Finland Elections 2011 / Suomen Vaalit 2011

Tweet Live blog of Finland's 2011 parliamentary election

Portugal and Finland could overshadow EU summit

Tweet

FT.com / Brussels - #Brussels fears #Lisbon left rudderless http://t.co/d2XMLlMWed Mar 23Luis Alves
mokkikunta

‎Even if Portugal were to ride out the storm with its government in limbo, European officials worry that failure to pass the EU-backed measures on Wednesday and Mr Sócrates’ resignation could overshadow the upcoming summit.

“If there is a fall of the Portuguese government, we’re in trouble,” said one senior European diplomat involved in economic negotiations. “How do you sell this as a credible collective response?”

"Finland Holds Key to #Euro Zone ‘Grand Bargain’ - CNBC-http://www.cnbc.com/id/42206590Wed Mar 23Luis Alves
mokkikunta

When European Union leaders gather in Brussels at the end of the week to finalise a much-anticipated “grand bargain” to solve their debt crisis, the eyes of the financial markets will be focused on an unlikely place: Finland.

After months of negotiations, the Finnish government, normally one of the most pro-European Union members in the bloc, is set to hold up one of the central elements of the package, in part because it has been blindsided at home by the rise of a populist anti-euro party that is threatening to cause havoc in next month’s national elections.(...)

Without unanimity in the euro zone, the deal could fall apart. In an interview with the Financial Times, Ms Kiviniemi acknowledged that Finland was playing the unusual role of “troublemaker” in negotiations.

But, with the parliament’s Europe committee opposing the increase and the legislature dissolved ahead of the April 17 elections, her hands are tied. 

“I don’t have the mandate from the parliament to increase them,” she said, noting it would have to be called back into an emergency session to approve an increase.

“It would be very, very difficult. I would say impossible, because this topic is a very hot one.” Ms Kiviniemi is not the only one struggling with the issue. 

UPDATE
Portugal Premier Quits After Austerity Plan Is Rejected

Promover a Coesão, Descentralizar o Estado, Desenvolver as Regiões: Que desafios em Portugal e na Europa?

Como já foi aqui anunciado a Comissão de Coordenação e Desenvolvimento Regional do Norte (CCDR-N) e o Conselho Regional do Norte promovem, a 7 de Julho de 2010, a realização do Seminário Internacional “Promover a Coesão, Descentralizar o Estado, Desenvolver as Regiões: Que desafios em Portugal e na Europa?”, que se realiza na cidade do Porto, com a participação de um reputado conjunto de personalidades e especialistas.

Tendo em conta a temática - uma análise comparativa de diferentes modelos e experiências internacionais, designadamente ao nível do modelo de governação, da distribuição de competências entre diferentes níveis de administração pública e do financiamento - apresento os dois seguintes links:

1. Excerto dum interessante relatório em inglês, publicado em 2007, Regionalisation in Europe (II. European regionalism, an overview), um documento de trabalho da Assembleia Parlamentar do Conselho da Europa, que descreve a evolução do regionalismo na Europa nos últimos anos e dá uma visão geral da situação nos países europeus regionalizados.
2. "Finlândia: Municípios e Descentralização" - neste artigo de 2007, são tratadas duma forma genérica e numa perspectiva comparativa, duas formas de descentralização de dois territórios distantes: Finlândia e Portugal. São abordados vários aspectos, tais como: a crise económica finlandesa de 90-93 e as suas causas; a recuperação económica finlandesa e os factores que a potenciaram, bem como a forma como sobreviveram os sistemas de saúde, assistência social e educação; dados históricos acerca da sua democracia parlamentar; a divisão administrativa e política do estado finlandês (e do estado português), com especial destaque para o papel dos municípios finlandeses; a problemática da descentralização/regionalização e comparações com Portugal.

A record number of new student housing in Helsinki, Finland

A significant change in the structure of the city of Helsinki (Finland) is currently in progress.According to the Master Plan 2002 Helsinki will be developed as an European capital city.Helsinki is an important part of a growing metropolitan area. The urban structure is moderately becoming more integrated and dense, but without damaging the basic city characteristics or compromising its spaciousness and natural features.

Read more

Länsisatama - West Harbour: downtown by the sea, Landscape architecture competition - Press photos--City of Helsinki/City Planning Dep.

The Länsisatama (West Harbour) redevelopment project of the Helsinki City Planning Department is comprised of more than 200 ha of land on the southwest waterfront of the Finnish city. Like other planning projects in the area, this one has generated a lot of public interest. Indeed, the construction of a big new urban district from scratch is rare and raises the question: what is the city of the future? [1]

The areas covered by Länsisatama project include:

• the residential and office area of Ruoholahti (built in the 1990s)
• Jätkäsaari (used previously for cargo and passenger traffic)
• Munkkisaari (used as a dockyard, part of which will be freed for other uses in 2012)
  

In 2007, a local plan for a comprehensive solution to the Jätkäsaari area was in preparation. This year, during the next spring, the first detailed plan with the largest permitted building volume in Jätkäsaari will be handled in the Helsinki City Council. Jätkäsaari will house 15,000 residents and provide 6,000 jobs. The area was freed for construction when the cargo port was transferred to the new harbour in Vuosaari, at the end of 2008.

Planning image of Vuosaari harbour--City of Helsinki/City Planning Dep.

Within the next two decades, the Länsisatama area will have been transformed into a waterfront city quarter with an estimated population of 22,000, which will enhance the appeal of central Helsinki and its services as a whole. [2]

Jätkäsaari (2007 data)

Size: 100 ha
Parks: 19.8 ha (13 m2 per capita)
Residents: 14,500
Jobs: 6,000
Housing: 600,000 m2 gross floor area
Jobs and services: 364,000 m2 gross floor area
Parking spaces: 1 space per 150 m2 gross floor area
City investment: EUR 217 million
Construction start: 2008
Completion date: 2023


The Jätkäsaari planning goals

Länsisatama - West Harbour: downtown by the sea, Landscape architecture competition - Press photos--City of Helsinki/City Planning Dep.

