by Captain Future
Mon Oct 31st, 2005 at 04:05:18 AM EST
Thinking socially can result in economic competitiveness - a great article from front page (with a small edit) ~ whataboutbob
This is a kind of adjunct or continuation to the subject and general ideas of the post here a few days ago by Jerome a Paris, with the theme "wealth capture is not wealth creation." The tone is different, as is perspective, coming from the U.S. But that's what makes a community fun.
Since the Reagan years, the reigning economic orthodoxy in the U.S. and therefore in the globalized economy has become that economies succeed when the wealthy and corporations are free from taxes, government is virtually nonexistent except to subsidize favored corporations, and businesses cut costs by shedding jobs to countries where living standards are poor and labor is therefore cheap, and by forcing employees in western nations to work harder and longer for less pay and smaller pensions and health care support that can be disappeared at any time, while businesses spend freely on lobbyists, legal and illicit graft, and executive pay and perks, all in response not to the longterm health of a company, an industry or a polity, but to keep stock prices going higher by means of favorable quarterly reports.
This philosophy, considered radical everywhere but in the U.S., is increasingly been forced on other nations by the U.S. and its puppet international institutions. But necessary to that philosophy's success is that economies that pursue other courses of action be less successful, and even fail, so that this particular approach doesn't look like a convenient mask on the greed and avarice of a few already wealthy and powerful cabals.
But the evidence is growing that this philosophy is not the only guide to prosperity, if it is such a guide at all.
To truly globalize this radical view, the U.S. economy must constantly be inflated as the most successful in the world, and other economies, particularly those of European nations that have evolved a philosophy mixing market capitalism with social supports, be seen as failures.
Unfortunately the only way that strategy can succeed is if Americans are ignorant of what's going on in Europe, and why. So far, we are.
There's been plenty of evidence given here previously on successful European economies, and specifically in the post I mentioned. News of economic strength in Germany and Italy were cited in the comments. Here's one more example, told in detail in a story from Reuters.
Fifty years ago, Finland was known for little more than the wood pulp from its endless forests. A poverty-stricken land of poorly educated loggers and farmers on the edge of the Arctic Circle, few paid it any attention.
Today,this small Nordic nation boasts a thriving hi-tech economy ranked the most competitive in the world, the best educated citizenry of all the industrialized countries, and a welfare state that has created one of the globe's most egalitarian societies.
The article points out that Finland's success is due in part to it being a small, homogeneous country, which once were its major drawbacks. But any nation can decide to invest in itself by investing, for example, in education and related social services.
Mr. Nygard and his partner, Minna Sirelius, have certainly enjoyed the fruits of Finland's exceptionalism. Neither of them paid a cent for their university education, though they took seven years to complete their respective degrees in history and psychology. Ms. Sirelius enjoyed free healthcare throughout her pregnancy and the birth of their daughter, Emilia, and she plans to stay on leave from her job in IBM's human resources department for 11 months.
She can afford to: The government is paying her 60 percent of her salary to look after her baby. Next year Nygard and Sirelius will choose among the Finnish-, Swedish-, English-, or Spanish-language day-care centers in their neighborhood, and the state will pick up four-fifths of the cost.
If either of them loses their job, they will be able to count on unemployment benefits that range up to 70 percent of their salaries for 18 months. And when they retire they can look forward to generous pensions that amount, for the average Finn, to 60 percent of their last salary.
These benefits come at a cost, of course: Finland levies some of the highest taxes in the world, and if Ms. Sirelius does well in her career, she will pay more than 45 percent of her personal income toward taxes. But she does not object. "I feel that is what keeps our society and country running," she explains. "We can't keep the welfare state running unless everyone pitches in and helps with the costs."
But what Mikko Kautto, a researcher at the government's Welfare Research Center, calls "universalist thinking," goes further. Finns do not regard social spending as a drag on economic growth and job creation, he says, but as a positive force.
"The merit of thinking socially," he argues, "is that having everybody involved, with all our human capital working for the benefit of society, is part of the reason for our [economic] competitiveness."
The World Economic Forum which runs annual business summits in Davos, Switzerland, has ranked Finland the most competitive economy in the world, ahead of the United States, for four of the past five years.
Making sure that every Finnish child, wherever he lived and whatever his background, could get a decent education had a very deliberate goal, says Riita Lampola, head of international relations for the Finnish Board of Education, which oversees schooling.
High level education is the key to what Pekka Himanen, a brilliant young philosopher who advises the Finnish government, calls his country's "virtuous circle."
"When people can fulfill their potential they become innovators," Dr. Himanen argues. "The innovative economy is competitive and makes it possible to finance the welfare state, which is not just a cost, but a sustainable basis for the economy, producing new innovators with social protection."
Other European countries could copy Finland's efforts to improve its education system, Himanen insists, just as they could emulate Finland's heavy investment in research and development.
Finland is still recovering from years of economic crisis, the article continues, so its services are not yet on par with neighboring Scandinavian countries. But this model is widely supported in Finland, especially in a changing world economy.
Indeed, says Mr. Rouvinen, the challenges of globalization mean that "we specifically need our social model. As a small country on the edge of the world we will have steep ups and downs. We have to have mechanisms so that individuals won't suffer from that."
In the end, says Jorma Sipila, the Chancellor of Tampere University, Finland's inclusive social model is its best guarantee for the future. "The conditions for a flourishing economy are so demanding that the state has to make social investments to raise competent people and take care of dropouts so that they carry their share of the burden," he argues. "Marrying prosperity and social protection is the only sustainable future."
That's all the excerpts from the Reuters article, which is here in full: Egalitarian Finland most competitive, too
Social supports are long-term investments. Yet even on their own terms, though business people talk about investment, so few seem to believe in it or understand it on a larger scale. Businesses are often captives of their own mythologies of cost-cutting and short-term profits.
Consider the publishing business in the U.S., which has gotten increasingly enslaved to short-term, high-profit margin thinking. Then you go into a huge Barnes & Noble and see portraits ringing the wall of famous writers who now are the brand names that give these stores their identity, and few if any of them made anybody any money for a long time. And today they just wouldn't be published by commercial trade publishers.
Quality is future-oriented. Decently paid workers with health care and cared-for families return investment in many, many ways, for generations. Europe is years ahead, perhaps light years ahead, in the sometimes difficult enterprise of dealing with all realities: those of world economics, the common good, the greater good, the ecological and energy and design practices for long-term prosperity.
Economics is health. The soul of a nation is as important as its wealth. It is the better part of its wealth.