One-Third of Finns in Poverty Without Support?
Here’s some typical welfare state propaganda for you, from the state broadcasting company YLE…
Nearly one-third of all Finns could be living in poverty if not for state financial support, according to a report by the European Commission released on Monday. The report compares the social inclusion and social protection of EU member states.
Finland has fewer poor people than the EU average. However, without the safety net of income distribution, that number would be higher than the EU average. In Finland, 29 percent of the population would be at risk of living in poverty without income distribution; the EU average poverty risk is just 26 percent.
In Finland young people, many of whom are unemployed and students, are particularly vulnerable to poverty. Institutionalised unemployment and displacement of vulnerable groups are particularly problematic in Finland.
10% of Finns currently live in poverty and without the interference of the welfare state, it could jump to 26%. Finland has some of the highest unemployment in the EU, especially amongst Finland’s youth. This high unemployment is created by welfare state ideology. Yes, the welfare state redistributes the income to the poor who are unemployed – but if they actually had jobs, the money would distribute itself. Would you rather be unemployed collecting welfare or employed and taking care of yourself?
The obscene taxation in the welfare state no doubts keeps people below the poverty line as well. There’s no doubt a large group of the population floating around the poverty line who could pull themselves out of it with some serious tax relief. This story from YLE is a perfect example of “the state breaking your legs then giving you a crutch to fix it.”
No doubt man. My buddy that has been in Finland for 6 years cant even hold a job there. He says he has been on that unemployment for 6 years.
Going back to Canada for him seems a sweeeeet deal if it were not for his Finnish wife being bloody home sick.
I like Finland, but this BS of high taxes has to stop.
They youth have to do something about it. But what ? oh yeh, get the best of the Finns thinking to hit the road and leave. Get the scientist groups to head out.
Finland is on borrowed time, the crash is soon to hit. Where will you be when the state cant afford to give out the hand outs any more. Once my school time is over. Im outaaaa heaaaaarrrr.
Sad for my Canadian friend, get rid of the Finn bitch and head home to greener grass. But then again he may like KELA.
This place is like a catch 22. LIMBO
Comment by Born in the U.S.A — Tue, Feb 20th, 2007 @ 12:43 pm
“This high unemployment is created by welfare state ideology.”
That is a bold statement. I didn’t know there is a universal correlation between unemployment and welfare state ideology.
I know it might be difficult to get a job in Finland for American who doesn’t speak Finnish. I’m sure it is equally impossible to get a job in Canada if you don’t speak English.
But I’m completely convinced that rich and successful people will redistribute the wealth freely in their divine wisdom, just like your libertarian ideology so precisely predicts. Take a look at Olli Pekka Kallasvuo or Mreal or Perlos. It’s amazing how all that extra money flows down the ladder…
Comment by Kraz — Tue, Feb 20th, 2007 @ 12:51 pm
Suppose machine intelligence rendered all human labor worthless. Under libertarianism, ownership and open source would then be the only ways to gain access to the fruits of industrial civilization.
Comment by Markku — Tue, Feb 20th, 2007 @ 1:22 pm
Propaganda. Haha. It’s true. If the safety net was taken away, are we seriously supposed to believe that by magic all these unemployed people would find jobs and if not, all the rich would quite happily buy their food for them and pay their rent?
Also, Yleisradio is not a state broadcaster. It is a public service broadcaster, just like the BBC, SVT and many others. There is a difference.
I don’t consider our taxation to be obscene. It seems to me you get what you pay for. If you want a society that doesn’t care about its fellow members, doesn’t provide basic essential services such as health care, then of course, I am sure having low to no taxes is an option. Personally, I would rather pay.
Comment by JG — Tue, Feb 20th, 2007 @ 1:30 pm
Let’s all move to New Zealand..!
“New Zealand’s Prime Minister Helen Clark says New Zealand has significant seasonal work opportunities and is keen to see Finnish people take them up.” – Newstalk ZB, New Zealand – Feb 20, 2007
…and Tarja has been sniffing round:
http://www.kaleva.fi/plusmedia/img/hires/20070219/hires_4907425_1F294B62C.jpg
heh.
Comment by FinnFreak — Tue, Feb 20th, 2007 @ 1:52 pm
George Carlin had some great ideas to fix this:
http://www.youtube.com/watch?v=yL6ULruYjNA
Comment by a — Tue, Feb 20th, 2007 @ 2:27 pm
“…significant seasonal work opportunities.”
Nah, I would change my current position back to some limited term in tramdriving any time, but going antipodal to pick kiwis is a bit too much reversal career development. I quit on agriculture and forestry related works at 16.
Comment by Antti (the redneck one) — Tue, Feb 20th, 2007 @ 2:31 pm
Actually, the EU’s own study determined that those lacking in education are much more likely to be poor and unemployed. So, does that mean that a fully 26% of Finns are under-educated and that the welfare system is compensating those who had no desire, or what was said in a earlier thread, too lazy to get an education.
With an education an unemployed Finn can just pick up and move to where there is work. Not so much the others. Then again, a good portion of them would be too lazy to do anything.
That report mentioned that a good percentage of these families have neither member of the house working.