• Produce whole new attractive and ecologically sustainable city district, not just a sleepy suburb

• Meet the everyday needs of residents and workers

• Social well-being

- Differing socio-economic groups live close to one another all over the city (town planning aims to encourage this assimilation).

- Construction of the new district is expected to help meet the need for all types of housing, thus easing the housing situation throughout Helsinki:

About one third of all the housing will be social housing i.e. moderately priced rental flats owned by the City and other non-profit landlords;

Another third will be price-regulated free-market housing and right-of-occupancy housing;

The remaining third will be privately funded housing.

• To take advantage of special features of the area (district is almost entirely surrounded by the sea and shipping)

- The passenger harbour on the east side of the area will remain in its present position, catering for some 3 million passengers per year travelling from Helsinki to Tallinn and St Petersburg and vice versa.

- The buildings have been designed so that the streets do not turn into wind tunnels.

- No residential buildings will be placed in the immediate vicinity of the passenger harbour, because of the noise, bustle and pollution caused by shipping.

- A beach will be created on a sheltered cove in the area.

• Mobility management - New Mobility Culture: non-dependence of private cars in daily traffic

- Available good alternative modes of transport : trams, service bus lines, car share vehicles, taxis, bikes.

- Cycle paths to serve those living and working in every part of the district.

- High quality pedestrian environment.

- Up to three tram lines.

- Helsinki Metro already runs close to the northern edge of the area.

- Very few streets allowing vehicular access.

- Every residential street will be a cul-de-sac.

- Minimizing motorized traffic will also apply to waste management (garbage removal underground): sorted household waste will go straight into a pneumatic conveyance system leading to a central underground collection point.

- Car-free lifestyle: return to the traditional practice of having ground-floor shops in a continuous line along the streets.

- Municipal services be located within walking distance of users' homes.

"We are putting up a whole new city district, not just a suburb. Our starting points are that life there must be ecologically sound and pleasant, and it must meet the everyday needs of residents and those who work there. Social well-being, mobility management and the special features of the area are also important factors,"

"We are realistic enough to know that many Jätkäsaari residents will want their own wheels, but our idea is that local services and routes will be planned so that a car will not be needed for local access. Multi-storey car parks are planned for residents to keep parked cars from clogging up the streets", said, in 2007, the Project Leader Matti Kaijansinkko, the architect in charge of planning Jätkäsaari. [2]

Architecture

Länsisatama - West Harbour: downtown by the sea, Landscape architecture competition - Press photos--City of Helsinki/City Planning Dep.

Another feature that Kaijansinkko was proud of is the green belt winding through the area, reminiscent of Manhattan's Central Park. The green belt is expected to achieve great popularity and importance for the life of the whole district.

"The park has been designed to accommodate as many popular Finnish outdoor pursuits as possible: it will be possible to ski and skate there, to cycle, to play games and to enjoy a picnic. There will also be a sledging hill for children." [1]

Urban Development

InfoCentre Korona, the main building of Viikki green university campus district--City of Helsinki/City Planning Dep.

Urban housing challenges in Finland are relatively new. However, rapid development in recent years have spurred the movement of people into growth centres and increased the demand for housing.

Outside growth centres, part of the housing stock is vacant as the population is declining. A current issue is how to maintain a unified community structure, especially in cities such as Helsinki where high house prices make it difficult to attract people working in the service sectors.

Therefore, in the next decades urban investments are needed in the following areas:

• Regenerating urban harbour areas in Helsinki
• Transport infrastructure in the metropolitan region
• Housing development
• Housing repairs

A record number of new student housing in Helsinki metropolitan area

Eco-Viikki is a housing area but also a noteworthy and internationally renowned experimental project--City of Helsinki/City Planning Dep.

Second YLE, the official site of Finland's national broadcasting company, in three years the Metropolitan area will rise to a record number of new student housing.

HOAS (Foundation for Student Housing in the Helsinki Region), responsible for the construction, plans to build a total of almost 900 new homes. In total, HOAS rents out 8,200 apartments to 17,000 tenants. The average annual construction volume will almost double. The normal annual rate has been 150-200 new homes. New estate will rise, mainly in Helsinki and Espoo.

HOAS was established by 16 student unions and student bodies in 1969 to help relieve the shortage of student housing within the Helsinki metropolitan area. HOAS student accommodation can be applied for by anyone undertaking full-time studies in a secondary level educational institution or university, and part of HOAS’s accommodation is reserved for international exchange students and researchers.

According to Heikki Valkjärvi, CEO of HOAS, the current economic climate is favourable to these plans: “Construction costs have come down, so we are trying to launch as many projects as possible”, Valkjärvi recently said to YLE.

The next few years, the major projects will rise in Viikki, Jätkäsaari, Kalasatama and Matinkylä Matinkylä district of Espoo. In addition, HOAS will also accelerate housing renovations.The Viikki project will launch a construction boom, which is larger than any other HOAS project has been for many years. ”Because of the new Aalto University, the focus on construction is likely to be in the west in the future”, Valkjärvi told to HS.

Kalasatama will be planned for 18 000 residents and 10 000 jobs--City of Helsinki/City Planning Dep.

The chronic shortage of student housing continues in Helsinki, and the queues for housing at the HOAS have been increasing year after year. With the gradual increase in rents, most students are unable to compete in the unregulated rentals market in the Greater Helsinki. In comparison, the Foundation charges EUR 220 for a small 18 m2 room with the basic amenities in a former old people’s home in Helsinki’s Ruskeasuo district, while a bedsitter on the open market would easily cost EUR 600 to 700.

The number of applicants doubled over three years - in August 2005, it was 3,300, while in the autumn of 2008, the figure was 6,200, setting a record in the 30-year history of HOAS.

