during the WWII. The employers agreed that labor unions had the right negotiate on behalf of their members. Otherwise there would have been the danger that quite a few Finns would have refused to die to save a country which, in a way, protected primarily the rights of those who owned something worth while.

After the war unions were relatively strong: they had a large membership base and solidarity. Strikes were common. And so was the fear of employers of further radicalization – helped by the Soviet Union. There was also something called “asevelihenki”: people, high or low, who had fought the Soviets side by side as comrades in arms, are supposed to have had a bond between them even after the war.

Gradually the labor-market negotiations got institutionalized as “kolmikanta”: employer and employee organizations plus the government sat down and agreed on taxes, salaries, R&D subsidies, holidays and what not. (These are “honest” negotiations in the sense that if one of the parties is not satisfied, the negotiations will stop – sometimes, namely, you hear from the right that it’s the trade unions who always get what they want, helped by the government.)

Certain other people who had earned well earlier, like, say, the state officials got unionized later and they often didn’t have the solidarity to push their demands through. Their relative salaries dropped dramatically.

At the same time the government (voters) wanted to develop Finland toward a more equalitarian state.

A steep progression as well as equal income distribution are nowadays something most people take for granted (I’m sure that many people disagree but this is my gut feeling). If unions, for example, demand more money for a group which is in palkkakuoppa (earn particularly little) few think, or at least say in public, that it’s wrong, something that should be avoided.

There have been quite a few attempts to claim in the “reagan style” that more money dribbles down and thus less equal income distribution and less steep progression would be good for all. It’s revealing that no big party has a radical tax reform in their plaform, apparently in fear of losing votes … or becaus of the possibility of having to do what was promised.

So far even the “right wingers” in Kokoomus mostly support the “kolmikanta” system. Some of the trade unions are lead by Kokoomus members, so no wonder.

And one has to remember that Finland is a pretty well functioning money making machine. Why try to repair something that’s working?

Hay… no credit. I posted this 2 days ago.

The bottom line, our poor are equal, but our rich get richer.

What a great system I live in. This must make all you liberals boil, to find out your welfare state system actually holds your Middle Class back from being Rich Rich Rich.

Ok, here is Jorma’s opinion

“The most surprising comment came from Jorma Ollila, Chairman of the Board of both Nokia and Shell Oil. Instead of worrying about the lack of research and product development, he focused on the problems of Finnish young men – their poor physical condition and unhealthy lifestyles.
“There is reason to be concerned about the physical condition of young men. The average weight of Finnish conscripts has risen by nearly five kilos in the past ten years.”, Jorma Ollila pointed out.
Ollila was also concerned about high unemployment, heavy use of alcohol, and the high homicide rate in Finland compared with other EU countries.
“All of these are linked with the economy”, Ollila emphasised.
Ollila also emphasised the importance of raising the productivity of Finnish labour. He noted that especially the service sector is lagging behind the overall growth in productivity. In his view, centralised wage agreements, in which pay hikes are tied to growth in the economy as a whole, are dangerous.”

Good points tomia. I can only add that these union/solidarity/equality sentiments were common during the post-WW2 era—and not just in Finland. There seemed to be a common theme throughout Europe. But Finland was probably helped-along by influences from Big Brother in the east—and perhaps the Big Sister in the west too

I’m not strongly opposed to a progressive tax. It seems to make sense in some ways. But in my opinion, Finland’s taxes should be lowered across the board. Maybe this would keep the solidarity principle in tact, but still enable more purchasing power domestically—for everyone, not just rich people.

We talked about this in the Choir post: #38

Finn

Its a quibble, but our poor equal your poor. And best news is we are getting richer, richer, richer.

Its like buying or selling real estate. Location, location, location

winter: Hopefully you have your share of total debt burden ready for the government…

US total debt burden currently:

Per person: $156,000
Per full-time worker: $375,000
Per household: $411,000

Basically, every US household owns now another overpriced “house” to the US government. This all started in the early 80′s, when USA was the largest creditor in the world and things were financially very excellent.

Now USA is the largest debtor nation and financially increasingly in very crappy condition. Asia too, because those idiots from China to Japan all borrowed blindly money again and again to Americans.

Phil says:

“Although they’re (the bottom 10%) are having the same amount of money.”

Perttu asks:

How much do the poor Americans have to pay for insurance, doctor, medicine, rehab, etc.?

This blog is as misguided as gringos usually are. Don’t listen to them Finnish and others Finn-minded!

This is getting really confusing. Phil says he’s a libertarian. Phil triumphantly declares that the American poor get better welfare benefits (bigger apartments). Phil says that the USA is a welfare state. Phil’s argues that the Finnish poor are worse off then their American counterparts because Finland is a welfare state.

Sounds somewhat schizophrenic, doesn’t it? Phil should perhaps decide whether he’s a libertarian or a patriotic American (with a strange leftist leaning).

Anyway, Phil, you’ve understood the leftists wrong. They don’t follow American statistics till their eyes bleed. But they do follow Finnish statistics with concern if they are true leftists. In other words, they are primarily concerned of the Finnish poor, not the American ones.

Fortunately enough, they are not in power. The most equal income distribution in the world is more than enough. I’d like to see a bit more movement to the other direction, a bit more personal responsibility and effort and such stuff wouldn’t hurt, I think.

Then again, who knows, perhaps one day I’ll be poor myself. Or my kids. If that happens, I pray God that by then Finland haven’t adopted anything like the American system. Honestly, who would like to be poor rather in Washington DC than in Helsinki?

#32

Tomia—obviously one wouldn’t want to be poor in the US and especially not in DC. But that’s not because of America’s “system.” I mean, sure it can be impoved. No doubt about it—but not necessarily a giant overhaul. The real underlying problem is specific to culture—specific to America’s culture, that is.

Collectively speaking, Americans are chaotic and prone to argumentation and even hostility. It’s probably best manifested in the court system with all the law suits. It’s also seen on TV programs centered on political debate. It’s downright ugly

This is all deeply rooted in history, and apparently normalization can’t occur due to the different types of people who live there. So, it’s no wonder DC’s problem looks like it does.

If you tried to equalize incomes in the States, through artificial means, then I guarantee it would be a disaster. It would create poverty beyond anything that’s immaginable now.

Income equalization and government programs work somewhat here in Europe, but that’s only because, collectively, we’re much more refined in our decision making and we can agree more easily on solutions—after all, we have relatively homogenous cultures, so it should be.

For that reason, our social condition would survive under almost any economic system. It’s not like we particularly *need* one system over another. What we have is simply what we’ve chosen because we think it works best. But, like America’s system, ours could also stand some tweeking

Also, many people in the bottom 10% are actually enjoying the free education at the present time: university and polytechnic students make up a big part of the (currently) poor people in Finland.