Comment by Fred Fry — Tue, Feb 20th, 2007 @ 3:22 pm
Fred, I know, it’s probably genetic with these lazy buggers – let’s have a some sort of a final solution. Anyway, the USA has quite a practical solution: over 2 million people are in prison, then there are the kind of ghettoes and large degraded inner cities areas that Finns can’t even imagine having here with the attached no-hope schooling keeping the situation, hmm, “stable”. It’s good to have models and ideals towards which to strive for!
Comment by mjr — Tue, Feb 20th, 2007 @ 4:39 pm
Phil, don’t think Finland is a welfare state. It’s a propaganda. The expenditure on social security is lower than the EU average. Actually I will agree if you call Sweden or Denmark welfare states, but Finland is not. Finland is just a impoverished country. It’s not surprising that So many Finns are living under the EU average. Finland belong to the third world.
Comment by european — Tue, Feb 20th, 2007 @ 5:28 pm
Phil: “The obscene taxation in the welfare state no doubts keeps people below the poverty line as well. ”
You’ve hit the heart of the matter. But probably not in the way some people automatically assume. But first, I don’t really see any problem with paying people ‘welfare’ if they can’t work—or even if they don’t really feel like working. Welfare isn’t really a luxurious lifestyle choice you know. Most people will choose to work if given a chance, just to be more comfortable.
But the problem with our taxation system is that it’s geared solely for large corporations. But, we can’t all be corporate employees. Unfortunately, our tax scheme chases away small business startups to places like Estonia, and it also prevents our anemic and overpriced service sector from growing—kind of important when we’ve got boatloads of tourists each summer, who’d love to spend money in wonderful Finland!
Instead we give them R-Kioskit that close at 21:00 and overpriced restaurants and hotels. Naturally, it’s not solely an overtaxation problem, but also a flexibility issue with unions.
The OECD says it best, to paraphrase: “Lower income taxes and more flexible centralized union agreements.” I don’t see how that conflicts with the welfare state as such. It’s simply smart economics.
http://www.oecd.org/document/36/0,2340,en_2649_34569_36552804_1_1_1_1,00.html
Then again, maybe we can just stack those who can’t get jobs at Nokia, or at other large corps, in the various high rise ghettos around Helsinki.
Comment by Kristian (in Espoo) — Tue, Feb 20th, 2007 @ 5:37 pm
mjr,
Keep in mind that many of those 2 million in prison…work. (See: Prison Industries) Go into a Government Office or Federal Academy and look where the furniture came from. Prisonor-made.
As for the gettos, they foster unemployment, stupidity, and lack of work ethic in the new generation as they never see their parents go to work to earn a living. Thankfully, the great getto of New Orleans was washed away and its inhabitants resettled elsewhere where most ‘somehow’ managed to find work. As an added bonus, with work keeping them busy, they are no longer sitting around all day long, shooting each other and trying to figure out better ways to get into jail.
Just why is it that Finland has 30% of the population needing assistance? At least a person in Harlem on welfare can count on $15+ an hour in various Government aid. Not exactly an incentive to go and take a $10 an hour job at McD’s. We probably have people in the US ‘earning’ more on welfare than Finns earn at doing real work. So it’s all relative.
Comment by Fred Fry — Tue, Feb 20th, 2007 @ 6:24 pm
“Keep in mind that many of those 2 million in prison…work. (See: Prison Industries)”
Fred, is that meant as a consolation?!
Comment by Kristian (in Espoo) — Tue, Feb 20th, 2007 @ 6:29 pm
Fred:
Actually, the EU’s own study determined that those lacking in education are much more likely to be poor and unemployed.
And more to the point, they tend to live in the economically liberal paradises of New Europe, with the Nordic states and traditional “old European” countries representing the other end of the spectrum. Go figure.
So, does that mean that a fully 26% of Finns are under-educated
Actually, many older Finns are not very highly educated. It is definitely a factor in unemployment and an excellent rationale for spending tax money on a high quality education system, the quality of which even the most fanatical Finland-bashers seldom question.
Pundy did try; he suggested that Finnish kids watch Hollywood movies instead of educating themselves, because education is just a vehicle for the evil welfare state to instill its propaganda (unlike Hollywood, which never ever disseminates any kind of state propaganda). Behold the bold new neocon educational strategies. No child left behind!
With an education an unemployed Finn can just pick up and move to where there is work.
This is a myth harboured by many Finns as well. In reality, a Finnish MD, for instance, can’t just hop on a jet and go work in an American hospital. One needs to be qualified to do the work in the host country. I didn’t even mention the 9-headed beast of US immigration authorities. Immigration to Finland is a picnic compared to that.
In my line of work emigration is probably among the easiest, with the richest man in the world putting in a good word for me, but it does still have its obstacles.
At least a person in Harlem on welfare can count on $15+ an hour in various Government aid.
Funny, when I read these posts by Fred, somehow the image of white robes creeps into my head. I can’t figure it out. Can someone help me?
I’d like some hard data on this $15 per hour factoid. Does one collect welfare 24/7 or is it restricted to business hours only?
Would one have to live in Harlem? Is, um, DNA a factor?
By the way, Fred, before you rant about Finnish slackers any more, have you taken into account the fact that Finland has a higher workforce participation rate than the US?
Comment by Freeridin' Franklin — Tue, Feb 20th, 2007 @ 7:03 pm
Kristian:
Then again, maybe we can just stack those who can’t get jobs at Nokia, or at other large corps, in the various high rise ghettos around Helsinki.