References:
[1] Salla Korpela, Jätkäsaari – city life for the new millennium?, virtual.finland.fi, Ulkoasiainministeriö, September 2007

[2] City of Helsinki/City Planning Department, Länsisatama - West Harbour: downtown by the sea, www.hel.fi , 15.08.2008

Related articles:

City of the future is for people, not cars 11.10.2007

Sweden Ranks First in Sustainable Society Index 2008

The Sustainable Society Foundation has published its update of the 2006 Sustainable Society Index, which covers 151 countries. The new publication, the SSI-2008 , has been launched December 2008 and integrates for the first time sustainability and quality of life in an understandable way. The SSI is based on public data from scientific research institutes and international organizations.

The world average score is a mere 5.7 on a scale of 0 to 10. The Nordic Region is on the top for sustainable development: Sweden scored 7.02, followed by Switzerland, Norway, Finland, Austria and Iceland. Portugal (6.16) was 25th on the list of 151 countries.

Read more
Top 15 - Sustainable Society Index 2008

1 SWEDEN
2 SWITZERLAND
3 NORWAY
4 FINLAND
5 AUSTRIA
6 ICELAND
7 VIETNAM
8 GEORGIA
9 NEW ZEALAND
10 LATVIA
11 COSTA RICA
12 LITHUANIA
13 NETHERLANDS
14 DENMARK
15 GUYANA
(...)
25 PORTUGAL

Sustainable development is a concept very much discussed and considered important for most of the people. However, it is very difficult to measure in our society. Many indexes have been developed, but until recently there was no index, which comprises all the aspects of a sustainable society, which is simple, clear and transparent and which is adequate for comparison between countries.

The SSI has been built on the solid definition of the Brundtland Commission, with the addition of the third important aspect of freedom:

A sustainable society is a society:

• that meets the needs of the present generation,
• that does not compromise the ability of future generations to meet their own needs,
• in which each individual has the opportunity to develop himself in freedom, within a well-balanced society and in harmony with its surroundings

(this third aspect is very important to get a clear view of the quality of life in a country, because "without quality of life sustainability makes no sense and quality of life without sustainability has no future").

The framework of the ISS consists of 5 categories (each one with several indicators- the lowest scores are for Consumption of Renewable Energy (3.2) and Waste Recycling (1.7). The highest score is for International Cooperation (9.2))::

I Personal Development
1. Healthy Life
2. Sufficient Food
3. Sufficient to Drink
4. Safe Sanitation
5. Education Opportunities
6. Gender Equality

II Healthy Environment
7. Air Quality
8. Surface Water Quality
9. Land Quality

III Well-balanced Society
10. Good Governance
11. Employment
12. Population Growth
13. Income Distribution
14. Public Debt

IV Sustainable Use of Resources
15. Waste Recycling
16. Use of Renewable Water Resources
17. Consumption of Renewable Energy

V Sustainable World
18. Forest Area
19. Preservation of Biodiversity
20. Emission of Greenhouse Gases
21. Ecological Footprint
22. International Cooperation

Second the report, in the past two years the world made a relatively little progress towards a sustainability society.

Positive aspects:

- The scores of all 6 indicators of the category Personal Development have modestly increased (the largest contribution to this progress comes from Employment and Public Debt, due to a worldwide economy growth during the analyzed period).

Negative aspects:

- Deterioration of decisive importance issues - regardless of all plans and targets, the increase in renewable energy production does not keep in step with the rapidly growing energy consumption and the emission of greenhouse gases has, also very contrary to all targets set, further increased.

Priorities:

On a global scale the direction of the declining indicators should be reversed urgently to avoid further deterioration - Emission of Greenhouse Gases, Consumption of Renewable Energy, Ecological Footprint and Income Distribution.

In many countries, the inequality in Income Distribution is still growing and may become a threat for a well-balanced society. Waste Recycling, the indicator with the lowest score needs special attention, but all indicators need attention at specific regional level.

The full publication, with the data of all 151 countries, can be downloaded for free from the website - www.sustainablesocietyindex.com

IMAGE: Scheme of sustainable development: at the confluence of three constituent parts, by Johann Dréo, en.wikipedia.org, Creative Commons "Attribution ShareAlike 2.0 France"

Kaisla Arts and Crafts

Kaisla shop gallery (Kaisla kauppa galleria) is a rectangular two-story old house with solid red-brick walls and interior open spaces, nicely situated at the port of Korpilahti, Central Finland (Korpilahden satama, Keski-Suomi), which offers the Päijänne lake beautiful landscape. The first floor has the arts & crafts shop function, revealing many pieces of local artists and the second floor is a single room gallery for artworks exhibition.

Read more

Last summer - in a particularly rainy and thunderstorming August (elokuu) in that Finnish region - my friend Haukka and I visited Kaisla. However, this time we’ve noticed there an open book with more than thousand signatures. What would be that? Talking with the kind hosts, they told us that it was a petition against the transformation of Kaisla shop gallery into a restaurant-bar, a decision of the Korpilahti municipality, the building owner. Signing the petition was a little contribution to support an arts and crafts collective that, like many others, have been caught in a web of market interests.

It’s good to notice the context of this situation. In fact, after the February decision for the extinction of the city of Jyväskylä (Jyväskylän kaupunki), the rural Jyväskylä (Jyväskylän maalaiskunta) and the Korpilahti municipality (Korpilahden kunta) - merging the three into one new municipality, established on the current areas of the abolished authorities (New Jyväskylä would be born on January 1 2009) - it took place the June confirmation by the Finnish government (Valtioneuvosto).

Either the “extinction” of Kaisla – yes, because the house is an intrinsic part of the arts and crafts project - is political or technocratic, it would be lamentable, in the future, not to find there beautiful handcrafted art pieces, like those of Ulla Huttunen and Arto Salminen, among others.

