The Story of Finland

From The Atlantic:

Inarguably one of the world’s most generous — and successful — welfare states, the country has a lower infant mortality ratebetter school scores, and a far lower poverty rate than the United States, and it’s the second-happiest country on earth (the U.S. doesn’t break the top 10). According to the OECD, Finns on average give an 8.8 score to their overall life satisfaction. Americans are at 7.5….

It’s a good debate to have, and in some ways, it seems like there’s no reason why the U.S. shouldn’t borrow from Finland or any other Nordic country — we’re richer and just as committed to improving education and health, after all. Here’s the difference: Finland’s welfare system was hardwired into its economic development strategy, and it hasn’t been seriously challenged by any major political group since. And just as Finland was ramping up its protections for workers, families, and the poor in the 1960s, Americans began to sour on the idea of “welfare” altogether. What’s more, some economists argue that it’sbecause of all that American capitalism contributes to the global economy that countries like Finland — kinder, gentler, but still wealthy — can afford to pamper their citizens. With actual Pampers, no less….

Over time, Finland was able to create its “cake” — and give everyone a slice — in large part because its investments in human capital and education paid off. In a sense, welfare worked for Finland, and they’ve never looked back.

“In the Finnish case, this has really been a part of our success story when it comes to economic growth and prosperity,” said Susanna Fellman, a Finn who is now a professor of economic history at the University of Gothenburg in Sweden. “The free daycare and health-care has made it possible for two breadwinners — women can make careers even if they have children. This is also something that promotes growth.”

With this setup, Finns have incredible equality and very little poverty — but they don’t get to buy as much stuff. The OECD gives the U.S. a 10 when it comes to household income, the highest score, while Finland gets a measly 3.5….

And there are some major lifestyle differences: Finns live in houses and apartments that are about half the size of Americans’, and their taxes on the wealthy, like those on capital gains, are much higher than ours. (Hence why taxes make up a huge chunk of their GDP.) Professionals such as doctors make far less there, which helps medical care to stay reasonably priced. (The conservative Heritage Foundation ranks Finland as downright “repressed” in some categories, like government spending, on its “Index of Economic Freedom.”)

It’s also worth noting that Finland isn’t a total economic Wonderland, either: It’s not growing very fast and will probably have issues with its aging population in coming years. The Bank of Finland recently predicted that the country might soon exceed the 60 percent debt-to-GDP ratio mandated by the European Union — a common problem in Europe these days.

Some of Finland’s more conservative politicians have suggested cutting public benefits there in the wake of the economic downturn — but even with those cuts, social protections there would still be far more generous than ours.

And the economic redistribution there doesn’t always work perfectly. Some municipalities inevitably find themselves with lower-quality hospitals and day cares, even when they’re supposed to be roughly identical, and recently some pro-business groups have tried to edge the country toward greater privatization (though unions have pushed back.)…

When Americans hold up Finland as a model, their arguments are usually dismissed with two indisputable facts: Finland is indeed much smaller than the U.S., making it easier to disperse generous benefits on a national scale. It’s also far more homogeneous, making disputes over payouts less frequent and less racially charged.

Still, Cook says, the claims of homogeneity are a bit over-stated. Finland has both sizeable Swedish- and Russian-speaking communities, and right-leaning parties like the “True Finns” want to pare back the little immigration the country does have. (Even the True Finns, though, love the welfare state.)

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  • attytjj466

    Finland has about the same population as the State of Minnesota, 5.5 million, 4.5 million of which are Finns, with the only other people gtoup of size being sweds (approx. 270 thousand.) There is no historic minority underclass. In short, an economic comparison betwern the USA and Finland of all places, is meaningless.

  • Klasie Kraalogies

    Except that, after being repressed first by the Swedes, then by the Russians, and the crippled by the aftermath of WW II (where they lost a major industrial center, the second largest city in the country at that time, Vyborg, as well as the rest of mineral-rich Karelia), they did not have a great start.

  • Andrew Dowling

    I don’t see the U.S. ever being able to maintain a welfare state the size of Finland.
    THAT SAID, we could have at least a QUARTER of what they have and be much better off. Mandatory paid maternity leave to starters (like every other developed country on Earth). But you have dimwits saying we can’t “afford” bare-bones safety net programs like SS while we shove billions into DOD that gets unaccounted for every year and shove more billions in farm subsidy and corporate give-aways. Don’t listen to the man behind the curtain saying we can’t do better . . .it’s the biggest myth in America.

  • Jamie P Moon

    Finland’s not an empire. What % does Finland allocate their funds to the military?

  • Susan_G1

    It is not correct to say that because of differences in the two countries, that we can’t learn from the Finns. It’s an excuse. We have all, I believe, learned things from the USSR, haven’t we? We can learn positives as well as negatives.

  • Westcoastlife

    I don’t call Finland a welfare state, because unemployment is low, but a socialist state because everyone shares their individual wealth so everyone can make a decent (not decadent) living.

    In Canada, the ’60s were the golden era of social policy – free health care was introduced.