Ha ha. Working at Nokia, you can kiss the dream of ever owning even a ghetto highrise apartment goodbye.
Comment by Freeridin' Franklin — Tue, Feb 20th, 2007 @ 7:12 pm
european:
It’s not surprising that So many Finns are living under the EU average. Finland belong to the third world.
But, thankfully, we are hard-working, resourceful Asian people, not slacking Europeans, like you have argued so many times!
Comment by Freeridin' Franklin — Tue, Feb 20th, 2007 @ 7:13 pm
Never mind the facts…again, Phil.
From UNICEF:
UNICEF Innocenti Research Centre today releases the Report Card 7 which focuses on the well-being of children and young people in the world’s advanced economies and provides the first comprehensive assessment.
“According to the Report Card small North-European countries dominate the top half of the table, with child well-being at its highest in the Netherlands, Sweden, Denmark and Finland.”. US was the second last and UK last.
Another report from America:
“Literacy of College Graduates Is on Decline – Survey’s Finding of a Drop in Reading Proficiency Is Inexplicable, Experts Say
Literacy experts and educators say they are STUNNED by the results of a recent adult literacy assessment, which shows that the reading proficiency of college graduates has declined in the past decade, with no obvious explanation.
“It’s appalling — it’s really astounding,” said Michael Gorman, president of the American Library Association and a librarian at California State University at Fresno. “Only 31 PERCENT of college graduates can read a complex book and extrapolate from it. That’s not saying much for the remainder.”
So maybe welfare state with education and health care paid by taxes is not so bad after all for the poor and middle class.
Comment by tim73 — Tue, Feb 20th, 2007 @ 7:16 pm
“Funny, when I read these posts by Fred, somehow the image of white robes creeps into my head. I can’t figure it out. Can someone help me?”
It’s like this: “We keep most of our niggers in jail……but they WORK.”
I know Fred didn’t mean it that way, but it’s the unfortunate reality if you want to speak plainly. I see it as a failure of the legal system more than the economic system though. Regular jobs just don’t compete with fast cash that’s possible, due to the illegal nature of drugs.
Also unfortunate, is that many blacks in america simply adopt the status quo, instead of calling for legalization of ‘drugs’—a move that would keep much of their community out of prison.
Franklin: “By the way, Fred, before you rant about Finnish slackers any more, have you taken into account the fact that Finland has a higher workforce participation rate than the US?”
To be honest Franklin, I don’t think that’s relevant. Jobs aren’t difficult to get in the US, but many (housewives, in particular) can choose to stay home with their children. I see that as a major PLUS.
Conversely, here in Finland, there’s a subset of society that can’t get jobs because they don’t fit into the corporate mold. Not much else to offer them. It could get much worse when this little global recovery slows. Do we have a local/domestic economy to buffer it? I doubt it.
Comment by Kristian (in Espoo) — Tue, Feb 20th, 2007 @ 7:23 pm
Finland is on borrowed time, the crash is soon to hit.
Oh well, Jesus is coming back real soon, so we needn’t worry.
Where will you be when the state cant afford to give out the hand outs any more. Once my school time is over.
This is a real killer. For one who bitches and whines about “state handouts” you certainly seem happy to enjoy them.
Just so you know, tuitions imposed on non-EU students are a topic in this spring’s elections. So far I’ve been against the idea, but morons like you are giving me second thoughts. It might affect my voting.
Im outaaaa heaaaaarrrr.
Thank you for improving the collective intelligence of the nation.
Comment by Freeridin' Franklin — Tue, Feb 20th, 2007 @ 7:26 pm
Thank you for improving the collective intelligence of the nation.
Oh, to quote Pundy:
Don’t let the door hit ya where the Good Lord split ya!
Where is the old bugger anyway and is he really the director of Odd Globular Beings?
Comment by Freeridin' Franklin — Tue, Feb 20th, 2007 @ 7:32 pm
Kristian:
To be honest Franklin, I don’t think that’s relevant. Jobs aren’t difficult to get in the US, but many (housewives, in particular) can choose to stay home with their children. I see that as a major PLUS.
Yes, I recall you mentioning that women in the workplace bother you. You preferring them at home baking cookies and watching Oprah doesn’t come as such a great surprise.
But seriously, spouses being taxed individually instead of as a household is pretty screwed up. I feel the pain of this tax model, being the primary breadwinner in our little family.
Comment by Freeridin' Franklin — Tue, Feb 20th, 2007 @ 7:56 pm
You know, on the topic of universally available healthcare…..
The one thing that absolutely horrid US presidential administration DID RIGHT is to lower federal income taxes. It allows America’s individual States to collect revenue for themselves and establish programs to provide health insurance for those who don’t have it. Although no one can be denied medical attention in the US, it’ll keep many people from needlessly experiencing financial ruin.
In my opinion it’s a MUCH smarter move than trying to implement some ‘national’ plan. At 300M capita, the country is too big for that. Individual states can do it much more efficiently. They’ll probably get matching funds from the federal government though. Doesn’t matter, as long as the programs are run by the states; not the federal government.
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=FT&Date=20070118&ID=6354268
It might even make the US a “kinder and gentler place” as George the Wiser once hoped it would be. Sitting on the edge of its seat isn’t the best strategy for society, in my opinion. Causes too much stress and aggressive behavior.