Got any figures on that? I’m not doubting you, I just have never seen these types of numbers. I saw Germany’s stats on this same subject, only a tiny fraction of Germany’s lowest income citizens were taking advantage of higher education.

The rest of the middle class is struggling to stand still and the rest are desperately struggling to survive.

Ditto for Finland.

We talked about this in the Choir post: #38

E-mail me this stuff! I don’t always have the time to read all the comments.

How much do the poor Americans have to pay for insurance, doctor, medicine, rehab, etc.?

I doubt Medicaid members pay anything at all. (assuming you mean health insurance)

Honestly, who would like to be poor rather in Washington DC than in Helsinki?

I’ve said this in other posts. If I were poor but hard-working and dedicated, I’d much rather be in the states, you don’t can move up much quicker, much higher, no need for fancy degrees. If I were poor but lazy and careless, Finland would no doubt be the place for me. You don’t have to do shit, yet you get so much.

“I’d much rather be in the states, you don’t can move up much quicker, much higher, no need for fancy degrees. If I were poor but lazy and careless, Finland would no doubt be the place for me.”

Another myth again, social mobility is lower in the US nowadays, the poor stay poor.

“Jo Blanden, Paul Gregg and Steve Machin found that social mobility in Britain – the way in which someone’s adult outcomes are related to their circumstances as a child – is lower than in Canada, Germany, Sweden, Norway, Denmark and Finland. And while the gap in opportunities between the rich and poor is similar in Britain and the US, in the US it is at least static, while in Britain it is getting wider.

A careful comparison reveals that the USA and Britain are at the bottom with the lowest social mobility. Norway has the greatest social mobility, followed by Denmark, Sweden and Finland. Germany is around the middle of the two extremes, and Canada was found to be much more mobile than the UK.”

http://www.lse.ac.uk/collections/pressAndInformationOffice/
newsAndEvents/archives/2005/LSE_SuttonTrust_report.htm

“”Also, many people in the bottom 10% are actually enjoying the free education at the present time: university and polytechnic students make up a big part of the (currently) poor people in Finland.”

Got any figures on that? I’m not doubting you, I just have never seen these types of numbers. I saw Germany’s stats on this same subject, only a tiny fraction of Germany’s lowest income citizens were taking advantage of higher education.”

In the US you can declare your adult children as dependents in your tax form. This makes them members of your household and you get tax deductions. In Nordic countries the students are their own households.

“September 21, 1990?! Didn’t you find anything more recent”

Oops. Didn’t notice. I noticed that some of these poor people had more than what I have. Then again, they are borrowing to live beyond their means. Try doing that in Finland!

http://www.helsinki.fi/ajankohtaista/uutisarkisto/8-2001/3-15-26-14

The Student Union of the University of Helsinki reports findings from their study on their members’ housing and economical conditions: 1/3 of students in the University of Helsinki are classified as poor (=earning less than half of the median income in Finland).

This is why students have been frigging angry after the news on the last national budget negotiation’s results came out: no real improvement in their situation even after all parties had been promising to do something. The situation has been just going downhill after the recession of early 90′s.

The university students can combine studying and working more easily than students in polytechnics, who have it even worse.

To #40 Fred Fry:

Actually, it’s been on the news that young people these days are prone living larger than they can afford. Especially mobile phone bills have gotten out of some people’s hands.

The other easy way to over spend is to buy from mail order companies and choose to pay it over a longer time rather than instantly (consumer credits). You can accumulate the payments before the reality hits you – the percentage added to normal price of things suprises people who don’t seem to be able to count what it all will cost in the end.

The Finnisg Bankers’ Association’s survey on young people shows less intrest in planning personal finances and young people taking more housing loans and consumer credits:
http://www.pankkiyhdistys.fi/sisalto_eng/upload/pdf/survey_young2004.pdf

Pihl with his “statistics” …

Dunno how it feels to make up idiotic statistics (starting with absence of health care and education) and try desperately “prove”, ie. lie for your anti-human ideology. I suppose it depends if Phil likes to spread lies on purpose, or he’s just an idiot without elementary ability to comprehend what he’s agitating.

According to Lissy the average household size was 2.55 persons in USA. In Finland and Sweden, the household size was 2.15 and 2.00 persons, respectively. The household size for the lowest income decile are not readily available. However, I’d guess that a poor household is larger than average in USA but smaller than average in Finland: only 5 % of children lived in poverty here in Finland, 22 % of children live in poverty in Swaziland. I mean USA.

I must admit that Medicaid does not look bad (if you have kids). However, that changes after you or you kids are over 20. For a single adult, the income limit is less than $10k per year unless your state happen to have some local program. And Medicaid does not cover dental for adults. (However, I cannot say that public dental care is easy to obtain here in Finland.)

A careful comparison reveals that the USA and Britain are at the bottom with the lowest social mobility. Norway has the greatest social mobility, followed by Denmark, Sweden and Finland. Germany is around the middle of the two extremes, and Canada was found to be much more mobile than the UK.”

Comparing the social mobility of Finland and the U.S. is comparing apples and oranges. Going from the lowest 10% to the lowest 30% (for instance) is a much shorter distance in Finland that it is in Finland. The U.S. has much higher salaries. Going from bottom 10% to bottom 30% might be 15K/year to 20K/year. Going from the bototom 10% to bottom 30% in the U.S. might be 15K/year to 30K/year. If two people, one in the U.S. and other in Finland, but both in the bottom 10%, were given a 20K/year increase, the American might move up say 30% in the social mobility scale. Meanwhile, the Finn moves up 50% in the social mobility scale. So even though each person got the same increase, the Finn moved up much higher in society and thus this country has a higher rate of social mobility.

The other thing when it comes to social mobility, people always, “How well did your father do compared to how well you do now?” 40 years ago, the U.S. was doing quite well, leaders in the world. That same 40 years ago, Finland was leading the world in rubber boots. It’s apples and oranges, you can’t compare the two countries. By these standards, Estonia should have the highest social mobility today of them all. 40 years ago, they were living in their own shit and piss under communism, today they’re become leaders in the globe. So let’s end the welfare state and take up Estonia’s form of government because they have the highest social mobility, right?

The Student Union of the University of Helsinki reports findings from their study on their members’ housing and economical conditions: 1/3 of students in the University of Helsinki are classified as poor (=earning less than half of the median income in Finland).

I’d suspect similar statistics in the states. No income, no job, no skills, high credit card bills = poor.