Kaisla shop gallery (Kaisla kauppa galleria), Finland/ Google Earth

Images: Luis Alves / www.flickr.com/photos/mokkikunta

Korpilahti Municipality (1867-2009)

The struggle against the isolation may have stimulated the strong identification of the Finnish people with their municipality (kunta), although the identification with their nationality (kansalaisuus) be considered generally more important.

Read more

One of the special features of the Nordic countries is their decentralized organization and thus the proximity of the government to the citizens. Indeed, the municipalities are the State, since they collect most of the tax revenues. Traditional institutes of the authoritarian state, such as the army, police and judiciary, are on a more distant level to the normal citizen in his everyday life.

This strong phenomenon of identification seems to be present in the municipality of Korpilahti (Korpilahden kunta). Located in the province of Western Finland and in the region of Central Finland (Keski-Suomi), Korpilahti has a population of approx. 5,000 inhabitants, and additionally approx. 4,500 inhabitants in the summer, when they visit their summer cottages (kesämökki).

Under the developing reform of municipalities, on October 30 2006, a local referendum took place in Korpilahti. It was questioned the merger with other “neighbouring” municipality, the city of Jyväskylä (then, Jyväskylä, with its 83,582 inhabitants, didn’t have common borders with Korpilahti). The result was a “No” victory, with 52.0% (1055) of votes against the merger and 42.1% (1303) in favour.

Later, on November 13 2006, the municipal council of Korpilahti (Korpilahden kunnanvaltuusto), counteracting the non-binding referendum outcome, decided in favour of the merger with the city of Jyväskylä, from January 1 2009 - 17 councillors voted in favour of the union, while 10 were opposed. The municipal government (kunnanhallitus) would have the task of preparing the accession to later approval of the council.

New Jyväskylä

On February 18 2008, the City of Jyväskylä, the rural municipality of Jyväskylä and the municipality of Korpilahti, by their respective municipal councils, decided that New Jyväskylä would be born on January 1 2009. New Jyväskylä will be the seventh Finnish largest municipality with a population of nearly 130,000 inhabitants, about half of the Central Finland region (Keski-Suomen maakunta) population and it represents an urban development pole of the “channel” New Äänekoski (Uusi Äänekoski) - New Jyväskylä (Uusi Jyväskylä) - New Jämsä (Uusi Jämsä).

Hello Finland: Globalization does not require municipal amalgamation

An interesting article of Andrew Sancton, professor of political science specialized in local government at the University of Western Ontario, alerts for the disadvantages of the municipal amalgamation. This perspective can be applied to the Finland “Project to restructure municipalities and services” and very particularly to Korpilahti, with the aggravation of the popular will manifested in local referendum hasn't been respected:

- Indeed, it’s not proved that “city-regions with fewer municipal governments representing larger populations are better off those with more governments representing smaller populations.”

- “Reducing the number of municipalities has nothing to do with reducing the size of government. Reducing the number of local politicians can only have one result: insuring that a higher proportion of local councillors are full-time politicians.”

- Gigantic municipal service-providers pose the same problems of gigantic corporations monopolies: higher fares, lower service levels; lack of choice.

- It is consensual “that some municipal functions are generally more efficient when they service larger numbers of urban residents ... It makes no sense for each municipality in the same metropolitan area to establish its own separate water-supply system. But this does not mean they all need to merge into one."

Besides the structural solution of municipal amalgamation [1] adopted in this case, there are other types of alternative solutions to territorial fragmentation, which can be divided into two categories: structural solutions, depending either on amalgamations or on intermediate levels of single or multi-purpose authority and cooperative solutions (inter municipal cooperation), leaving basic local authorities with functional responsibilities. A semi-amalgamation model is an avalaible solution as well. It combines small municipalities into larger units for administration and service provision, but leaves some form of representative body in existence in the original settlements. (Davey; Division of reponsibility between levels of power)

In fact, the sizes of local authorities vary enormously, being the “optimum size hard to define and almost impossible politically to achieve”. [2]

Democracy and Efficiency

In Finland, the municipal reform was subject of intense debate. A large number of small municipalities is seen as undesirable in public service provision and proposals were submitted for mergers imposed by the state. In the past, the ex-Minister for Regional and Municipal Affairs Hannes Manninen committee has proposed a municipal two-tier system, in which municipalities would have different powers. Otherwise, the Association of Finnish Local and Regional Authorities (Kuntaliitto) has supported a system with municipalities having at least 20,000-30,000 inhabitants. (current average is approx. 4,700).

High levels of government efficiency strengthen the democratic legitimacy of governments. But also legitimacy allows greater efficiency. In the process of the municipal amalgamation nowadays taking place in Finland, it would be unthinkable that the final decision of the Finnish state would be contrary to the local popular will democratically expressed in municipalities where mergers had a “negative” referendum, especially since Finland is a signatory of the European Charter of Local Self-Government /Strasbourg, 15.X.1985.

“Article 5 – Protection of local authority boundaries
Changes in local authority boundaries shall not be made without prior consultation of the local communities concerned, possibly by means of a referendum where this is permitted by statute.”

In addition the Act on Municipal Division, 1 § states:

“(...) The municipal division is changed by legislation, or by decision made by the Council of the State or Ministry. (...) Only voluntary changes to municipal division are possible.(...) “

But then again the reality overcame the fiction. On 12 June 2008, in Helsinki, the Finnish government (Valtioneuvosto) took the extinction decision of the city of Jyväskylä (Jyväskylän kaupunki), rural Jyväskylä (Jyväskylän maalaiskunta) and Korpilahti (Korpilahden kunta), as well as the creation of the new municipality of Jyväskylä, on the current areas of the abolished authorities.

The Project to Restructure Municipalities and Services (Kunta - ja palvelurakenneuudistus)

Started in 2005, the Project to Restructure Municipalities and Services had the objective of creating a solid financial structure to assure the future organisation and provision of services supplied by the municipalities.

