Economy | “Once the cow is sold, it cannot be sold again” – The government is now selling state assets, criticism from economists

Economists Aki Kangasharju and Mika Maliranta are criticizing the government’s investment program, in which the sale of state assets is used to finance major transport projects, road improvements and the raising of Kela reimbursements for private doctor visits.

Kangasharju’s and Maliranta’s criticisms are aimed at different things. Kangasharju is worried about the efficiency of the use of money, while Maliranta considers the whole arrangement misleading and unnecessary “messing things up”.

Both, on the other hand, also understand at least some of the uses of money.

The government’s investment program became relevant in the fall budget rush, because the government now started the search for sales targets.

Business life the CEO of the research institute, Kangasharju, admits that there may be “room for lightening up” in the state’s holdings. The Finnish state has a lot of holdings compared to comparison countries. He worries about how the money is spent.

“When politicians are given even a little money, they use it all and not all of it is put to effective use,” says Kangasharju.

According to Kangasharju, at least the raising of Kela compensations should be reconsidered, because there is no evidence of the effectiveness of the measure in shortening treatment queues.

Kangasharju would prefer the money to be used to support Finnish growth companies, for example through the Finnish Industry Investment. The government is in the process of capitalizing this state capital investment company one hundred million euros. Kangasharju would bet on it even more.

“We don’t have Swedish style [sijoittajasuku] Wallenbergs, that is, we lack the funding that small Finnish companies would use to grow bigger. Now they are sold to the world for a few tens of millions.”

Work and economy Maliranta, director of research institute Labore, on the other hand, is of the opinion that the government’s idea of ​​financing investments by selling assets is bad and misleading. In the name of fairness, it must be stated that they also used the exact same idea Juha Sipilä (central) flagship projects and Antti Rinne (sd) future investments.

Now only the pot is bigger. The size of the program is four billion euros. In Malirantna’s opinion, a profitable investment should be financed with debt, which the Finnish government still receives relatively inexpensively. Bad things should not be financed at all.

The sale of state assets should be kept on its own track.

“Connecting the sale of assets and investments to each other is unnecessarily confusing things,” he says.

According to him, selling assets and taking on new debt “are the same thing”: both weaken the future position of the state economy, although the first seems more disciplined.

“When property is sold, it means less income from the property in the coming years,” explains Maliranta. This can mean, for example, lost dividend income.

If the ownership is not productive at all, it is unlikely to generate much sales revenue, because the price is a reflection of the future returns of the asset.

“If something is financed by selling a cow to avoid taking on debt, it’s a bit like a scam. It doesn’t remember that once the cow has been sold, it can’t be sold again and the milk for the coming years has been lost.”

Praise the government the investment program benefits from the fact that a large part of the money is going to improve roads and railways.

“The maintenance and upkeep of existing infrastructure is often more efficient than building new lines,” says Kangasharju.

“Economists pretty much agree that the basic infrastructure has to be in order, otherwise the economy won’t run.”

Maliranta also understands that fairway projects are aimed at different parts of Finland. Eastern Finland will benefit from the improvement of highway 5 between Leppävirta and Kuopio and the improvement of highway 15 between Kotka and Kouvola.

“Eastern Finland has most obviously suffered [Vladimir] Putin’s of the attack [Ukrainaan] more than western Finland. It can be thought that the long state power evens out regional differences, especially when it comes to such a sudden shock.”