More social mobility in Finland than in the USA is a lie … or is it …

http://www.economist.com/world/na/displayStory.cfm?story_id=3518560
http://www.post-gazette.com/pg/05133/504149.stm
http://www.ru.nl/contents/pages/380214/erola.pdf
http://www.iserp.columbia.edu/news/articles/mexico_mobility.html

My feeble mind tells me that if your success depends on your education, as it tends to do nowadays, a society that gives every kid a free quality education from the pre-school to the university must have more social mobility … unless the liberitarians are after all right … ha ha , just kidding.

“If I were poor but hard-working and dedicated, I’d much rather be in the states, you don’t can move up much quicker, much higher, no need for fancy degrees. If I were poor but lazy and careless, Finland would no doubt be the place for me. You don’t have to do shit, yet you get so much. ”

Phil—

I have to take issue with you there. Perhaps as blogger extraordinaire Phil, who’s temporarily dabbling in poverty by hauling bricks at a construction site or selling cigarettes at a mini-market, all the while scoping-out advancement possibilities: Sure America is the place, because it’s always looking for bright and energetic people to run its enterprises.

But the reality is that most people who are poor can barely tie their shoes in the morning—in some cases it’s their own fault, but in most cases it’s probably not. The majority don’t have the acumen to advance in society; that’s why they’re poor—chronically poor. Some of them work hard, but some don’t and some can’t. Those people exist in any country. But, America is definitely not the place for this group of people.

And it’s not really a place for their children either, despite the free healthcare, free education and ever other free thing. In that way, it’s not much different than what poor kids in Finland get.

Tomia—

Although I agree entirely with your assertion that there’s more social mobility in Finland than in the US, it has nothing to do with income distribution, taxation or lack of government help; there’s plenty of money and programs in America to help these people.

Any failure is due to the choices Americans make about their society. Those choices are a manifestation of America’s history and diversity. And as Phil stated, comparing the US and Finland is like apples and oranges; the numbers and percentages really don’t mean very much. IMO, these are fundamentally different countries, irrespective of their economic systems.

As I stated previously, Finland can prosper under either system; America can’t.

But the reality is that most people who are poor can barely tie their shoes in the morning

Well, they’re poor, not retarded. I’ve lived in two poor areas of Baltimore, Charles Village (an oasis of college students amidst a ghetto on three sides. And West Baltimore, actually in the ghetto. 90% of these people were good, honest people. It was the 10% of human garbage that was ruining it for the others. Offering free higher education wouldn’t do a damn thing for these people, half probably never graduated high school and most of the others wouldn’t have the grades to make it into college. Besides, these people could goto college for free if they wanted, thanks to America’s left-wing, the lower income students goto school for free.

It all begins in the public schools, this kids go off course the second they’re born. These schools are seriously fucked up, I used to get scared visiting even the county high schools that were close to the city when on the tennis/XC team. They’re no enviornment to learn in, it’s dangerous, and it isn’t cool to be smart. The intelligent kids get picked on and beat up until they assimilate with the others. The administrators and teachers don’t give a damn, they’re just glorified babysitters and they’re counting the years until they can move to the county schools – and the parents are often alcholics/drug-users. The kids are forced to goto these crazy schools, and what they need is school choice. But the American left and teachers unions will never let that happen.

Then they become adults and live in a crime-ridden city. Drug-dealers on every corner, robberies and other crazy shit going on all around them – there’s neighborhoods where cops will not journey down. Pulling themselves out of that hellhole is extremely difficult. You got no education, no skills, crime is all around you.

People are fooling themselves if they think some bullshit welfare state policies is going to fix all that – the problem is so much more deep.

#52

Phil—exactly, there’s no economic solution there. I spent a few months rooming with some people in North Philadelphia, a few blocks away from Broad Street, near Temple University. I think Temple U. was trying to integrate college students into the ghetto or something like that. Probably the same thing as what you experienced.

There was a crack house at one corner of the block. Welfare kids played in the middle and there was a mini-market on the other corner. Sometimes we heard gun shots—several different shootings on some nights, in fact. Once a teenager offered to sell us a small pistol. Several weeks later the mini-market night clerk was killed (he was stabbed though, not shot).

I can give you other examples of poor rural people with methamphetamine labs, etc….

Differences from one area to another are like day-and-night. America is huge and diverse. One can’t possibly overlay it with a centralized economic system—or even compare meaningful statistics with other nations.

“Several weeks later the mini-market night clerk was killed (he was stabbed though, not shot).”

Wow. is it cut and run time from Philadelphia?
We are losing the war there, no no, its a civil war. Can anyone say mismanagement? But wait Philadelphia is a Democrate Party controlled city, run by Liberals.

Note to self: Do not bad mouth Liberal failures, it just get them mad.

winter—

I haven’t been there in many years, so I don’t know how Mayor Milton Street’s administration is doing lately. But, I could just guess

Tim75

Why do you hate the Roaring USA economy. Well it seams that a lot of Americans agree:

Link;Americans Hate their Fabulous Economy

Growth of the Gross Domestic Product (GDP) is, perhaps, the most basic measure of the health of any economy. A growth of 1% is often described as anemic, 2% is so so, 3% is good and 4% is excellent. By the way the USA is at 4%.

“It was the 10% of human garbage that was ruining it for the others. Offering free higher education wouldn’t do a damn thing for these people, half probably never graduated high school and most of the others wouldn’t have the grades to make it into college.”

That is exactly were the attitudes differ between Finland and USA. One example: Hervanta suburb in Tampere was turning to one sad and violent suburbs in the 70′s. Well, authorities across the field, from social services to police put up a program to fix it and they did manage to turn Hervanta to a success story. This “human carbage”-talk is just a lazy excuse to do nothing like STRICT gun control, adequate police forces in problem areas and better social services, for starters. This really works, most crime rates are 1/10 in Helsinki when compared to major US cities like Baltimore. Why is that?

most crime rates are 1/10 in Helsinki when compared to major US cities like Baltimore. Why is that?

USA liberals are just plain bad managers of lots of tax payer money?

“By the way the USA is at 4%.”

Good for you, in Finland they just upgraded the GDP growth for this year to be about ~5% (previous estimate was 3.9%) So I guess that’s super excellent .

winter,

The US is not at 4% at all. The first quarter showed growth of over 5% while the second quarter showed growth of 2.9% (seeing the trend?). Most economists project growth for 2006 to be around 2.5% and many (Delong, Roubini) are predicting a recession. Meanwhile, Finland’s growth is expected to be 5.1% this year slowing to 3.5% next year.

