Chocolate and Gold Coins

Wednesday, June 08, 2005

What Can Finland Teach Us?

What can Finland teach an ethnically diverse country like the U.S. or India about how to run a socialist society effectively?

Nothing.

The Washington Post sent associate editor Robert G. Kaiser and Post staff photographer Lucian Perkins to Finland to discover what makes Finland work. Finland has the best education system in the world (so the Post claimed) and socialized medical system that is much less expensive than the U.S. medical system and works well for them. Finland, like other Scandinavian countries, has a level of public spending, high taxes, a very equitable distribution of income, and few people in Finland want to change that.

Finland is ethnically homogeneous. Robert Kaiser commented about that here. Basically everyone in Finland is a Finn, speaks Finnish, belongs to the Lutheran Church (although doesn’t attend regularly), and has a lot in common culturally with every other Finn. This does not describe the United States or India. If you could measure ethnic diversity, Finland would be on the left, United Kingdom would be more towards the middle, United States to the right of the U.K., and India would be to the far right. A casual observation is that mild tax-and-spend socialism works well in a country that is ethnically to the left but not so well in a country that is ethnically to the right. Why is this?

Socialism requires cooperation from the participants. People will cooperate to a limited degree, but the more cooperation you ask from people, the more selfish they tend to be. In the United States, most will leave a tip in a restaurant they never intend to visit again, most who regularly watch public television will donate $10 to $20 to public television (but not much more), most will vote in a national election but not in a small local election.

People in India behave more in the way that the non-cooperative game theorist would predict. I am told that if there is a piece of trash in the hallway in a luxury apartment, no one will pick it up and put it in the dustbin. I’ve been to India and have observed that men regularly relieve themselves on the walls in public. I would be willing to bet that this would not occur in a neighborhood where everyone is of the same ethnic group. People are more cooperative among their own “tribe”.

Socialism can be modeled by a simple game: the commons game. In the commons game there are n (n greater than 1) participants. For every dollar that the participant puts into the common pot, the society can buy a public good worth 2/n to everyone. Obviously, if everyone puts in the same amount, everyone gets a good that is worth double what he or she paid for it, which is a really good deal. But the free rider will think: if everyone else puts in their money and I don’t I get the benefits for nothing. Obviously the free rider is a stinker, but these people do exist, and they more likely to exist among groups that feel that they have been abused in the past.

This is the important point: people who don’t trust others in society will act less cooperatively and make socialism unworkable. They will shirk their responsibility to work hard, pay lots of taxes, and avoid taking too much from the public pot. They won’t feel so bad about their anti-social behavior because they don't care so much about these other people. They will feel that the money in the public money-pot is going to those others and they would prefer that the money would stay within their own family.

I believe that we humans have an instinct for cooperating with the “tribe”. The commons game came up all the time in our prehistoric past and humans did not have capitalism to help overcome the free rider problem. Think about warfare. People in the tribe had to put their own interest aside for the common good or the tribe might lose to another tribe. But this feeling of cooperation did not extend to other tribes for obvious reasons: the other tribe might be your enemy, either today or tomorrow. Instinctively, we will feel bad if we are uncooperative with our own tribe but less concerned about other tribes.

Yesterday, I wrote about a fascinating encounter that Saket Vaidya had on a quay waiting for a train in Mumbai. He was about to fight a fiend who was taking a village girl against her will when someone from the crowd intervened. If the crowd had backed Saket, the girl might have been spared an awful fate. But that’s not what happened. The person from the crowd told Saket:

Why are you involving your self with such people? Let him take the girl anywhere. How does it matter to us? Why should we interfere? He may get away, but perhaps we might get into trouble in the end.

My guess is that no Finn would be like this in Finland.

Think about this situation: you are going to play the commons game with a group of Moslems (if you are Moslem, change it to Hindus). One from the group says something stupid (like “The U.S. brought 9/11 on themselves”) and the others nod in agreement. Do you cooperate or free ride? I would not cooperate in this case.