Actually, Finland is in the implementation phase of the reform. In the next year - with municipal elections already realized - many new laws come into force. In previous years other reform phases passed, including the preparation of basic bills on legal reforms. During the period 2010-2011 will occur the execution of the legislation and the follow-up of the reform.

October 26 Municipal Elections

On October 26, more than 10,000 municipal councillors were elected to local councils across Finland - one more decisive step of the municipal reform. The dominant issues of these municipal elections covered the restructuring of the public services of health care, education and child care. However, the electoral outcome is not expected to influence the center-right coalition government (SiniVihreä Koalitio) policy.

The over 60% voter turnout in these local elections might have been caused by the electorate interest in the dozens of municipal mergers that will come into effect from the beginning of 2009. Electors of small merged communities, like Korpilahti, had keen interest to elect their representatives on the new expanded municipal councils.

It is true that Finland's municipal elections, in general, represent well the principles of “grassroots” democracy. But not this time in the case of Jyväskylä October 26 elections - in fact, the new municipality will be founded on a democratic “deficit” from the beginning. And that will be the burden of responsibility of the new Jyväskylä council for the next four years. In reality, as a municipal autonomous institution, Korpilahti lost its self-government by extinction, in exchange for a few representatives on the new council and some promises of investments.

Last Sunday, the traditional competition between the three big Finnish parties had a first-ever national win for the National Coalition Party (Kokoomus), but in New Jyväskylä the Social Democratic Party of Finland (Suomen Sosialidemokraattinen Puolue) is still the most voted.

Notes:

[1] The amalgamation model means abolishing small municipalities and merging them into new basic units of local government with some minimum population size. This model is often used in Nordic countries, where minimum populations are generally around 5,000 (averages between 10,000-30,000 inhabitants)

[2] Publications in which these arguments have been well discussed:
- The Size of Municipalities, Efficiency and Citizen Participation (Council of Europe, 1995).
- Consolidation or Fragmentation: the Size of Local Governments in Central and Eastern Europe, edited by Pawel Swianiewicz, (LGI/OSI, 2002).

References:

Wikipedia articles: “Municipalities_of_Finland” , “Korpilahti” (EN) , “Korpilahti” (FI)

Andrew Sancton, Globalization does not require amalgamation, Institute for Research on Public Policy - Montreal, Quebec.

Davey, Kenneth; Division of reponsibility between levels of power, 2003.

Project to restructure municipalities and services (Kunta- ja palvelurakenneuudistus), Ministry of the Finance, 2007.

Images:

Luis Alves / www.flickr.com/photos/mokkikunta

777 - Turbo-Capitalism's Failure

Dow closed at 10365.45, dropped 777.68, the largest drop ever in history - Sept. 29, 2008 (black Monday) / By faungg , Some rights reserved

Markets have inefficiencies, because of their inability to correct the negative externalities of industrial outputs (production) and industrial inputs (depletion of non-renewable resources). Failure to calculate the costs to nonparticipants in transactions and failure to allocate resources efficiently, represent market failure definitions.

Externalities represent cases of market failures. A person (or company) who makes choices that affect other people not accounted for in the market price – like the pollution costs often unaccounted for in industrial greenhouse gas emissions- is creating an externality.

Read more

Besides the externalities, non excludability and non rivalry are other common forms of market failure. To be efficient, markets should trade simultaneously both excludable and rival goods, and shouldn’t have externalities. In the market perspective, there are four types of goods: private goods (R,V), common goods (R, non-E), club goods (non-R,E) and public goods (non-R and non-E). [R-rival, E-excludable]

Excessive costs of excluding potential beneficiaries from the consumption of a rival natural or human-made resource, represent an inefficient market allocation - non excludability. Hence, "common" goods are defined by a property right regime in which only a collective body could exclude others from accessing rival resources, thereby allowing the capture of future benefits.

Stable “common property” regimes – suitable to the local level - must be based on certain principles which prevent the overexploitation of a resource system. However, these regimes are not the solution to large scale overuse , such as air pollution. In those situations, environmental regulations (economic impact estimated by cost-benefit analysis), quotas on pollution (tradeable emissions permits), taxes on pollution and adequate definition of property rights, might be preventive solutions to correct negative externalities.

Public goods are another type of market failure, because the market price doesn’t catch the social benefits of public provisions. For example, both social protection and environmental protection are inherently public goods, since their provision, in case of non-congestion, is non-rival and non-excludable, either protecting people from the risks of unemployment and illness or from environmental risks, like climate change.

If a public service faces problems of congestion or overuse, it will be a non-excludable but certainly a rivalrous good, making it a “common-pool resource”.

Privatization of public goods doesn’t change their intrinsic non-excludable, social and environmental characteristics. Nobody has the right to exclude people from protection, i.e., to prevent people who have not paid for the service, from receive its benefits .Most of public goods, like most of non-rival goods , are intangible, less fitted for an efficient private market.

Scarce, rivalrous, but also vital resources (like water) cannot be excludable. Water priced on a private market it would be the receipt to a humanitarian disaster, as the recent global market failures may prove.

With respect to local public services provision, the Finnish health care system is one of the most decentralized in Europe (as well as the other Nordic countries), with most of the Finnish people being generally satisfied with their national health care system. Local municipalities (Finnish: kunta) are the center of the system, largely public, where the private sector has little relevance today (only about 4% of Finnish doctors have a purely private activity) and the state has little intervention, defining goals and orientations. However, although the public health care and education, Finland has an advanced and competitive market economy.