By the way, I think they’re using private insurance as a basis. Those who can’t afford insurance, get their policies subsidized.
Comment by Kristian (in Espoo) — Tue, Feb 20th, 2007 @ 7:58 pm
1) Finland does not have some of the highest unemployment in the EU. Finland’s unemployment rate is around 7.6%, which is about average.
2) Finland’s unemployment rate has come down steadily and without interruption since the break up of the USSR in ’89 when the unemployment rate was over 20%.
3) If current trends continue Finland will have 4% unemployment by 2010.
4) The Nordic countries have the highest taxes and yet some of the lowest unemployment in the EU.
5) Denmark is the real unemployment success story in Europe with something like 3% unemployment and yet Danish taxes are a full 6% of GDP higher than Finland’s. They do it through flexicurity whereby employers can fire at will encouraging them to hire, but with generous unemployment benefits to mop up the uncertainty created be this system.
Conclusion
Phil’s talking rubbish again.
Comment by finnsense — Tue, Feb 20th, 2007 @ 9:01 pm
Phil and his assorted cronies on this site are, well, quite regularly factually challenged. Or, rather, like for the Bush administration: “facts on the ground don’t matter” for them. This is because they have a grand political/economical Theory that Explains Everything. So, if something is empirically contradictory to the Theory, the observation must be faulty because the Theory Cannot Be Wrong. Quite simple. Reminds one of which great political ideology of the 20th Century – hmm, now that’s a hard one…
Comment by mjr — Tue, Feb 20th, 2007 @ 9:19 pm
2) Finland’s unemployment rate has come down steadily and without interruption since the break up of the USSR in ‘89 when the unemployment rate was over 20%.
Please check your facts. 1989 certainly represented the golden 80s at their height, with practically full employment. The Soviet Union wasn’t going to fall apart in another two years.
1991-1994 wasn’t such picnic in economic terms, though. Imagine a quarter of the GDP disappearing overnight.
Comment by Freeridin' Franklin — Tue, Feb 20th, 2007 @ 9:20 pm
With respect Franklin, you’re being a bit pedantic. The point remains that since the restructuring the rate has steadily decreased. I confused the fall of the Wall with the break-up of the USSR but I think I can be forgiven a couple of years.
Comment by finnsense — Tue, Feb 20th, 2007 @ 9:29 pm
With respect Franklin, you’re being a bit pedantic.
That’s a criticism that’s hard to feel insulted by. You might want to revise it after seeing my desk at home or at work. At work, I’m staring at a relational database model, pinned to my cubicle wall, for a project that finished a couple of months ago that is covered in coffee stains.
Comment by Freeridin' Franklin — Tue, Feb 20th, 2007 @ 9:34 pm
Finnsense, you claim the USSR broke up in 1989 and that according to current trends, Finalnd will have unemployment of 4% in 2010. You then go on to say Phil is talking rubbish again. So tell me, was it not the USSR I visited for the last time in March of 19991? Maybe it just took a while to break up being such a large country
Also the peak unemployment of approx 20% you mention (somewhat higher outside of greater Helsinki) was achieved around 1994. Now as for 4% by 2010, do you mean unemployment or 4% of the workforce employed? What with the loss of real jobs (not short term casual appointments) and forced early retirement programs I think this target of 4 % is a lot closer to your prediction.
Talking rubbish? Don’t forget to take out the trash with you tonight.
Comment by Punter — Tue, Feb 20th, 2007 @ 9:38 pm
About history and the golden 80s:
Here’s a a graph of real estate prices that certainly reassures someone who’s currently looking at properties to buy. Just went to my bank to have The Talk yesterday and have a time booked tomorrow at another bank.
Comment by Freeridin' Franklin — Tue, Feb 20th, 2007 @ 9:38 pm
More neoliberal economic policies will not get rid of unemployment. Neoliberal economic policy needs the unemployment to keep inflation down.
Keep to the left if you want to help the poor.
Comment by Jens — Tue, Feb 20th, 2007 @ 9:43 pm
finnsense: “ The Nordic countries have the highest taxes and yet some of the lowest unemployment in the EU.”
Perhaps it depends on how unemployment numbers are counted. I don’t completely disagree with your premise though. However, we’re heavily financed by foreign (read American) money here in Finland, due to our high taxation policies. If the global economy falls from its current high, then we can only pray that foreign corps won’t find cheaper deals elsewhere.
finnsense: “5) Denmark is the real unemployment success story in Europe with something like 3% unemployment and yet Danish taxes are a full 6% of GDP higher than Finland’s.”
Well, according to the OECD…..
“Although labour force participation is high, the number of hours worked is low, not least because of high marginal taxes. [...] The number of disability pensioners is high….”
And the OECD’s suggestion concerning Denmark…….
“….an updated medium term fiscal strategy should include timed, targeted and fully financed tax cuts which are much needed to make work pay better.”
http://www.oecd.org/document/4/0,2340,en_2649_201185_36604740_1_1_1_1,00.html
Actually, there’s striking similarity between Finland and Denmark, in terms of OECD observations and suggestions……
http://www.oecd.org/document/36/0,2340,en_2649_34569_36552804_1_1_1_1,00.html
Comment by Kristian (in Espoo) — Tue, Feb 20th, 2007 @ 10:12 pm
That depends on how you look at it. One excuse that the US puts all these people in prison is that they are no longer unemployed. My comment above was to point out that they are doing work while in jail, so those are jobs now not available to the general population. Then there are the 10+ million illegal immigrants who are not counted in the workforce nor are the jobs that they do.