Phil,

I debunked your social mobility crap ages ago. I wish you’d read it before posting the same crap again. Your income is dependent on your job regardless of the absolue distribution of income. If a postman in the US earns €15,000 per year and a lawyer earns €80,000 a year, whereas in Finland the difference is €20,000 to €50,000, it doesn’t mean that it’s easier for a Finn to go from being a postman to being a lawyer than it is for an American, even though the increase in income is much smaller. Both require a law degree. The simple fact is that a Finn from a poor family is more likely to become a lawyer than an American.

I wish you’d read it before posting the same crap again.

I was looking for that post where we discussed this, couldn’t find it, do you know where it is? I don’t remember you debunking a damn thing.

. The simple fact is that a Finn from a poor family is more likely to become a lawyer than an American.

So social mobility isn’t about income, it’s about which jobs you consider to be high society?

This “human carbage”-talk is just a lazy excuse to do nothing like STRICT gun control, adequate police forces in problem areas and better social services, for starters

I don’t know about Hervanta but I’m gonna guess that it’s nothing like West Baltimore. Like I said, the kids are already screwed up, social services won’t address a damn thing. The education system needs to be reformed. Then there’s the cops, they’re all worthless and corrupt thanks to the drugs, there’s just too much money in the drug game. Drug dealers run the neighborhoods, not the police.

This really works, most crime rates are 1/10 in Helsinki when compared to major US cities like Baltimore. Why is that?

Drugs is most definitely, without a shadow of a doubt, the #1 reason.

Tim–

“That is exactly were the attitudes differ between Finland and USA. One example: Hervanta suburb in Tampere …”

Easily said AND done in Finland.

But, in America, you need to find at least two people who agree on the same solution. It’s not easy because religious and secular forces compete against each other. Neither side wants to give way, and each blocks the other’s efforts.

Then you have the different races. Many are relatively chaotic. No agreement. And one race doesn’t necessarily want to support the advancement of another.

Despite all this, there are programs to help poor people, but it still involves dealing with huge numbers of impoverished minorities (blacks, for example).

Consider that Baltimore’s or Philadelphia’s black ghettos are the size of Helsinki. New York’s ghettos are the size of Helsinki/Espoo/Vantaa combined. These are only three cities in the US. There are many more.

Ghettos are dangerous places. It’s sort of like having a violent, little African country attached to each American city.

Blacks and whites form two very different cultures. European whites can’t really help blacks directly with social workers or other solutions—I guess that little slavery thing kind of shot their credibility

Also consider that not so long ago, the Philadelphia police force used a helicopter to drop a fire-bomb on a house occupied by black “troublemakers”—yes, it was a real bomb. They burned down an entire black neighborhood. It would be like Finnish police bombing-out Mellunmäki, only with all blacks there.

Blacks need to solve their problems from within. But black leadership and society tends to be chaotic, so progress happens slowly.

And none of this even considers Hispanic poverty.

Here in homogenous Finland, solutions are easily agreed upon and acted out. Just point toward the problem and concentrate some minimal effort on it. Solved. That’s Finland.

“So social mobility isn’t about income, it’s about which jobs you consider to be high society?”

You’re missing the point (possibly intentionally). Social mobility is about your position in society relative to others, not in absolute terms. Thus it doesn’t matter if it takes a pay increase of €10,000 per year to move from one quintile to another in the US but only €5,000 in Finland if the pay increase in both cases is dependent on having a similarly more desirable job.

Look at it this way. We wouldn’t say the Congolese have much greater opportunities for social mobility than the Finns because to move from one quintile to the next requires €100 whereas in Finland it requires €5000. Why? Because getting work in the Congo compensated that €100 better is just as hard as getting work in Finland compensated €5000 better.

Consider yourself debunked.

#64

I can’t answer for Phil, but I *think* what Phil meant is that one can move upward in American society without necessarily having a university education. For example, one can own a business—and many do, and they live in the same lifestyle as those with far more education.

That possibility hasn’t really existed here in Finland due to the restrictive tax laws and general economic policy. Also, perhaps the EU offers new possibilities.

finnsense

GDP grouth for such a large country as the USA compared to Finland? Come on, let compare apples to oranges.

“If the European Union were a state in the USA it would belong to the poorest group of states. France, Italy, Great Britain and Germany have lower GDP per capita than all but four of the states in the United States. In fact, GDP per capita is lower in the vast majority of the EU-countries (EU 15) than in most of the individual American states. This puts Europeans at a level of prosperity on par with states such as Arkansas, Mississippi and West Virginia.”

Lets not even talk about Italy with a negative GDP.

That possibility hasn’t really existed here in Finland due to the restrictive tax laws and general economic policy.

Sorry, but that’s bullshit. If you don’t know these kind of self-made-men you must move in strange circles. I know several, dozens, I guess.

Kristian,

I don’t think that’s what Phil meant and even if it were it’s not true as tomia says. Look at the facts. If you start a business here and you sell it, the only tax you pay is capital gains tax, which is about 28% if I recall. Even if they just paid themselves a salary, they would pay a maximum of 60% in tax and 60% of a shitload of money is a shitload of money.

winter,

I don’t defend the way most EU countries are run but I do defend the way Finland is run. If you don’t want to compare “apples” to “oranges” then don’t offer false statistics in defence of a position which gains its force from comparing apples and oranges.

finnsense,

I probably sound like I’m arguing with you, and I’m not, I’m just trying to figure this out. My point is that comparing the social mobility of the United States and Finland is worthless because it’s comparing apples and oranges.

I’m not going to waste your time re-writing what I’ve written 10 times already. Maybe we have two different definitions or understandings of “social mobility”? And maybe mine is wrong? So here, correct me where I’m wrong..

When I think of social mobility, I think of how well financially you improve yourself in your lifetime, and how well your children do financially. And like you said, it’s all relative. Gaining 10K/year in Finland vs. U.S. means nothing, it’s all about moving up in income brackets.

Am I correct so far?

“If you start a business here and you sell it, the only tax you pay is capital gains tax, which is about 28% if I recall”

The nominal capital gains tax rate is 28%, but if you have owned your company for 10 years or longer, the actual rate is around 17%.

Business taxes are lower in Finland and other Nordic countries than in the US. One of the very worst ones is Washington state with its gross receipts tax that exempts big companies.

This whole business of the business taxation is “a bit” complicated but if you own a firm at best you don’t have to pay any taxes for an income that is below €90 000 (if the firm’s net worth is 1 000 000 and profit 9%). If the firm’s net worth is, say, 100 000 and the profit 18%, €9 000 (9%) of the whole is tax free. But everything that goes over, in this case the “next” 9 000, only 30% is tax free. The remaining 70% (€ 6 000) is taxed as income. So in this case an entrepreneur would get 12 000 tax free, while 6 000 would be taxed according to the normal progression. IN other words this 9% is always taxfree (unless it goes over €90 000).

