Financial Times's Finland report

Today the Financial Times published a rather sizeable report on Finland. I criticize some aspects of it below, but in general I thought it was well-put together and interesting.

David Ibison writes:

The film Frozen Land by director Aku Louhimies begins optimistically enough with a thoughtful quote about the Finns by one of the country's most famous rock groups, Eppu Normaali: "Born pure into the future's hands in these cold and northern lands".

From this hopeful starting point the film descends into a gritty study of human weakness and the corruption of Nordic purity that embraces alcoholism, unemployment, a double murder, drug abuse, family violence and depression, all set in a darkened land of dirty, semi-frozen slush.

This is where being a foreigner lets Ibison down a little bit. The line is from "Tuhansien murheellisten laulujen maa" ("A Land of Thousands of Sorrowful Songs"), a semi-parodic take on traditional Finnish pathos of the sort with which Louhimies's film deals in a more serious fashion. The next line in the song introduces alcohol-fueled domestic abuse as a traditional pastime. The line isn't hopeful; it foreshadows (to Finnish viewers) that things are about to go badly wrong for the protagonists.

A wider point is that the film's themes are traditional, nigh-on timeless in Finnish art. It may be an unusually harsh representative of its genre, but it does have a lot of predecessors. Thus, it says something about one side of life in Finland, but it doesn't say much specifically about the times we live in. It's probably not the best way to illustrate Finnish zeitgeist (which Ibison attempts in greater length here).

After noting that economically things are going rather well, the FT does what it always does when writing about any country at any time - it recommends reforms. Finland's problem in need of solving is aging:
At the heart of the problem lies the fact that Finland has Europe's most rapidly ageing population. At the beginning of the 2010s, the structure of Finland's demographics will shift in an unprecedented way when the proportion of the total population of working age starts to decline for the first time.

Simultaneously, life expectancy is going up, meaning people will be spending more time in retirement. According to Statistics Finland, the government agency, the percentage of the population over the age of 64 will increase from 17 per cent in 2010 to 27 per cent in 2035.

If nothing is done, this will create a financing problem. The Ministry of Finance's 2006 Stability Programme paints a disturbing picture in which pensions- related expenditure rises from 11 per cent of GDP in 2010 to 14 per cent in 2030 and stays there until 2050. Public expenditure as a percentage of GDP will increase from 48 per cent in 2010 to 58 per cent in 2050.

I have to say, there are a heck of a lot of assumption in those paragraphs. If nothing is done, if growth forecasts going forward decades prove accurate, if demographic trends remain... How likely is that? If in 1964 you had assumed that demographic and economic forecasts pan out and nothing is done, what sort of a future would you have predicted in 43 years' time?

I'll comment on some of the other articles in the report later.

1 comment:

Tomi said...

According to the article:

"In terms of per capita GDP adjusted for purchasing power, Finland was ranked 17th in the OECD in 1970, and 17th again in 1998 before creeping up two places to 15th in 2004, the latest figure available. The worrying fact is that despite well above average economic growth, Finland is running to stand still."

I think that mr Ibson has been taken for a ride. The last time I checked Finland's ranking prior to the "great depression" in the late 80s was tenth and afterwards, in 1994, 19th. This year the ranking will be close to tenth once again, perhaps twelfth.

Then again, if I remember correctly, these were World Bank's rankings. Perhaps the OECD calculates in a different way.