My wife does not work. She does have a job, and that is as a full-time mom. She had a job and is offered work all the time but would rather stay at home. Luckily our situation does not require two incomes.
How many Finnish moms would prefer to stay at home but for some economic reason cannot?
I have one friend who would but she complains that her friends want to know what is wrong with her, you know, because there is free day care and so on so that she can go to work. She feels this pressure that she has to work and that the state has removed a valid excuse for her to stay home.
Then you have the others who do ‘work’ but are gone for years, only to pop in for a couple weeks between kids. Realisticly, they are not part of the workforce. If anything, they are a drain on it.
Then you have the students who want to work but cannot unless they want to risk losing their opintotuki.
And how is it that with less social welfare, a higher percentage of Americans manage to not participate in the workforce than Finns? Is Finnish society such that both members of the family must work? My wife can work if she want’s
And what is this deal where you can take up to a year of leave at 80% pay so that some unemployed person can have a job for a year? how many are taking advantage of that? (Nobody offered that sweet deal while I was working there.) I bet that does not hurt the numbers any.
and Franklin, I can rant about Finnish slackers all I want as I was a) able to get work in Finland as a result of their slacking, and b) had to deal with these slacker while working in Finland. As far as I can tell, the only reasons why the Finnish workforce participation rate is so high is because a) the Government is a major employer and b) because it is very difficult for a company to fire anyone, especially deadwood.
Comment by Fred Fry — Tue, Feb 20th, 2007 @ 10:48 pm
“slackers….”
I take offense
Comment by Kristian (in Espoo) — Tue, Feb 20th, 2007 @ 10:56 pm
My comment above was to point out that they are doing work while in jail, so those are jobs now not available to the general population.
This is a gem. So those prison manufacturing jobs would be available to the US population?
Anyways, here’s a wonderful cure to unemployment, Republican style. Let’s all go to jail!
Then you have the students who want to work but cannot unless they want to risk losing their opintotuki.
Oh, this tired old b.s. again. If you work enough to lose it, the amount is insignificant to you anyway.
I wouldn’t mind removing the restrictions altogether. By all means, if you can scavenge together enough credits to keep your opintoraha (that’s what we’re talking about, right?), why should you be punished for working, even if the “punishment” is mostly symbolic.
And how is it that with less social welfare, a higher percentage of Americans manage to not participate in the workforce than Finns?
So, now a lower workforce participation rate is a good thing. Nice spin. By the way, the $15/h rate you quoted earlier doesn’t really sound like “less social welfare”. Or doesn’t it apply to white people? Or are you possibly flip-flopping on the issue?
Comment by Freeridin' Franklin — Tue, Feb 20th, 2007 @ 11:22 pm
b) because it is very difficult for a company to fire anyone, especially deadwood.
Why would this be difficult? It’s a persistent myth that, granted, even many Finns believe.
I’ve experienced two thirds of a company I worked for being fired without compensation. It didn’t appear to be that difficult.
On the topic of deadwood, there’s plenty of that in middle and upper management. And they do get compensated quite royally when fired. This trend seems to be imported from the US.
Comment by Freeridin' Franklin — Tue, Feb 20th, 2007 @ 11:36 pm
Finnsense:
“Phil’s talking rubbish again.”
I think you will be called anal-retentive now. That’s what – per definition – you are if you disagree with Phil’s divine wisdom and write about it here. I.e. Finnish taxes are high, finnish wellfare-statism sucks, and well, generally everything in Finland sucks. These are the facts. Just understand the reality, and bow your head. We should be thankful for the gospel – as it is not charged for – provided by this temple of freedom.
Comment by Thomas — Tue, Feb 20th, 2007 @ 11:38 pm
That you Thomas seem so happy to read
“Bow your haed”, now that does sound anal-retentive
Comment by Punter — Tue, Feb 20th, 2007 @ 11:41 pm
Franklin:
“Why would this be difficult? It’s a persistent myth that, granted, even many Finns believe.”
And the funny thing is that this myth is being actively put forth by editors of major newspapers (or at least it has been for many years), who should know better, even though the facts tell us that in EU circles Finland is one of the countries where it is easiest to lay off people.
Blogs such as this do not help much in this sense I guess.
Comment by Thomas — Tue, Feb 20th, 2007 @ 11:43 pm
Kristian:
“Well, according to the OECD…..
“Although labour force participation is high, the number of hours worked is low, not least because of high marginal taxes. […] The number of disability pensioners is high….†”
Yet GDP/capita seems high enough. Funny that is. People work less hours, and the number of disability pensioners is high.
And furthermore, according to the very same OECD, Finland has NO gross public economy debt. Unlike almost any other OECD countries. Except Norway and Sweden (and South Korea, I think). But we all know that they achieved this status via low marginal taxes, right?
Comment by Thomas — Tue, Feb 20th, 2007 @ 11:51 pm
Punter:
“That you Thomas seem so happy to read
“Bow your haedâ€Â, now that does sound anal-retentive”
I don’t know what you mean??? I seem happy to READ “Bow your head” (or does the “haed” spelling have some hidden meaning I don’t understand?)? What are you talking about? I think I WROTE it. But I guess it’s anal-retentive to mention this little detail.