No wonder people are so eager to set up firms. But of course most people have to work very hard and long to get their firms in a position where they really can enjoy the tax breaks. Most entrepreneurs never make it.

“No wonder people are so eager to set up firms. But of course most people have to work very hard and long to get their firms in a position where they really can enjoy the tax breaks. Most entrepreneurs never make it”

I think that’s where the problem lies. One needs 100K or 1M (or some other significant amount) to take advantage of any tax ‘benefit.’ Many businesses just aren’t asset-intensive. For those, I suspect their owner is subject to ordinary income tax rates like everyone else—not a big motivation to assume risk and hire people, etc.

But for those who DO accumulate 100K or 1M, they’ll probably overpay by about 25%—30% to acquire their assets in the first place. So, at best, the government gives them the aforementioned tax break as compensation. If it didn’t, the whole economy would probably stall.

For an aspiring small businessman—especially in a low-tech field—none of this seems very beneficial. His start-up cost is probably over 1/3 more than elsewhere. Maybe he can amortize some of that extra cost against future revenues—but that’s only IF the business actually generates revenues. Otherwise, he risks an extra 1/3+ for nothing.

And then, there are the re-occurring high operating costs that follow—again, probably 25%—30% higher. So, in effect, the costs get passed to the end consumer; hence, by necessity, the end consumer purchases 25%—30% less from the small entrepreneur. And the state collects 25%—30% less in revenue. Therefore it needs to keep tax percentages high to keep its revenue base. It’s self-perpetuating cycle.

To some, the Finnish model looks great on paper, but, as highly-taxed consumers–especially at the low end of the income spectrum– we’re almost piss-poor. I have to say that my experience living in other places proves it. But I know that’s perhaps subjective.

finnsense

Finlands economy is small compared to the entire USA. Any GDP comparison is Apples vrs oranges, and thats why I use the entire EU, as the populations now become closer.

England Prime Minister Tony Blair’s words during a recent interview. When asked by one of his Parliament members why he believes so much in America, he said: “A simple way to take measure of a country is to look at how many want in…. and how many want out.”

I think the worlds poor are voting with their feet.

winter,

The way Italy or Ireland are run is as different from Finland as the way the US is run. The EU may be numerically a more apt comparison but it’s not informative precisely because Finland is not typical of the EU.

Phil,

The reason social mobility is seen as valuable is because it is seen as fair. People in a socially mobile society end up in the income bracket that fits their talents and effort. So you are correct that the absolute level of the income is not informative. What is informative is how hard it is for people to move between income brackets in practice. What this amounts to is your ability to get a better job than your parents (in monetary terms) or successfully start a business.

So it’s not technically about how you financially improve yourself in absolute terms, it’s how well you do financially compared to your parents and others in the same society. It’s also about going down as well. A society in which rich but stupid and lazy people are not able to enter the bottom quintiles, is not a socially mobile society.

finnsense—If we compare native populations here in Finland or Europe with America’s White population, then I’d suspect that social mobility is roughly the same. In fact, it might even be higher in the states.

But if you include Blacks and Hispanics into those figures, then America’s numbers probably fall apart. That’s a racial problem specific to America though.

I often wonder how a person in Finland (w/ poor parents) can even afford schooling. Sure, they get 450-euros-per-month allowance from the state, but their living costs are higher by about that same amount. It’s the same phenomenon I described in #72, but here it’s applied to students.

We’ve got a much better urban infrastructure here in Finland though.

I think the worlds poor are voting with their feet.

It’s amazing if Blair doesn’t know that there is no big differences between the USA and EU. I wouldn’t be surprised if there would more poor people voting for the EU nowadays.

I think the world’s poor go wherever they see an open door. It’s not like they’re choosing a vacation

Besides, Mexico is right across the border…

What is informative is how hard it is for people to move between income brackets in practice.

Do you believe that income brackets in Finland are smaller than those in the U.S.?

And another question – Is the jump from bottom-10th to (let’s say..) bottom-40th in Finland smaller or larger (in terms of absolute income) than the U.S.?

One more – In the past 15 years, Estonians have seen their standard of living increase by incredible amounts. Would the children born after communism have higher social mobility compared to the same children born in Finland at that time?

But if you include Blacks and Hispanics into those figures, then America’s numbers probably fall apart. That’s a racial problem specific to America though.

I disagree. Minorities have seen huge increases in social mobility during the last generation, it’s the white people who are fucking up the social moblility statistics. Blacks for instance, are doing MUCH better today than they were 30+ years ago.

“Finland is not typical of the EU”… Huh

You have the typical welfare state of a EU country, with high taxes, high unemployment, and restrictive government rules on evil businesses.

So where did I mess up?

Phil,

Finland has smaller income brackets, yes, but that doesn’t mean it’s easier to move between them because it’s easier to earn more money in the US.

To the Estonian question the answer officially is no, they have worse social mobility than Finland. The fact that Estonia has become rich quickly doesn’t make any difference to the ability of it’s citizens to do well compared to other members of society.

winter,

Finland has a strong welfare state, however, it has lower taxes than other Nordic countries (about 5-10% of GDP lower) and much higher taxes than the UK and the new EU countries. It has highish unemployment but that is in stark contrast to its Nordic neighbours along with several other smaller EU countries and the UK and Ireland. Moreover, its unemployment is not structural as people argue it is in France and Germany but the result of the collapse of the Soviet Union. Since then unemployment has declined steadily from over 20% and is projected to decline further. The myth of high EU unemployment is based on the overall figures as I said swayed by very particular circumstances in France and Germany. As to restrictive rules on business, that’s just wrong. Finland has some of the most open business rules in the world and business taxes are lower in the EU than the US.

People talk about four EU models not one. They talk about the Anglo-Saxon model, the East European model, the Franco-German model and the Nordic model. It is even possible to notice significant differences within these. Labour is dealt with very differently across Europe.

Here’s the Index of Economic Freedom by the Heritage Foundation.

http://www.heritage.org/research/features/index/countries.cfm

Unfortunately enough, for winter, this American, consevative “think-tank” ranks Finland’s economical freedom in practice at the same level as that of the USA. So much for “restrictive government rules on evil businesses” – at least when compared to his beloved model country.

Then again, the Conservatives most often understand the concept of freedom in a very limited way. Thus high taxes, in their mind, automatically mean less economical freedom. But of course that’s not necessarily true, as can be seen if social mobility in particular is taken into account. The USA with its low taxes seem to create a static society, while the Nordic countries are much more dynamic and meritocratic. More free, in my humble opinion – and thus Finland perhaps should be above the USA in the ranking.

