Thoughts of the Professor: WORKERS

Showing posts with label WORKERS. Show all posts

14 August 2024

Do Finns have the patience?

The Finnish economy has been in a mild recession for fifteen years. Now, there seems to be - perhaps - some light at the end of the tunnel once again. This is because, according to preliminary data from Statistics Finland, the seasonally adjusted gross domestic product (GDP) of Finland grew by 0.4 percent from January-March to April-June.

It remains to be seen whether Finland will finally succeed in returning to a growth trajectory that would also allow for balancing the state budget and, eventually, reducing the country's debt. And in time, also increasing the funds available for public services.

In my view, all this is possible, but it requires what former President Urho Kekkonen emphasized in 1952: patience. However, the situation now is different from back then, as the President at that time was urging taxpayers to finance the industrialization of Northern Finland to exploit the region's rich natural resources.

Now, it is more about having the patience to refrain from new public services - and even reduce existing ones - so that the private sector would dare to invest in the country. This applies to both domestic and foreign investors. And workers, who should be willing to follow job opportunities to where they are available.

Previous thoughts on the same topic:
Balancing the Books
The difficult times for Finland's economy are coming to an end
Why Can't Finland Find Workforce?

26 June 2023

History of Finland IX: Enlightended dictator initiated economic growth

This is the ninth part of a blog series where I go through the significant stages of Finnish history. In the eighth post, I described how Finland's transition to a Grand Duchy of Russia led to the domination of bureaucrats who shared common interests with the Tsar, resulting in a halt in the country's economic development, a bleak future for young people from poor backgrounds, and an unprecedented increase in crime.

This changed during the Crimean War, in a pivotal moment, with the death of the old Tsar Nicholas I and the rise of the new enlightened autocrat, Emperor Alexander II. At the same time, Russia began to move towards a new economic system, namely a liberal market economy.

In Finland, this was reflected in the fact that the Senate was now dominated by individuals who were supportive of reforms, such as Johan Vilhelm Snellman, while the old mercantilists had to go. The new Tsar also appointed a liberal Baltic German as the Governor-General.

Under Snellman's influence, Finland began to build a railway network, which reduced the significance of waterways and brought increasingly larger areas into the sphere of economic progress. At the same time, the country's dependence on the old estates and their owners, who enjoyed various privileges and monopolies, diminished, which allowed for economic development to be furthered by a growing number of urban bourgeoisie and rural farmers. This also strengthened Finland's connection to Russia.

The convening of the Assembly of the Estates - after a long hiatus - in 1863 led to the creation of liberal legislation that allowed for free economic activity but bound the administration and the judiciary to the law. This led to the separation of political and economic power, and eventually in 1879, economic freedom was implemented, laying the foundation for the modern Finnish society.

As a result, large steam-powered sawmills were established in Finland's port cities and the value of sawn timber increased along the logging routes throughout Finland. The economic opportunities also attracted foreign entrepreneurs to Finland. Thus, Finland began its path towards becoming a forestry industry giant, and this was supported by the creation of a school reform.

At the same time, the use of child labor decreased, and gradually, rural-to-urban migration gained momentum because people had better opportunities to make a living in the cities. At the same time, the country's prosperity began its transition towards the southernmost parts of autonomous Finland - before that, the wealthiest region of the country had been Southern Ostrobothnia located in the western part of the country.

Finland also underwent a municipal reform, which was initiated because the central government wanted to transfer social, economic, and educational burdens to be organized by the rural population. The money saved from this was used to improve the prerequisites for industrialization in the country. As a result, in addition to the entrepreneurs getting richer, a new social group - the liberated industrial working class - emerged.

At the same time, the entire society was reformed. A police force was created, the Assembly of the Estates were institutionalized, private law was established, and criminal punishments were mitigated, based on the idea of turning prisoners into good citizens. All in all, Finland's future at this stage looked downright brilliant.

The original blog post in Finnish:
Valistunut itsevaltias käynnisti talouskasvun

16 June 2023

History of Finland VIII: Joining of Finland to Russia led to an increase in crime

This is the eighth part of a blog post series where I go through the most significant phases of Finnish history. In the seventh post, I described how King Gustav III's coup continued to strengthen the position of peasants and urban bourgeoisie, thereby increasing their economic activities.

But then a new major turning point in our country's history came. It turned out that Finland's administration was transferred from Sweden to Russia, and the kings were replaced by grand dukes. The first of them was Tsar Alexander I.

At least according to my history education during school, this was said to have happened by elevating autonomous Finland to a nation among nations. In reality, however, the power used in Finland was transferred to the highest officials who shared common interests with the Tsar and further to the nobility, officials, rural businessmen, and urban bourgeoisie, who merged into a Swedish-speaking entity.

During the era of the emerging bureaucracy, the liberalization of the Finnish economy came to a halt, and the economic inequality among people increased. The wealthier population, including the peasant landowners, became richer, while the rapidly growing population became poorer. This was due to the fact that the business sector was not liberalized, and therefore the economy did not grow much. As a result, there were not enough jobs for the growing population.

In Finland, this led to a situation where previously salaried farmhands were reduced to seasonal laborers, whose recruitment principle was to choose the applicant who was willing to accept the lowest wage. As a result, the general standard of living of the people quickly declined.

As living conditions deteriorated, the marginalized and dissatisfied responded with crime, which quickly began to grow, reaching an exceptionally high degree of organization. An example of this was a group terrorizing the area of Nurmijärvi, Uusimaa, and Southern Häme, which included the great-uncle of a noted writer Aleksis Kivi.

This group started their criminal career in 1820, at first with petty thefts and later expanding their operations to include robbery and murder. Eventually, Finland's first organized criminal gang was brought to justice by as many as 700 Cossacks and soldiers - and even after that, they organized a prison uprising.

Another well-known example is the "puukkojunkkarit" (knife-fighters) of Southern Ostrobothnia, whose story may be familiar to some readers. The roots of this group also lay in the lack of future prospects for young men.

As the Finnish economy faltered under the power of bureaucratic administration, and more and more people turned to a life of crime, a growing portion of the population ended up in prison. The numbers were so large that overcrowding in prisons had to be alleviated by even sending people to serve their sentences in Siberia.

Overall, it can be said that Finland's annexation to Russia was initially a step backwards for the country, while our old motherland Sweden continued its positive development, which may explain a significant part of our western neighbor's substantially stronger economy even today.

The original blog post in Finnish:
Suomen liittäminen Venäjään johti rikollisuuden nousuun

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