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Ovid (2709)

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Stuff with the Perl Foundation. A couple of patches in the Perl core. A few CPAN modules. That about sums it up.

Journal of Ovid (2709)

Wednesday October 26, 2005
08:59 PM

The Dangers of Socialism

[ #27324 ]

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

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

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

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

Really, in reading up about Finland, it sounds too good to be true. Anyone familiar with Finland able to provide a counterpoint?

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  • Thanks for warning us about these perils. I have emailed this to everyone I know so they can be aware of the danger. :)
    • Then hopefully they'll read my counter-argument, too. One primary tenet of economics (and one that's often not taught) is that in any given economic system, there tends to be an inverse correlation between efficiency and "fairness". If you go too far to either extreme, the systems can break down. One problem with many socialist countries is that they have strived so hard for "fairness" that they tend to be less efficient and economies like the US tend to dominate. Witness the economic doldrums of France

      • Witness the economic doldrums of France as a classic example.

        I guess I'll have to step up to the plate on this one ;--)

        Not being an economist, I won't comment on figures and if the French economy is really that bad though. I will just give an example of why I can't really comment ;--)

        My favourite economic example is a perfect illustration of a line that should be familiar to you: "There Is More Than One Way To Do It". See I used to work for Airbus, a German-French_English (with a smidgen of Spanish th

  • Quick note....

    Speaking as a danish citizen. Notice quite a few scandinavian countries in the top 10 those charts.

    Also note that the income tax are not flat, but progressive. []

    I believe that one of the reasons of the fine ranking, is trust. I don't expect to get cheated/lied to/murdered by fellow citizens/ politicians/the state (ok, politicians always twist the truth a bit). This makes it easier to create and innovate, and more likely to share.
    • Yes, cultural differences are a huge problem. On this side of the pond, we have a nasty habit of placing socialism on par with Satanism. I find that amusuing because most citizens of the good ol' USA are quick to condemn this economic system despite that fact that most of them don't know a damned thing about economics.

  • I am not a citizen of Finland, but I have spent about a year there. This is realy great country, but ...
    1. Finland receives big amount of support from EU (especially to support northearn teritories)
    2. I have seen a lot (and I mean A LOT) of drunk people wandering all day through out the city. I suppose, that this country won't last in this condition to long, since prices of alcohol are decreasing and most Fins do like to drink.

    But hey, at least now, they do make a great living.
  • While I have no personal knowledge of Finland, here are some fact and figures, courtesy of Wikipedia []:

    1. Finland [] has a population of only 5mil spread over 338,145 km², making it only the 162nd most densely populated country.
    2. the Finish miliary [] expenditure for 98/99 was only 2% of the Finish GDP. Compare to the USA's 3.7% for that time frame, a number which has surerly risen since then.
    3. 92% of all Fins are, well, Finish [] :)
      (My point beeing that demographic homogeneity surely encourages trust and a grea
    • Point 3 is a load of crap.

      Last time I checked, Australia has the highest rate of migrants of any country in the world, over 25% of the country wasn't born here, and it works just fine thank you.

      One thing I will say though, is that we don't have any major minorities (except for the aboriginal situation sort of...). There's no equivalent to the entrenched poor black or latino populations America has to deal with. At least, not amoung the migrants.

      But again, if you look at the top cluster of countries, Norway,
      • Point 3 is a load of crap. Last time I checked, Australia has the highest rate of migrants of any country in the world, over 25% of the country wasn't born here, and it works just fine thank you.

        I'm sure it does, but you can hardly say "Point 3 is crap" based on that - for one, thing, every point I listed is a contributing factor, changing just one may change the situation a bit, but the other factors will remain (as you yourself pointed out!).
        Furthermore, Australia is very different from both Finland

  • Some more interesting (some more, some less :)) comments at Ovid's LiveJournal [].
  • At the highest incomes, income taxes are a staggering 45%.

    As Frej pointed out, Finland's tax system is progressive, not flat, so this is a marginal rate.

    Through the Kennedy Administration (IIRC), the US Marginal tax rate was about 60%. It was somewhat high until the Reagan administration, when the tax code was cleaned up and replaced with a three(?)-step rate structure (with oodles of shelters). That "high" tax rate was justified at the time because it was a 60% tax on all income above $1MM/year