Employment is higher in Finland than in the USA. Unemployment will be, if current trends continue, in a couple of years.

I’ll bet that “winter” will continue with his ignorant right-wing propaganda never mind what facts are presented to him. Why do I bother?

Finland has smaller income brackets, yes, but that doesn’t mean it’s easier to move between them because it’s easier to earn more money in the US.

So you agree it’s easier to earn more money in the US?

The fact that Estonia has become rich quickly doesn’t make any difference to the ability of it’s citizens to do well compared to other members of society.

So “social mobility” has nothing to do with how a father’s income compares to his son? Dictionary.com thinks it does.

I think Estonia is kind of difficult to place within this Social Mobility theory. As a former Communist—and thereby highly proletarianized—country, there’re still many people with the ‘old’ mindset.

I experienced it up-close living in eastern Europe. The majority of parents were ‘workers’ in the Marxist sense. The former ‘worker state’ was a powerful concept in their lives—mercantilism was evil. Many worker types still believe it.

These ideas filter down to the next generation. Hence, sons hold notions of employment as ship builders or boilermakers, rather than becoming ‘office workers.’ Social Mobility isn’t just about economic models—family/society attitudes within each particular social strata play a huge role.

After all, like Finland, Estonia DOES have ‘free’ education. So, in that way, also like Finland, it’s actually better than the US insofar as providing for everyone. But unlike Finland, education is financed by a more progressive revenue generating economic system.

That way, ship builders, boilermakers, entrepreneurs, engineers and businessmen can actually earn a worthwhile living when they enter the workforce—and still be able fund the next generation. No restrictions.

tomia, don’t bother to shine some light to phils attic . phil seems to be a lost case, he kinda reminds me of stalinists (no offence there phil)
but seriously how many times do you have to be proven wrong. stop reading those libertarian fantasy books and join us in the real world

aren’t ad hominems fun

tomia

If you are so free to change jobs. They why have a law guaranteeing your job. In the USA no such law exists, as we are much more free to move around, the so called voting with your feet. Thus more social mobility than in Finland.

Its your law, why have it? Go ahead and propose a repeal, as you have greater social mobility?

Phil,

Dictionary.com says this:

“the ability of individuals or groups to move within a social hierarchy with changes in income, education, occupation, etc.”

Which sounds nothing like earning absolutely more compared to your parents and everything like what I said. The point is being able to move up and down the hierachy.

As to your point about it being easier to earn more in the US then obviously it’s true. The US taxes income less progressively than Finland. What does that have to do with anything?

#80

“But if you include Blacks and Hispanics into those figures, then America’s numbers probably fall apart. That’s a racial problem specific to America though.”

“I disagree. Minorities have seen huge increases in social mobility during the last generation, it’s the white people who are fucking up the social moblility statistics. Blacks for instance, are doing MUCH better today than they were 30+ years ago. ”

Phil—I believe your premise that minorities are doing better than before; but that might be in abolute terms, not relative terms. At least, that’s according to this Dec 29th 2004 Economist article….

“Upward mobility was particularly low for black families.”

http://www.economist.com/world/na/displayStory.cfm?story_id=3518560

Blacks might not have enough positive numbers to influence their collective, relative upward mobility. Unfortunately, the article doesn’t state anything about whites, so it’s hard to get a clear picture about what’s going on. It does state that social mobility in the States is poorer than before. But again, is this an overall problem or are the negative numbers concentrated in minority communities?

I dunno.

The US taxes income less progressively than Finland. What does that have to do with anything?

Thats one of the big points here. More money in your pocket means one step higher. Take that away like in Finland, and one has to produce more just to stay even. Take 60% away and one soon stops even wanting to produce more, why line the government pockets, and get nothing back for it?

Thats why I say Taxes are the most evil thing a Government can do to its own people. Heck our poor folks are equal to your poor folks, and we have a much less tax rate.

I like keeping the money I earn. Why don’t you?

Kristian (in Espoo)

Not the economist again. They are so wrong, so many times, its getting real embarrassing when they publish.

Have they even figured out we took Bagdad?

winter—I know the Economist is biased, but it had the only statement on blacks’ social mobility that I could find. My original premise (posts #63 and #76) was that social mobility among whites is roughly equal to- or higher than- Europe; but US minorities skew US figures downward. And that America can’t do anything about that—in effect, it’s a cultural condition independent of any economic system.

By the way, talking about taxing more “progressively” vs less…

I think by definition, a more progressive tax system is one in which the tax percentage increases MORE rapidly as income rises. Conversely, in a less progressive tax system, the tax percentage increases LESS rapidly (or not at all) as income rises.

Hence, Estonia, with its flat tax, has a less progressive tax system than Finland. In Finland, the tax percentage rises rapidly as income rises, so it’s highly progressive—perhaps the most progressive in the world.

The US might be somewhere in-between. However, it could be that ultra-high income earners pay next to nothing percentagewise, compared to low earners. That’s supposedly how America’s rich have ’tilted’ the system in their favor via their influence.

Keep in mind, this is all irrespective of tax amounts overall (e.g. high taxes vs. low taxes ). Instead, it’s all about percentages relative to income levels.

One thing that America has, of which Europe has less, is (no winter, not GDP ) an elite class of ultra-rich, so-called Blue Bloods that make decisions for everyone else—Kennedy, Bush, Dukakakas just to name a few. There are many more of course; both those directly involved in politics and others who fund (read: buy) their candidates’ activities.

I realize it’s part of America’s history. But, I don’t think such a phenomenon would be good in Europe. I still like to think that people here decide on matters, not a handful (large handful as in the US case) of ultra-rich.

US minorities skew US figures downward

Huh… Have to seen what Asians are doing here? Very well.

I think its a culture issue. You bring your culture with you. Its that simple.

Ah the evil ultra-rich??? Can you say Bill Gates????

winter,

“Thats one of the big points here. More money in your pocket means one step higher. Take that away like in Finland, and one has to produce more just to stay even. Take 60% away and one soon stops even wanting to produce more, why line the government pockets, and get nothing back for it?”

This is precisely wrong winter. Social mobility, which is what we were discussing is about your wealth relative to everyone elses. So more money in your pocket doesn’t make you one step higher, if everyone above you also has more money in their pocket. What you are talking about is the disincentive of taxation, which is a seperate issue.

Kristian, it’s refreshing to see a person who tries to weigh the pros and cons of different (economic) systems objectively.

But before making statements like this: “But for those who DO accumulate 100K or 1M, they’ll probably overpay by about 25%—30% to acquire their assets in the first place”, you should perhaps refer to something else than your “probably”.