Comment by Thomas — Tue, Feb 20th, 2007 @ 11:56 pm
Franklin: “So those prison manufacturing jobs would be available to the US population?”
I don’t think the general population has lots of willingness to press automobile license plates
But for regler amercuns, there’s always work. No shortage whatsoever. But, at the bottom end, it’s not so much fun. That’s mostly due to the collapse of unions in the US. There’s also the problem of exorbitant CEO/management team compensation, which dilutes pay at the bottom end (among other negative consequences). I’m not really sure if politics can solve that problem though. Companies need to evaluate themselves better. Or maybe shareholders/investors should.
As for taxation…. Not even a 50% top rate prevents companies in Finland from paying 1M+/year to CEO’s. It still has the effect of diluting workers’ pay.
And raising taxes only makes the problem worse—companies will just pay CEO’s/top managers even more to compensate for the difference :-/
Comment by Kristian (in Espoo) — Wed, Feb 21st, 2007 @ 12:04 am
Kristian:
“And raising taxes only makes the problem worseâ€â€companies will just pay CEO’s/top managers even more to compensate for the difference :-/”
Why is then that we hear Ollila and the likes complaining about the fact that HIGH TAXATION hinders e.g. Nokia in their scouting for TOP LEVEL experise? Is he just lying, or is it something worse. E.g. politics.
Comment by Thomas — Wed, Feb 21st, 2007 @ 12:14 am
As for taxation…. Not even a 50% top rate prevents companies in Finland from paying 1M+/year to CEO’s. It still has the effect of diluting workers’ pay.
There’s one thing: stock options dilute the shareholders’ assets, not workers’ pay. If the shareholders are willing to grant the options, I have nothing against that from a worker’s perspective. As a minority shareholder with no say in the matter, I might object.
Comment by Freeridin' Franklin — Wed, Feb 21st, 2007 @ 12:14 am
Thomas: “Why is then that we hear Ollila and the likes complaining about the fact that HIGH TAXATION hinders e.g. Nokia in their scouting for TOP LEVEL experise?”
Just business: Get the most and pay the least. If he needs to pay more for TOP LEVEL expertise due to high taxes, then you’ll get less yourself…..unless you also happen to be top level. Or unless the company’s gross receipts rise due to that top level guy’s work.
Franklin: “There’s one thing: stock options dilute the shareholders’ assets, not workers’ pay.”
Sure, but the larger effect—perhaps at the macroeconomic level—is that wealth gets concentrated among top managers, instead of workers. I believe it’s a societal problem—unless you favor oligarchies of course. Then it’s ok
The worst part about it, is that those CEO’s don’t even undertake personal risk—at least not proportionate to their pay. Contrast that with someone who sinks his life savings into a business venture, in hopes of being successful. That guy at least creates value in society, assuming his risk-taking creates jobs, etc.
Of course, he’s the one who’s dissuaded by the 50% tax rate. Those guys go straight to places like Estonia and eastern Europe. Conversely, regular CEO’s will stay here where it’s comfortable and dilute *our* earnings (macroeconomically speaking of course).
Comment by Kristian (in Espoo) — Wed, Feb 21st, 2007 @ 12:39 am
“He’s [the risk taking business owner] is the one who’s dissuaded by the 50% tax rate.”
Actually, he’s not only dissuaded by the 50% rate (assuming he earns that much), but he’s also dissuaded by overly high taxation of his employees; it raises the gross amount he needs to pay them. That in turn raises the amount he needs to bid for contracts. It puts him at a competitive disadvantage, so he’ll go where gross pay for employees is cheaper.
Comment by Kristian (in Espoo) — Wed, Feb 21st, 2007 @ 12:51 am
Of course, he’s the one who’s dissuaded by the 50% tax rate. Those guys go straight to places like Estonia and eastern Europe.
Bollocks. I and a number of consultant chums are in the process of setting up a business, which would effectively double our gross income AND lower our tax rates.
Actually, he’s not only dissuaded by the 50% rate (assuming he earns that much), but he’s also dissuaded by overly high taxation of his employees
Oh, this is easily resolved: pay your employees peanuts. Sure, if they were paid first-world wages, they’d have high taxes. There are plenty of Finnish wage slaves who’d love to have that problem.
Comment by Freeridin' Franklin — Wed, Feb 21st, 2007 @ 12:59 am
Kristian:
“Just business: Get the most and pay the least. If he needs to pay more for TOP LEVEL expertise due to high taxes, then you’ll get less yourself…..unless you also happen to be top level. Or unless the company’s gross receipts rise due to that top level guy’s work.”
Well I won’t since I don’t work for Nokia. But I’m sure Nokia could use part of their TEKES millions to fix that deficit
. Does TEKES have a US subsidiary to pay for Nokias losses in hiring US Top Level Experts?
Yet, Nokia does – afaik – not pay their engineers in Finland (gross) any more than they pay in the US (gross). So there should be plenty of manouvering space available.
“Sure, but the larger effectâ€â€perhaps at the macroeconomic levelâ€â€is that wealth gets concentrated among top managers, instead of workers. I believe it’s a societal problemâ€â€unless you favor oligarchies of course. Then it’s ok
”
Are you a socialist suddenly?