According to Robin Hahnel (ecological economist), four environment related basic defects of a market economy can be enumerated: overexploitation of “common property” resources; overpollution; too little pollution cleanup; overconsumption. [ Hahnel (2005), pp66-72]

The view considering that markets are unable to correct negative externalities is in contradiction with the free-market environmentalist perspective. This perspective considers that both lack of ownership incentives to care for the property and multiplicity of ownership, represent the cause of overexploitation. In this point of view, pollution occurs because the property owners’ rights have not been totally respected and the legal authorities have inclination to favor big industry, public and common property over individuals and consumer organizations.

That approach also argue that resources are renewable and the market, by way of supply and demand, regulates consumption by adjusting it according to supply.The absence of sufficient incentives to create a potential “market” in a private economy, causes loss of efficiency, according to this view.

We can say that intrinsic characteristics of some type of goods, like the non-excludable goods (common goods and public goods), imply the design of sustainable social-environmental-economical systems, different from the private “markets”. See 1990 Ostrom's work about how people using real common property resources have worked to establish self-governing rules to reduce risks [Ostrom, E. 1990. Governing the Commons. Cambridge: Cambridge University Press]

Bailout of US financial system / Green Recovery / Low-Carbon Economy

These previous considerations are also appropriated for the financial markets, specially for institutions which utilize them. The recent dramatic intervention of the Federal Reserve, aimed at bailing out Wall Street with a US$700 billion plan, was a spectacular representation of market failure. In fact, the market took multiple decisions that would affect millions of tax-payers, who weren’t accounted for in the finance market price.

"Markets have inherent and well-known inefficiencies. One factor is failure to calculate the costs to those who do not participate in transactions. These 'externalities' can be huge. That is particularly true for financial institutions. Their task is to take risks, calculating potential costs for themselves. But they do not take into account the consequences of their losses for the economy as a whole. (…)

The unprecedented intervention of the Fed may be justified or not in narrow terms, but it reveals, once again, the profoundly undemocratic character of state capitalist institutions, designed in large measure to socialise cost and risk and privatize profit, without a public voice. “
Noam Chomsky, accuracy.org

The actual "turbo-capitalist" crisis, whose end and global consequences are unpredictable, could constitute an opportunity to the construction of a new alternative economic model firmly based on the environmental, economic and social domains, with new concepts of “growth” - not just a “green“ recovery based on this capitalist model, but a effective Low-Carbon Economy model.

However, a future green recovery may be compromised. The actual situation of financial collapse, with the state injecting hundreds of billions in the financial capitalist system, doesn’t assure the future application of funds on the environmental and social areas. It may even deflect these funds from many necessary and urgent investments in those areas.

Past Friday, 3 October 2008, the US House of Representatives voted in favour of a financial rescue plan after rejecting an earlier version. The approved package is aimed at buying up the bad debts of failing financial institutions on Wall Street, having the Treasury $700 billion to buy “toxic” mortgages, securities and related assets, that have undermined the US financial structure. But the deep causes of the US financial market collapse still continue unknown, and therefore this massive intervention probably cannot reach them.

So far “toxic” products are the justification for the financial market failure. However, financial products are increasingly designed trough technological innovation, which has replaced experienced professional traders by computers running software based on algorithmic trading, trying to simulate human behavior, deciding on timing, price and the final quantity of the orders. Although many claim an increased market efficiency with “robo trading” the last events could contradict it, and thus we could be in presence of a global technological (in)adaptation.

On September 29 2008, the Dow Jones lost 777.68 points, the largest one day point loss in its history, following news that the US House of Representatives had failed to pass the $700 bn bailout bill. Only after the Monday's 777-point stock-market slump the political class started to see the extension and deepness of the crisis. The “shock” and the claims from worried November potential voters motivated the Friday morning vote change. The bill that establishes the Emergency Economic Stabilization Act of 2008 - previously approved by the Senate, on October 1 2008 - was sent to the House, and on Friday, October 3, the House voted 263-171 to enact the bill into law.

References:
Wikipedia article, Environmental economics

Related articles:
From the US housing bubble to the (proposed) bailout of US financial system
Fed eyes Nordic Model

July 2008 OviMagazine [Download the free PDF]

Download the free monthly PDF OviMagazine from here, which contains original articles and other material:

And that was July 2008...
Published: 2008-08-01 (10.43MB)

"How many websites can boast of a whole day dedicated to rats? How many websites focused on the waste of food, the disposal of energy saving light bulbs and the recycling of mobile phones in July? How many websites celebrated the birthdays of both Nelson Mandela and Daley Thompson? How many websites covered China, Iran, Pakistan, Mongolia, ANWR, Finland and then told you to boycott the Nobel Prizes? We know of one…

Ovi magazine hasn’t had time for a summer holiday, even though we thoroughly deserve one. We continue to man the controls of this online juggernaut and will never take our foot from the accelerator, especially while contributors such as Emanuel L. Paparella are explaining the five ways to God’s existence or explaining photovoltaic solar power in Portugal, like Luis Alves, or while Alexandra Pereira wants to teach us about brave men like Aristides de Sousa Mendes. Brake pedal, what brake pedal?"

Best Countries for Business (Forbes): Denmark, Ireland and Finland

Danish wind turbines near Copenhagen. Wind often flows briskly and smoothly over water since there are no obstructions by en.wikipedia.org

Forbes’ website has published the list of the best countries for business. This year Denmark tops the annual ranking. Here are the first 25 countries:

Read more

1 Denmark
2 Ireland
3 Finland
4 United States
5 United Kingdom
6 Sweden
7 Canada
8 Singapore
9 Hong Kong
10 Estonia
10 Switzerland
12 New Zealand
13 Australia
14 Netherlands
15 Norway
16 Israel
17 Iceland
18 Belgium
19 Chile
20 Portugal
21 Germany
22 Luxembourg
23 Austria
24 Japan
25 France

No. 1: Denmark ( 2007 Rank: 4)

The Danish economy is a mix of low inflation and low unemployment with emphasis on entrepreneurship and lower taxes. These qualities combined with high marks for innovation and technological savvy lift Denmark to the top of the ranking of the Best Countries for Business.