Mild tax-and-spend socialism is a good fit for Finland. Laissez faire libertarian capitalism is a very good fit for India. The United States can tolerate a mild touch of tax-and-spend, but not much. India and the United States should compare themselves to Switzerland, which is divided by ethnicity and religion and is still very free and prosperous, and not to any Scandinavian country.

As a postscript, I would point out that the recent failure of the Europe Constitution is a failure of socialism. European countries are individually must less diverse that Europe as a whole. And if we include Turkey, Europe would be very diverse. A common economy over Europe would require a shift from mild tax-and-spend socialism to laissez faire libertarian capitalism, and Europe is not ready for that.

27 Comments:

  • I think you're absolutely bang-on-target here.....an exceptional post. And explained beautifully.

    Let's see if it makes it to blogmela :-))

    By Blogger Sunil, at 6:45 PM  

  • Hi Sunil
    Thanks for the complement. I obviously wrote it with India in mind. It is clear to me the socialism was a ridiculous choice for such a diverse culture as India. Diversity is wonderful...but you need to have a small public sector to make it work.

    By Blogger Michael Higgins, at 7:26 PM  

  • Hi Michael,
    Thanks for visiting Ink Scrawl and pointing me to Amit's new cricket blog.
    Excellent post you've here, very thought provoking. What you say about India and us Indians is true in many ways. We are a diverse country, but the only time we seem to be together is during a cricket match.
    I don't know if it boils down to "trust" as you put it -- but there's a tendency amongst us to form friends and groups largely within our ethnic/religious groups. The picture is a bit different in cosmopolitan cities like Mumbai -- but is largely true.
    Just a question -- Coming to political systems, are you saying that Democracy is a better fit for diverse societies compared to socialism? I just wondered because in India, people tend to vote for candidates along religious and ethnicity lines.

    Your post certainly provokes a lot of thought.

    By Blogger mandar talvekar, at 8:33 AM  

  • Hi Mandar
    Like Winston Churchill said "I think that democracy is the worst form of government... with the possible exception of every other form of government." In a democracy, people are free to vote for a goodie from the government at the expense of someone else. You would think that people would catch on that this is a negative-sum game, but it's played everywhere.

    There is no alternative to democracy. You can only hope that people will begin seeing that the place to look for goodies is in the free market and not from the government.

    The parlimentary system leads to diversity. That's good and bad. You get to have some candidate who really cares about what you care about. But 90% will be people you neither like nor respect.

    In our two-party system, we tend to look at the candidates and say "none of the above". Right now, there is no one in Congress who is serious about reducing the size of the spending or the deficit. I find it very frustrating. Politics is fundamentally frustrating around the world.

    But in India, at least you no longer have that dacoit Phulan Devi in parliment. Things could be worse. :)

    By Blogger Michael Higgins, at 11:40 AM  

  • Hello,
    I have posted a response to your post here. http://www.blurty.com/talkpost.bml?journal=pleiades&itemid=116947
    It got too large and unwieldy to be put here.
    Like the blog. :)

    By Blogger Pleiades, at 11:50 AM  

  • Great post, Michael. I'm gonna link it on my blog.

    By Blogger Gaurav, at 11:52 AM  

  • One question. Do you think Finland, with all its homogeneity, would do even better if it embraced laissez faire capitalism?

    By Blogger Gaurav, at 12:18 PM  

  • Hi Gaurav
    What do you mean by "do better"?
    If you mean more GNP - sure. If you mean more "Gross National Happiness" probably not, at least in the short run. The Scandinavian countries are like a big family. They like the welfare state. The would be very upset if they had to go to a system that leads to some people being very poor.

    I'm not that bothered by a little poverty (Western style, not Indian style). In India, poverty means not enough to eat, that's a real problem. In the West, it means no cable t.v. - cry me a river. But the Scandinavians really don't want to go there.

