Editorial | A balanced public economy is in the interest of the poor

Editorial|Editorial

Next the board’s most important task is already known. The government must start work that will lead to the restoration of balance in Finland’s public finances. A balance of expenditure and income would ensure that Finland can afford to maintain and develop the welfare state. The indebted, aging and productivity-deficient national economy cannot withstand external shocks and cannot guarantee the services of the welfare state.

The most vulnerable members of society would suffer the most from the welfare state’s payment crisis. Balance is especially to their advantage. It is regrettable that the dangers of indebtedness are downplayed especially by those who have most enthusiastically signed up to defend the welfare state and those living on income transfers. For example, in Sweden, the left has traditionally supported economic policy choices that promote growth and balance.

The balance has been shaken under the current government for both good and bad reasons – both external shocks like the coronavirus pandemic and political short-term needs. In a world of zero interest rates, it was possible to give up political choices. The problems were bought away from burdening the multi-party government. When one government party got money for its goal, the other was given too. The debt paid nothing.

Now pay. Loan servicing costs are absorbing money at an accelerating pace, and this situation will not change. Interest rates belong to normal economy.

Ministry of Finance on Wednesday, the working group presented its ideas for curbing indebtedness. The goal is to bring the growth of state and other public sector indebtedness under control in the 2020s.

The background thought of the ideas says a lot about how Finnish politics has looked from the outside lately. The ministry needs frames, rules and frameworks for the use of money. Limits that governments would commit to and abide by in good times and bad. So the logic is that if politicians do not agree to tie their own hands, they will use them to distribute benefits to themselves.

It is pointless to blame only the current government for the attitude. Other governments have not been properly capable of counter-cyclical economic policy either: in good times, good things are distributed to the voters, and not saved for a bad day. In good times, the structural reforms that would help in bad times are also not made.

Development is corrosive. Politics should be value choices and prioritization: because this thing is good for the whole, we compromise on these less important things. It is difficult to succeed in elections by promising a responsible and balanced economic policy when voters are used to sweets.

Due to the war, inflation and the pandemic, this government had good reasons not to think about the balance of the public finances in the short term. However, the government had no good reasons not to think about how to reach a balance in the long term. These two goals would have been worthwhile and could have been promoted at the same time.

Ministerial the ideas have already been criticized as being against politics and the welfare state. Officials have also been interpreted as having exceeded the limits of their role.

A few of the proposals offered can be criticized as too stiffening the policy, but criticism of the ministry’s initiative is pointless. The ministry is trying to wake up politics to bear its responsibility and perform its important task – to decide what the “welfare state” will be in the future.

The parties and the future government should outline what kind of welfare state we can sustainably afford. If the ministry, made up of public finance experts, has tips for this work, they should be listened to. And if the role boundaries have been in danger in the ideation work, it may have happened because civil servants have felt a greater responsibility for the whole than the politicians.

The editorials are HS’s positions on a current topic. The articles are prepared by HS’s editorial department, and they reflect the magazine principle line.