After winning a third term last year, Danish prime minister Anders Rasmussen has announced plans to cut taxes while addressing Denmark's need to prevent innovative entrepreneurs from pursuing international efforts by backing a new entrepreneurial academy known as 180academy.

No. 3: Finland (2007 Rank: 7)

A center-right government, elected in April 2007, plans to combat declining investment and labor shortages through tax cuts, budget increase for government-funded research and development and the merger of 3 Helsinki universities.

“Finland has a highly industrialized, largely free-market economy with per capita output roughly that of the UK, France, Germany, and Italy. Its key economic sector is manufacturing - principally the wood, metals, engineering, telecommunications, and electronics industries. Trade is important; exports equal nearly two-fifths of GDP. Finland excels in high-tech exports, e.g., mobile phones. Except for timber and several minerals, Finland depends on imports of raw materials, energy, and some components for manufactured goods. Because of the climate, agricultural development is limited to maintaining self-sufficiency in basic products. Forestry, an important export earner, provides a secondary occupation for the rural population. High unemployment remains a persistent problem. In 2007 Russia announced plans to impose high tariffs on raw timber exported to Finland. The Finnish pulp and paper industry will be threatened if these duties are put into place in 2008 and 2009, and the matter is now being handled by the European Union.”

No. 20: Portugal (2007 Rank: 23)

“Portugal has become a diversified and increasingly service-based economy since joining the European Community in 1986. Over the past two decades, successive governments have privatized many state-controlled firms and liberalized key areas of the economy, including the financial and telecommunications sectors. The country qualified for the European Monetary Union (EMU) in 1998 and began circulating the euro on 1 January 2002 along with 11 other EU member economies. Economic growth had been above the EU average for much of the 1990s, but fell back in 2001-07. GDP per capita stands at roughly two-thirds of the EU-27 average. A poor educational system, in particular, has been an obstacle to greater productivity and growth. Portugal has been increasingly overshadowed by lower-cost producers in Central Europe and Asia as a target for foreign direct investment. The budget deficit surged to an all-time high of 6% of GDP in 2005, but the government reduced the deficit to 2.6% in 2007 - a year ahead of Portugal's targeted schedule. Nonetheless, the government faces tough choices in its attempts to boost Portugal's economic competitiveness while keeping the budget deficit within the eurozone's 3%-of-GDP ceiling.”

No. 4: United States (2007 Rank: 1)

The weak US dollar continues to weigh on global commodity prices, though the Fed has signaled plans to leave interest rates at current levels, if not higher, in the coming months as the domestic economy sputters.

Germany (No. 21 lost 9 places). For France (No. 25, lost 9 places), the scandals in the banking system and tougher barriers for entrepreneurs led to decrease. Saudi Arabia, regardless of higher inflation from booming oil exports, has tackled inequities in its markets, expanding investor rights as it evolves from an oil state to a center for investment in the Middle East.

Socioeconomic indicators to compile the ranking:

Trade Freedom
Monetary Freedom
Property Rights
Innovation
Technology
Red Tape
Investor Protection
Corruption
Personal Freedom
Corporate Tax Rate

Links:

Jack Gage, Special Report, The Best Countries For Business, www.forbes.com

And that was June 2008...by The Ovi Team [free PDF]

Download the free monthly PDF OviMagazine from here, which contains original articles and other material:

And that was June 2008...
Published: 2008-07-01 (8.65MB)

Many of June's news stories were dutifully covered by our dedicated team of contributors over the past 30 days and, as I always say, only a certain number can receive an Ovi front cover, which have been collated once again and presented in totality inside this free PDF.

You can also download the Issue #21: ME

Issue #21: ME
Published: 2008-05-14 (7.26MB)

Me, myself and I, or perhaps it is the ego and super-ego that inspires, but the Ovi team of contributors have pulled together to give you the 21st theme issue: ME.

CONTENTS

I, Me, Self-Forgetfulness, Dehumanization by Emanuel L. Paparella
Who by Jan Sand
Works by photographer by Cátia Cóias
Staring into the magician’s eyes by Asa Butcher
From the Piscean Person to the Aquarian Self by Rene Wadlow
Who am I? by Asa Butcher
“Me” by Jan Sand
I, cynic by Thanos Kalamidas
Ego (In Greek) by Dimitra Karantzeni
Cogito Ergo Sum by Rene Descartes
The unbearable lightness of me by Thanos Kalamidas
Ovi Mosaic by Luis Alves
Me, a name I call myself by Asa Butcher

Does the Nordic Model need to be reformed?

Does the Nordic model need to be reformed to face up to the challenges of globalisation? What exactly are these challenges and what are the causes which make the model work successfully, creating strong economic performances? Is the Nordic approach sustainable? Can its characteristic elements be used in other economies? Here are some of the main questions posed at the OECD conference "Embracing Globalisation in the 21st Century: a Dialogue about the Nordic Approach".

Read more

To better understand this issue I present a synthesis of the OECD Secretary-General’ keynote, , at the conference in Paris, on 21 May 2008. [1]

Is there a "Nordic model"? (Characteristics of the Nordic Model)

In fact, there is no one single model among the 5 Nordic countries. However, they share some common approaches:

1.Labour market institutions and policies that provide:

- relatively low employment protection

- high unemployment protection (coupled with high income-support benefits)

- strict activation policies

- high degree of centralized wage coordination

2.Comprehensive social benefits and publicly provided social services and:

- large investment in education and research

- development financed by taxes

3.Openness to trade and competitive product markets

4.High taxes

Together, these features offer:

- a collective mechanism for risk sharing

- play a key role securing the political acceptability of structural reforms

"Inflation has generally remained low over the last three years, although as elsewhere, recent increases in food and energy prices are exerting upward pressures."