    "What works for them" I say.

    By Blogger Michael Higgins, at 12:47 PM  

  • You are wrong about Indians having better civic sense among their own. Indian communities are of different types but civic sense varies from region to region. Also, cooperation between members of each community (nepotism) varies from community to community. To some extent the lack of civic sense is cultural and more importantly a product of lax enforcement of rules. Wherever rules are imposed more strictly (though never as well as in Europe or N America) people are much more careful about throwing garbage etc.(Regions where the caste structure has been weakened by leftist policies are also more egalatarian and perhaps that plays a role thus attesting to your idea to some extent. Another factor is exposure to new ideas. A community that is much more exposed to ideas through books and cinema is much more likely to show some civic sense. Finally the weather, in cold regions cooperation was (and perhaps still is) much more important than in warmer regions. A simple mistake can mean the difference between life and death. Hence moral values are stricter. Another way to look at it is the fact that unclean habits cause more diseases in the tropics than in cold regions. The effect is a much more cooperative mentality among people in cold regions and a religious devotion to washing/bathing among those in the tropics.

    Btw, what you call 'socialism' is more a state capitalistic set up. It is another example of Scandinavian capitalism, an oddity that survived as a result of the pulls and pressures of the Cold War. It is already under attack and will be so for the coming time.

    By Anonymous Anonymous, at 5:06 AM  

  • Both Capitalism and Socialism requires similar initial factors. One of them is a community that is non-tribalistic. If you look through history there have been attempts to destroy tribal affiliations by both leftists and righ-wingers. They are two sides of the same coin.

    By Anonymous Anonymous, at 5:09 AM  

  • But then there is the minor detail of the Russian Finns. Half of Finland was taken by Russia sometime in the first half of the 20th century. When in the latter half of the century it might have been possible for Finland to "reincorporate" their former countrymen, the Finns chose "economic stability" over allowing their former countrymen back into Finland. So I guess social conciousness runs only so deep in that tribe...

    By Blogger The Captain, at 1:43 AM  

  • I think you are putting too much emphasis on tribe behaviour in India. While it might definitely hold true for some degree of individual decision making but not merely in ethnic sense. The over-riding factor in India is the "class" factor (financial status). The resulting behaviour in your examples is better explained if you input class into the equation.

    However maybe you did imply the class factor within your tribe definition?

    By Blogger Closethisaccount, at 6:30 PM  

  • A very good blog, although as a Finn I dont agree to the writer's rude one word answer to the headline.

    By Anonymous Simo, at 3:42 PM  

  • I agree with simo. I think you've overlooked a number of similarities between the US and Finland and oversimplified Finnish history and politics in order to make it seem much less like us than it originally was. For example, there are about 250,000 folks in Finland who speak Swedish as their first language (yes - many Finns are tri-lingual and NO, Swedish is not like Finnish so it's not like learning a bunch of related language.) Further, the loss of land to Russia (which wasn't nearly 50% last I looked) is a far more complicated issue than simply caring to get it back. In short, I think you've way oversimplified your facts for the purposes of picking on a newspaper article.

    By Anonymous Anonymous, at 6:59 PM  

  • Hi Simo and Anonymous Finn
    I never dreamt that this blog would be read by many Finnish people. I admit that I am largely ignorant of Finland but so were the Washington Post authors who went to Finland to see what makes Finland work.

    I don't doubt that Finns are wonderful people and excellent citizens, (in fact, the article implies this) but the Finnish example is not so useful to a land with enormous ethnic and cultural divisions. There is no way to compare the diversity of Finland, 94% Finn and the rest ethnic Swedes, to India, which is split in every conceivable way.

    By Blogger Michael Higgins, at 6:03 AM  

  • I am very curious to know what is the source in Finland of the link to this post. Is it something I could read (in English)?

    By Blogger Michael Higgins, at 8:15 AM  

  • http://www.truthlaidbear.com/customtopic.php?topic_string=finland

    At the top of "most linked".