But seriously, where has the wealth “concentrated among the workers”? And you calling the “not concentrating among the workers”, oligarchy, seems like a joke to me. I might be wrong, though?
“Conversely, regular CEO’s will stay here where it’s comfortable and dilute *our* earnings (macroeconomically speaking of course).”
But there are no laws (not even economic one’s) forcing anybody to allow this “dilution”. Yet it happens. It’s not forced upon us by the taxation. It’s rather a convention. An accepted fact.
Comment by Thomas — Wed, Feb 21st, 2007 @ 1:14 am
Franklin: “Bollocks. I and a number of consultant chums are in the process of setting up a business, which would effectively double our gross income AND lower our tax rates.”
Double it? Go to Estonia and you’ll triple it. Maybe even quadruple it. You’ll appreciate the extra buffer when you experience the first client who doesn’t pay you—even though you had to pay your employees for their labor.
Otherwise, you’ll have that dream house much faster. Leverage is wonderful……if you’re on the long end. In Finland, you’re not. Guaranteed.
To be fair though, if the OECD’s recommendations for Finland get carried out (lower taxes), then it’ll work in your favor.
Comment by Kristian (in Espoo) — Wed, Feb 21st, 2007 @ 1:20 am
“However, we’re heavily financed by foreign (read American) money here in Finland, due to our high taxation policies.”
What are you talking about? Having a Finnpundit moment? You make no sense whatsoever.
Comment by Markku — Wed, Feb 21st, 2007 @ 1:42 am
Wow, lots of comments on poverty in a social state. No one even complains that your perfect social state should have no poverty, let alone 10% or higher as you all have.
Got to be a let down to know your social welfare state is not working.
For those who have not figured it out both the USA and the EU have welfare. The difference is the time limit the USA places on the free stuff. You all just keep on giving, how nice of you, and so you get folks who never ever work.
Comment by winter — Wed, Feb 21st, 2007 @ 3:50 am
I’m sorry. Let me clarify that. You can’t fire someone and then hire a replacement in Finland.
Well, they do manufacture furniture (among other things). If it does not come from then then it will from somewhere.
As for the opintoraha, you are the first one to discount the work restriction. Of course the amount is minimal if you work full-time, but as a student, that’s not possible. It should be repealed as the students are paying taxes on their earnings, so taking away what they are entitled to, results in double taxation.
As for the $15/hour of benefits in New York City, I heard it in a radio program and can’t find a net reference. (Lets just say its good and I dare say beter than Finland. Where are Finnish welfare numbers?) I did find a reference that a woman on welfare earned more than a worker in the Soviet Union, but that’s another story.
Comment by Fred Fry — Wed, Feb 21st, 2007 @ 5:16 am
Kristian:
Double it? Go to Estonia and you’ll triple it.
Yeah, those 200k€/year paying opportunities are just waiting for the taking in Estonia. It seems that you’re having an indulgent moment. Don’t bogart it, pass it along.
Fred:
Well, they do manufacture furniture (among other things). If it does not come from then then it will from somewhere.
Would that somewhere be outside the US by any chance?
As for the $15/hour of benefits in New York City, I heard it in a radio program
Are you sure the radio host wasn’t high on Vicodin when he said it?
Where are Finnish welfare numbers?
http://www.kela.fi
Comment by Freeridin' Franklin — Wed, Feb 21st, 2007 @ 8:37 am
2) Finland’s unemployment rate has come down steadily and without interruption since the break up of the USSR in ‘89 when the unemployment rate was over 20%.
3) If current trends continue Finland will have 4% unemployment by 2010.
…and by 2020 it’ll be 0%. YAY!! LOL!!
Comment by Phil — Wed, Feb 21st, 2007 @ 11:44 am
Thomas: “Yet, Nokia does – afaik – not pay their engineers in Finland (gross) any more than they pay in the US (gross). So there should be plenty of manouvering space available.”
Perhaps that’s true. But, I bet Nokia’s top US executives get paid 20X more. Not that I think that’s great……
Thomas: “Are you a socialist suddenly?”
Aren’t we all?
“But seriously, where has the wealth “concentrated among the workersâ€Â?”
I think we’re a bit more sensible about executive pay here in Europe. I know the CEO of one of the largest tool manufacturers here in Europe; he drives an old Opel. Of course he can afford more. But it just shows that there’s a different mentality here. Probably based on old military structures. Maybe it’ll change over time though.
Thomas: “ And you calling the “not concentrating among the workersâ€Â, oligarchy, seems like a joke to me.”
Well, I’m not above telling a good joke
Thomas: “But there are no laws (not even economic one’s) forcing anybody to allow this “dilutionâ€Â. Yet it happens.”
Yes, I don’t have a good reason for the cause. Other than maybe good showmanship.
Comment by Kristian (in Espoo) — Wed, Feb 21st, 2007 @ 2:39 pm
Franklin: “Yeah, those 200k€/year paying opportunities are just waiting for the taking in Estonia.”
Sure, but those who are seeking international clientèle benefit from systems like Estonia’s. They need to charge (international) market prices for their services. Estonia’s (and e. Europe’s) low tax burden and labor costs give them a much higher profit margin.