    The problem is, it is like a pendulum. Forces such as economic recession, war, etc. force people to think in group survival terms. They raise a generation who is hung ho to live well together, who shares the same values and who agree to work towards it together. The next generation, however, takes all the “free” stuff for granted. Some begin to live off the state, with no plan to contribute fairly. While for others, they see the neighbours down the street with a two income family. Suddenly, the individual lifestyle looks better. The idea of a smaller house so everyone can live with a decent roof over their head gives way to “they need to get a job”, I don’t want to help them, I want a bigger house, let them manage on their own. They have fewer kids so they can get ahead (the state will look after them in their old age). The third generation is now faced with high taxes to support the many people not working (retired, and, now a whole cyclical group of welfare recipients who are third generation recipients in the social safety net and haven’t learned how to get a job).

    In three generations, the pendulum has swung back to capitalism as the cure for everything.

    For Socialism to succeed, I think it needs a) people to pay into it willingly b) the right of society to “meddle” or speak into people’s individual lives if they are receiving welfare. Should a person receive welfare if they own a home? a car? Should they get welfare or have child custody take their kids if they never work and have many? How long should refugees get welfare? can new immigrants get welfare? Can we afford elder immigrants who didn’t work/pay taxes in our country? What usually happens is individual rights trump the rights of the system to favour fair contributors. In Canada, we can barely afford our health care, but allow illegal immigrants to received free health care, why? because their individual rights entitle them to it. There needs to be a strong balance between pooled resources and individual rights. The payers of the pool need some say over who can share.

  • Klasie Kraalogies

    Except it is not really socialist. There seems to be a confusion on this continent: High tax and welfare does not = socialism. The amount of legislation affecting the workings of the market is actually less there than here. The market is freer.

    Socialism, in essence is collective (implying state) ownership of the means of production. Hospitals etc are not a means of production per se, but can be a source of profit.

    Also, for the record, I am an immigrant, now citizen, of Canada (SK). I have paid lots of taxes since I arrived here. Also, since the state did not have to pay for any of the cost of my, birth, education, medical care etc till my early 30’s, and I immediately started paying taxes after arriving here, I’m quite a boon to the economy.

  • Susan_G1

    We can learn a lot from Canada. My brother still lives in Quebec, and I’m a doc, so I’ve been following it’s to-and-fro progression from capitalism towards socialism with much interest. I can honestly say that my mother would have lived much longer if she were not sick in Canada, back when she had to travel 64 miles for an ultrasound (Lac Megantic to Sherbrooke) and the nearest CT scanner was in Montreal (157 miles) with a 6 month backlog. However, I admire Canada. I really do. I recall with a bit of pride the day the loonie was first worth more than the dollar. (Yet magazines still charged 1-2$ more, lol!) I admire the many talented Canadians who have made it big and don’t rush to citizenship of other nations. Less crime, a shot at a good education for everyone, less dissatisfaction with life, free health care for all, more idealism, little if any road rage, a lot of pluses that this ‘Christian’ nation, the US, cannot bring ourselves to.

    70% of the US professes to be Christian, yet the struggles we have are phenomenally ungodly. The American Dream is slowly killing us.

  • Westcoastlife

    Oh my condolences for any family from Lac Megantic – wow, I never knew oil in freight cars could blow up like that. I feel so sad for that little town.

    I think rural living in the US likely isn’t much better, am I right? That is a huge problem North Americans face with public health care, education, etc. We have vast swaths of very sparsely inhabited rural areas, and people who live out there probably end up costing us far more than Europe, when travel costs are included. Most provinces are dropping travel compensation now.

  • Susan_G1

    Thank you for the condolences. I’ll accept them on behalf of my nephew’s family. I couldn’t believe what happened. It is a true nightmare.

    It’s hard to compare rural US with rural Canada, because we are not (except for a very few states) as sparsely populated as many places in Canada. I live in what is considered a relatively rural area. I’ve moonlighted in areas which were truly rural. Here, most rural hospitals have their own CT scanners and a stat scan is never more than an hour away. Many rural areas also have their own MRIs.

    The difference is demand based. The US citizenry simply demands the best, and our lack of tort reform scares every hospital into duplicating services. It’s crazy, and it’s one of the reasons the cost of medicine is so high.

    For instance (I hope I’m not boring you), in our relatively rural hospital, we recently obtained the costly capability of doing multidetector CT pulmonary angiography. I can’t tell you how absurd this is, first, because a hospital of about a 45 minute ambulance ride away has one, and second, they detect pulmonary emboli so small no one knows what to do with the results (treating them may in fact do more harm). We were better off, in many ways, when we detected PEs with blood gases and a VQ scan (available when I first started to practice long ago) or pulmonary arteriograms. At least we knew what to do with the emboli we found.

    All of this is to say, no, medicine here is a lot different. It’s “consumer driven” (a horrible idea), services are unnecessarily duplicated, a lot costlier, we practice defensive medicine because of lack of tort reform, and the cost is killing us. Yet it’s not better today than is available in many countries that have socialized medicine.

  • Nick

    American exceptionalism will lead us to say there can be no comparison made. Good history and political awareness will lead us to say that we should be hesitant to make sweeping comparisons. Nevertheless, if is good to look for successful ideas that we can put into play ourselves and it can’t hurt to look to Finland and other succeeding countries for direction (even if its minor). Perhaps we can also look around the world to see what isn’t working (Ahem austerity… ahem, Paul Ryan).