    By Anonymous Another Finn, at 7:31 PM  

  • Hi Another Finn
    Thanks, I would never have guessed.
    That is so strange. This post is months old. Why did it show up so high now?

    By Blogger Michael Higgins, at 8:33 PM  

  • "Anonymous" here again (only signed in this time) - I think the problem lies more in the piece in the Post than in the comparison - I mean, the piece in the Post is written pretty wide open for the reader to interpret. I suspect there is something in there to be learned (at least for the US - I couldn't even begin to guess about India as I just don't know anything about India.) This is actually a question I've been mulling over a lot. How can we capture the cultural respect for education the Finns have in a larger population, etc? I have no answers - but I suspect there is something there to learn!

    By Blogger Musey_Me, at 9:02 PM  

  • www.finlandforthought.com

    a naive, libertarian american in finland

    By Anonymous a finn, at 5:12 AM  

  • I live in Finland and am married to a Finn but not Finnish myself. While I think you have several good points to make you should be aware that criticizing Finland results in a rather immediate vapid response since monoculture also tends to support strong nationalism.

    Your assumptions about ethinic diversity and behaviours don't quite follow though as the bit you wrote:

    "I’ve been to India and have observed that men regularly relieve themselves on the walls in public. I would be willing to bet that this would not occur in a neighborhood where everyone is of the same ethnic group."

    You haven't been to Finland where guys piss everywhere in public, even when there is a free toilet not more than 100m away. And few, if any, ever pick up random rubbish either. I pick up some of the larger bits around my neighbourhood at times and get odd looks like I've just arrived from another planet. Culture, not diversity, would appear to be a far more influential factor.

    By Anonymous Anonymous, at 11:42 AM  

  • It's a well-written piece, but the content is full of sssssh..., uh. Anyway. You're basically taking what some socialist reporter wrote and applying all the prejudices you can come up with on it. Finns are a highly individualistic people, known for their unwillingness (but not inability) to cooperate. For example, there was a time (1700's?) when a village shared a common field, but, it didn't work purely because people absolutely hated the idea of a commonly owned land where the harvest was shared. So, a land reform was done. In the modern world, the same individualism means that only the state, by imposing taxes, can construct any socialism. Finns wouldn't cooperate voluntarily. -- Monk Anonymus

    By Anonymous Anonymous, at 5:58 AM  

  • OK, that was your opinion. But here's some facts from a native Finn:

    1) "I’ve been to India and have observed that men regularly relieve themselves on the walls in public. I would be willing to bet that this would not occur in a neighborhood where everyone is of the same ethnic group."

    Bullshit. Finns might as a whole behave quite corteously when sober, but hey, just get them shit-faced & you'll see them bozos urinating against your wife's thigh if there're no better places available...

    2) "They won’t feel so bad about their anti-social behavior because they don't care so much about these other people."

    ...which actually describes the modern Finnish society quite well too, and not only moneywise (see above). The common mentality in Finland at the moment is very egotistical, and people behave - sad as it is - accordingly...

    3 "My guess is that no Finn would be like this in Finland."

    Crap, or at least almost. There's been a couple of stories in the local Helsinki rag about someone gotten beaten up / sick / whatever in public, and guess what's happened? Well, you guessed it - nothing. The passers-by have just walked away without calling the cops / ambulance or anything, because hey - not their business...

    So yep, there's some prime Finnish "socialism" for you :D

    By Anonymous Anonymous, at 7:53 AM  

  • More libertarian ideological garbage. Shallow, anecdotal.

    By Blogger Social Democracy Now, at 12:10 AM  

  • It is impossible to implement a civic sense in India. This is because of the nature of Hinduism which is deep in hypocricy, cunningness,jealousy and glorifies cow dung and cow urine as a holy stuff for their worship.

    By Anonymous Anonymous, at 4:36 AM  

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