Anyway, the problem – or the way the world just is – is that if you have money making more money is relatively easy. Whatever you do, wherever you live can’t change that. It can’t be a big surprise that it’s true in Finland. too. The state and municipalites have tried to address the problem with loans and what not. So, it’s quite easy capitalwise to set up a small firm here – if you happen to be a woman, in particular.

But I tend to agree that even more could be done. So far capital-intensive growth has worked well, but in the future service sector will become more and more important … not that Finland’s econmy could ever be based primarly on services, there is the language barrier, remoteness and the small size of the country among other things. But it’s a social problem: it’s better to have people doing something, even less productive things, than do nothing. And fewer and fewer people are talented – or good looking! – enough to compete in the global market. Those who can must pay for the rest, and that can work only if they feel thay get soemthing worth while in return for their money.

Finnish firms make more profit than any other firms in the world, by the way. And the industry sector is likewise the most efficent in the world. Something must have been done right

And Finland is not that expensive compared to its main competitors, actually it’s mid-priced – although, yeah, shopping in Bauhaus here and in Germany may give you a different idea. But it’s above all the size of the customer pool, most things cost about the same, but the special offers are something we here in Finland can only dream of.

“Ah the evil ultra-rich??? Can you say Bill Gates???? ”

Yes, and I can also say *evil* Bill Gates

I’m not against the notion of building individual wealth and being able retire comfortably from it. Passing it down to heirs is ok too, as far as I’m concerned.

But, of all the valid reasons Americans have for defending their system (and there are some good ones–not all, but many) I can’t see why it’s so common for Americans to support the idea of having an ultra-rich segment of society that ‘purchases’ decisions that affect everyone else. They must be doing a good public relations job with charity work or something.

I try to be open-minded about understanding these things, but I haven’t heard a good reason for that one yet. Anyway, I’m not open-minded enough to want it here. Such an idividual would probably buy the entire southern/western coast of Finland and occupy it. And then we would all brag that we have such an individual here?

“US minorities skew US figures downward”

“Huh… Have to seen what Asians are doing here? Very well.”

Sorry, I meant blacks and hispanics, in particular. But, I think you knew what I meant

“I think its a culture issue. You bring your culture with you. Its that simple.”

Exactly. In this case we actually agree. Now stop working against my point.

I can’t see why it’s so common for Americans to support the idea of having an ultra-rich segment of society that ‘purchases’ decisions that affect everyone else.

There’s a very good reason for that. Ask yourself what do the ultra-rich do with their money? Do they somehow take it out of circulation, – stuff it in their mattresses, or in some vaults where they swim in it? No. Some gets spent on conspicuous consumption, but the vast majority goes back into the capital markets, where the marketplace – i.e. the people – makes the decisions on what to do with it (as opposed to the government, which has taxed the money into their coffers).

That vast amount of capital is better spend by the marketplace than by some government bureaucrat, because the bureaucrat cannot be faster than the marketplace in knowing where the money should be invested.

“That vast amount of capital is better spend by the marketplace than by some government bureaucrat, because the bureaucrat cannot be faster than the marketplace in knowing where the money should be invested.”

Yes, of course. No question that it belongs in the marketplace rather than with government.

And if these ultra-rich people would spend ALL of their money on conspicuous consumption, then it might not be so bad; they’d be fueling the economy by providing jobs, etc. There are a few custom yachts being built here in Finland that do just that. Plus, presumably, people will be hired to crew and maintain them…

However, these ultra-rich can’t possibly spend every dime, so they invest in companies. But, not only do they invest, they also hold an overwhelming amount of voting shares in those companies—very disproportionate to the general investing public.

And to make sure their investment go the way they want, they use their enormous capital to influence political decisions. This, in turn, affects everyone.

Why should so much power be held by so few individuals? Does it benefit anyone in the general investing public?

finnpundit,

actually the rich tend to spend their money less efficiently than the poor. The poor tend to spend the money on their own doorsteps on everyday things. The rich put some under the mattress, some in offshore accounts and give some to the bank to invest – which they also often do offshore.

There is no consensus among experts on this issue.

But, not only do they invest, they also hold an overwhelming amount of voting shares in those companies—very disproportionate to the general investing public.

And to make sure their investment go the way they want, they use their enormous capital to influence political decisions. This, in turn, affects everyone.

For the most part, everyone can rest assured that they know the aim of a corporation, because it is only one thing: to make profit. Very rarely do such corporations engage in political decision-making that would deviate from this “prime directive”. In fact, shareholders, both big and small, expect corporations to defend themselves through politics if political trends spell the curtailment of the corporations’ ability to make profit. As these profits are the lifeblood of an economy, the well-being of corporations becomes critical to even those who are not shareholders.

I don’t mind one bit that corporations use their capital to influence political decisions. The only thing that is important, though, is that it’s transparent: that it is known by the public. Not only does that dispel any notion of a conspiracy, but it also forces the corporation to exlain to the public the issues involved from the point of view of their prime directive.

“For the most part, everyone can rest assured that they know the aim of a corporation…”

It’s not about corporations! It’s about a disproportionately large investors (or select groups) who invest in– and assumes control of– corporations. There’s a big difference. As you correctly stated, corporations act in their own best interests. But investors also act in THEIR own best interests. Those interests aren’t necessarily the same. Therefore a disproportionately large investor (or select group) can influence a corporation to act against its own interests–and perhaps against other investors, like you and me. And they use the political process to achieve it.

So, instead of handing-over all this capital and control to a small number, wouldn’t YOU rather have a piece of it to invest and control? I probably would. And remember, these aren’t necessarily blue blooded Republicans in these control positions.

Obviously you would like to influence Europe to be more libertarian in its economic affairs. That’s fine, because, if it’s done right, it would probably help both Europe and the US. But when you start defending oligarchs, then even the like-minded will close their ears.

Unless you have a better argument for supporting them?

When it comes to supporting oligarchs, it seems Europe is well-ahead of the game, considering the prevalence of “old family” corporations that somehow get state support, as long as they pander to the state’s welfare agendas.

In the US, on the other hand, oligarchs tend to invite trouble, in the form of shareholder rebellions. Now, we tend to imagine that these rebellions consist of small shareholders, who probably won’t be any match against the “oligarchs”. But in reality, most shareholders are represented by mutual fund managers, – who are in open competition against the more than 2000 other mutual fund managers for the attention of small shareholders – in addition to the managers of huge pension funds. These funds, as you should know, are so important to maintaining share price that “oligarchs” would rarely try to cross them. Rather, they would do their utmost to court them, as well they should.