But also, as in my example of a client who decides not to pay, a low tax and labor cost model is a buffer against any possible losses. And against resulting legal costs incurred. You’re relying on accumulated personal savings at that point; you’ll have more saved in Estonia or e. Europe.
Of course, if you’re clients are exclusively here in ‘honest’ Finland, then such thing are less to worry about. But, as I mentioned before, the OECD’s recommendations will help you—especially on the macroeconomic level.
Franklin: “ It seems that you’re having an indulgent moment. Don’t bogart it, pass it along.”
Ok, here….
Comment by Kristian (in Espoo) — Wed, Feb 21st, 2007 @ 3:00 pm
– Not likely. The US still have domestic furniture manufacturing and Government contracts often give preference to them, regardless of price.
Since it was radio and they were not slurring their speech, it is kind of hard to tell. Anyway, the basic issue is, the higher the compensation, the more people who will accept it over work. After all, if you can get a certain amount of income for doing no work at all and you are offered work where you need to work 20 hours just to earn the amound you were given for free, it is hardly an incentive to get a job.
How about letting people on unemployment/welfare keep receiving that income for a set period if they find a job? That would be an incentive to take a job as they would be losing nothing other than some free time. Maybe hold it and then give them access, like some sort of re-employment bonus if they keepthe job for a year or so.
Comment by Fred Fry — Wed, Feb 21st, 2007 @ 3:41 pm
“…and by 2020 it’ll be 0%. YAY!! LOL!!”
That’s a lazy response Phil. The estimate of 4% comes from the EU. Growth of 3% per year would make this come true (last year it was over 5%), which is around what is predicted by the OECD.
You seem to forget that the US had unemployment of 6.5% after the post bubble recession and it went down to 4.5% in two or three years. Growth rates then were lower than Finnish growth rates.
Comment by finnsense — Wed, Feb 21st, 2007 @ 5:44 pm
Sure, but those who are seeking international clientèle benefit from systems like Estonia’s. They need to charge (international) market prices for their services. Estonia’s (and e. Europe’s) low tax burden and labor costs give them a much higher profit margin.
When we take a trip back here into the real world, Estonian IT subcontractors charge about 20€/h for the kind of work that costs 60€-100€ in Finland. Buying from Estonia will probably get you better value for money, but I see little point in selling myself short and moving to Estonia to work for Finnish clients.
Comment by Freeridin' Franklin — Wed, Feb 21st, 2007 @ 9:16 pm
#57 Yes, of course. But ultimately it’s not the registered address of your business that will determine the billing rate; rather it’s your communication ability. Any discussion about your official business address can occur after the fact anyway. If your clients are multinationals, then it’s even more irrelevant.
However, to fully take advantage of the tax savings, you’d need to have a residence in Estonia. But that doesn’t preclude you from having a villa along the southern coast of Spain, a penthouse in NYC, a chill pad in Tonga….. And of course, your mökki here in Finland
But, as I mentioned, it’s mostly useful if you plan to hire people and seek contracts outside of Finland; leverage works against you here. Eastern Europe is a great hedge.
Comment by Kristian (in Espoo) — Thu, Feb 22nd, 2007 @ 3:09 am
Kristian:
“I think we’re a bit more sensible about executive pay here in Europe. I know the CEO of one of the largest tool manufacturers here in Europe; he drives an old Opel. Of course he can afford more. But it just shows that there’s a different mentality here. Probably based on old military structures. Maybe it’ll change over time though.”
I think this is changing fairly rapidly RIGHT NOW. Haven’t you noticed? Ordinary employees real salaries are just about kept unchanged whereas executive salaries grow exponentially. The question is not what type of car you drive. The question is, how many years can you live WITHOUT salary – given the part of your salary that can be saved after “life-supporting” costs.
This development has been very much to the liking to the economic libertarians btw.
“Yes, I don’t have a good reason for the cause. Other than maybe good showmanship.”
Or too many blogs like this one
.
Comment by Thomas — Thu, Feb 22nd, 2007 @ 11:06 pm
But, as I mentioned, it’s mostly useful if you plan to hire people and seek contracts outside of Finland; leverage works against you here. Eastern Europe is a great hedge.
Blah. If the location of the business is irrelevant, then one should naturally select a real tax paradise. Off to Jersey we go. Doesn’t Estonia have a higher capital gains tax than Finland?
Comment by Freeridin' Franklin — Fri, Feb 23rd, 2007 @ 10:37 pm
#61 Capital Gains/business tax difference in Finland vs. Estonia is mute. But you can reinvest your earnings in Estonia without being taxed.
Also, as a software developer, most of your income will be taxed as personal income anyway; that’s obviously much lower in Estonia.
Then there’s the cost of labor….
Comment by Kristian (in Espoo) — Sun, Feb 25th, 2007 @ 4:23 pm
#62 “…most of your income will be taxed as personal income anyway; that’s obviously much lower in Estonia.”
I mean the income tax is lower; not necessarily the income—as I described in #59.
But again, if you just do business with companies here in Finland, then setting-up a residence in Estonia won’t be worthwhile. Unless of course you plan to make the business grow….
Comment by Kristian (in Espoo) — Sun, Feb 25th, 2007 @ 4:29 pm
Oh yeaahh.. the baaa-ha-aaals of faiaaaaahhhhhhhh…
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