Though such funds exist in Europe (including Russia), they simply don’t have the same size as those in the US, because the state interferes with the workings of capital by taking on the role of administering pensions. Thus, funds which are critical in holding “oligarchies” at bay in the US simply do not exist in the EU nor Russia. The prime directive of profit is preserved in the US, at the same time it is being perverted in Europe, mainly by a state that favors oligarchs – if only to show that the state is needed to keep those very same oligarchs in check.

Checks and balances via mutual funds… Could be.

Of course, another scenario might be that oligarchs who have controlling interests of companies will pay themselves with say, stock options; then deplete other investors’ share value (yours and mine) while increasing their own personal wealth.

I don’t know for sure, but there might now be some checks and balances in place to prevent this particular occurrence. But then again, I think we can be certain that they’ve tilted the system enough in their favor, through funding of political processes, so they’ll always walk away richer, whereas the average investor might not.

In any case, we haven’t identified a bona fide reason for why oligarchs might be useful to society. So I’ll try to help the discussion by saying that maybe, but only maybe, their efforts thwarted (and perhaps still thwart) an overly-powerful worker movement in the States.

I’m pretty sure they’ve successfully sold the American worker on the concept of self-reliance and anti-union thinking, etc. I can’t say for sure, but it seems plausible, considering that this would seem to be in their direct interests.

However, even if we agree that this is a good thing—assuming that it’s even true—then I don’t see defending the existence of oligarchs as good strategy for convincing Europeans to adopt freer economic policies.

IMO, you’ll get better results by simply stating that there is a long historic basis for it, and it’s deeply ingrained in American society. And then you could perhaps challenge us to improve our economies via lowering taxes, etc. , yet still maintain policies that prevent more oligarchs from emerging here. I think it’s an honest approach that’s more palatable.

Just my opinion of course.

Though such funds exist in Europe (including Russia), they simply don’t have the same size as those in the US, because the state interferes with the workings of capital by taking on the role of administering pensions.

Ha, ha, Finnpundit’s mission in life seems to be to write about things he knows nothing about. Now he’s promoting – without knowing it – a pension system that is much more socialistic than in many EU countries, Finland included.

And yes indeed, there are a lot more “oligarchs” in Europe than in the USA … one just has to remember to turn everything Finnpundit writes upside down to get the facts straight.

then I don’t see defending the existence of oligarchs as good strategy for convincing Europeans to adopt freer economic policies.

This is the second time you’ve referred to this as an agenda. On the contrary, there’s no point to trying to convince Europeans to adopt freer economic policies, as they’re under the tight control of the welfare state elites.

The point is to convince Americans that Europe is not a model to follow and, furthermore, a potential enemy of the United States, against whom counter-strategies need to be devised.

Seeking debate with Europeans enables us to find weaknesses towards that goal.

Seeking debate with Europeans enables us to find weaknesses towards that goal.

That sounds like a worthwile plan. When did you intend to start?

It’s been going on for quite awhile. I haven’t spotted any weaknesses in any of the criticisms America has of Europe, given the quite poor responses received. Some of my colleagues have more mixed reviews. But, as I’ve said before, the internet provides a useful testing-ground when formulating strategies, – all of us agree on that.

Perhaps the biggest lacunae in European thinking is that America will continue to treat them as allies. This can be, – and should be – used to American advantage as long as possible, but jettisoned in due course, as European freeridership becomes a liabilty that’s not worth bearing.

I haven’t spotted any weaknesses in any of the criticisms America has of Europe

That is hardly surprising, given your somewhat limited powers of observation. In fact, you rarely seem to spot much.

Perhaps the biggest lacunae in European thinking is that America will continue to treat them as allies.

Actually, ever since Georgie the Chimp took over, it has been fairly obvious that America is not interested in having allies.

#110

Colleagues? Oh, I didn’t realize this is a coordinated effort. I suppose I’m just naive to the ways of the world

But, since your efforts have official purpose, then I’ll continue my diatribes concerning high prices, exorbitant taxes and low salaries here in Finland, as I’m sure it will help your cause….and maybe even mine

One thing I can’t understand though, is this ‘welfare elites’ terminology. I mean, I suppose politicians are considered ‘elites’ by their nature. But ‘welfare elites???’

Obviously Finland’s left panders more to those who use welfare—-and it even strives to convince people that they ‘need’ welfare, especially welfare in the form of transfer payments to affect their social engineering agenda. But I never really considered these politicians to be ‘elites.’ In fact, as individuals, they’re usually quite ordinary—conniving, but ordinary. So, excuse me if I’m tempted to chuckle.

But, I’ll restrain myself for sake of fairness. That’s because, despite the many other—perhaps more intellectually sound, albeit more confusing—explanations for why Finland is still shadowed by this self-defeating specter of statism, the ‘welfare elites’ terminology is a good ‘nutshell’ explanation that members of the ever-growing, simpler-minded segment of the US population will understand.

So I’ll support it!

the author of this site is quite clueless indeed…

I haven’t been up to anything lately. I’ve just been letting everything wash over me recently. My life’s been generally boring lately.

Howdy Guru, I fell lucky that I located this post while browsing for small business loans for minority owned businesses. I am with you on the topic d States | An American’s blog in Finland. Ironically, I was just putting a lot of thought into this last Tuesday.

There are many things I take issue with in this post but the mainly I would like dispute the claim that the poor in the U.S. recieve healthcare through medicaid. It is estimated that 60% of the poor in the U.S. are not covered by Medicaid. According to the U.S. Dept. of Health and Human serivces “Even under the broadest provisions of the Federal statute (except for emergency services for certain persons), the Medicaid program does not provide health care services, even for very poor persons, unless they are in one of the designated eligibility groups.”
There are unquestionably over 40 million Americans without health insurance. Having grown up poor and uninsured in the U.S. I can attest not only to physical harm that can arise from neglecting illnesses but also from but also to the phsycological stress it puts on a family. For this reason alone I would rather live in the worst ghetto of Helsinki rather than that of Baltimore anyday.
Having a statistically bigger income, more cars and square footage says nothing about actual quality of life.

hey finland shut,wait antil 30 years from know when u see all fucking africa come to live in finland and bangladish,kurdish and all world come to finland,and u can even go to get dildo from stockman to take it in ur ass with out looking ho going to fuck u in street or next to realway station,ur time is coming,just like america,long times was no crimes,every body knew each others,so finland ur time is coming,specially when u peaple have alot sluts in finland,finnish girls all what they talk and thing is just about when they get fuckt,is that what good school in finland to learn,i want let my sister to live in finland,for what to learn to be a slut and get fuck in any park in finland,no no