Labour markets are characterized by:

- high participation rates

- generally low unemployment

- a small incidence of long-term unemployment

- high job mobility.

Nordic countries’ tax and welfare systems have generally ensured that the winners from structural transformation have shared their gains with the losers - "Nordic countries have expanded the size of “the economic pie”, the distribution of this “pie” has been widely shared."

"For example, in the Nordic countries, older workers’ employment rate in 2006 was well above the OECD average of 53%, reaching nearly 85% in Iceland."

"Income equality and poverty rates were lower in Denmark and Sweden than in any other OECD country, and they were below the OECD average in Finland and Norway."

Traditional commitment to free trade

- barriers to trade and investment are low (apart from agricultural products)

- measures of Nordic country participation in the international trading system are high

- Nordic countries score well in terms of competition-friendly regulation in markets for goods and services

High tax burden

- needed to finance the comprehensive and generous social expenditures and spending on education

- tax revenue is put to efficient use

"Taxation revenue to GDP last year was close to 50 per cent in Denmark and Sweden and over 40 per cent in Finland and Norway"

To what degree can the strong economic performance be attributed to the Nordic model?

Many attribute the combination of:

- solid economic growth

- well-performing labour market

- an equal distribution of income and social cohesion

Others recognize the recent good economic performance, but question:

- whether the incentives associated with high taxes and a generous social security system are compatible with long-term sustainability.

Nordic countries in particular have managed to seize the opportunities offered by globalization for higher productivity and living standards. OCDE attribute this to two forces:

- a lower exposure to globalisation, in the sense that the export sectors are geared towards fast growing and relatively profitable products.

"Finland and Sweden, for instance, specialize in the telecoms sector."

- a higher ability to cope with change

and:

- education levels

- the quality and public confidence in the institutions of government

- and their strong innovation frameworks.

Is the Nordic approach sustainable?

Moving on to the challenges, the Nordic Report [2] identified the risks for the Nordic model. The authors, six Nordic professors, focus on the implications of globalization and demographic change. The conference was organised against the background of the debate generated by this report. The authors think that the financial dilemma faced by the welfare state cannot be solved by increased growth, higher taxes, higher birth rates or increased immigration.

Globalization has accelerated:

- emergence of new players in the international trading system, bringing additional workers ( 1 billion over the last decade).

- new relationships such as cross-border out-sourcing and in-sourcing.

The globalization of innovation:

- many OECD-based businesses are setting up R&D operations in China and India, attracted by their abundant supply of highly skilled scientists and engineers.

The Report’s authors note that the costs of funding the Nordic model are likely to rise faster than nominal GDP. This is due to:

- expected demographic changes, leading to a higher proportion of retirees relative to the number of workers, as the baby boom generation retires, and life expectancy continues to lengthen.

- governments’ room for manoeuvre has become more limited, with taxation levels already high, and tax bases becoming more mobile (especially on capital and labour income). Both forces exert tensions on the long-run sustainability of the Nordic model.

"How can the essentials of the Nordic model be preserved going forward, especially its underlying philosophy of collective mechanisms for sharing risks? "

Can elements of the Nordic approach be transferred?

Are there lessons for other countries that can be drawn from the Nordic model? Certainly (second OCDE).

- regulation does not buy security; in fact, the opposite appears to be true.

- to caution against trying to emulate directly the Nordic model. The precise balance between the different policy planks depends on country circumstances and institutions.

"For example, the quality of industrial relations, and agreement among trade unions and employer organizations on common objectives may play a key role in labour market performance, as well as the political feasibility of reforms. Establishing how countries can implement coherent policy packages in practice also takes time. The Danish version of the Nordic model, for example, is the result of a long series of reforms, started in 1994 and has required considerable fine-tuning to reach its present format."

Dealing with the political economy of reform

"Coping with globalization is about coping with change, and success in implementing policy reform requires winning broad support for change. But as you are well aware, that is not an easy task. There are winners and losers across countries and within each country. Even if a country benefits overall, the adjustment costs cannot be ignored."

*end of synthesis*

The compatibility between reformism and capitalism

The actual dominant ideology of global capitalism - designated as “neo-liberalism” by some and “open trade” by others - has its proper strong discourse to impose the program of “creative destruction” of collective structures contrary to the market logic, across the world.

Through agencies such as the OECD, “neo-liberalism” promotes the economics of the free market like an incontestable scientific theory - a logic of flexibility, competitiveness and extreme individualism that has no alternative. Indeed, the OECD is not ideologically neutral and, like other transnational bodies, it has the corporate speak characteristic of the corporate world.

We know that the compatibility between a true reformism and capitalism is measured by the relationship between the policies of labour organisations and the vital institutions of capital (private property and labour market).

Reform seeks to improve the economic system like it is. One neo-liberal reform, whose main goal consists in the “free market”, is quite different from a reform focused on progressive transition to social justice and job security. It is not a question of competition - “winners and losers”. It is a question of social justice and human rights, and the crucial factor for that change resides in the mobilized collective power of the workforce, which cannot be measured in economic terms.

We don’t need a "reformist reform", which simply supports the system and allows capitalism to function more effectively. We need a "non-reformist reform", a "structural reform” or a "revolutionary-reformism", that in a cumulative way tends to transform the actual system in all its economic, social and environmental dimensions. [3]

So, the governments and academic institutions that read these international reports should not to be so influenced. They should have in consideration the political and economical objectives that are behind them, and above all, that they have not passed through a democratic scrutiny.

References:

[1] Angel Gurría's keynote, Seminar on "Embracing globalisation in the 21st century: a dialogue on the Nordic approach", oecd.org"Reform the Nordic model" norden.org
[2]ETLA’s report “The Nordic Model – Embracing globalization and sharing risks” Read the book [PDF] ; Image: frontcover of the book

[3] Andre Gorz, Austrian and French social philosopher, Wikipedia article

POLL: Does the Nordic model need to be reformed? (top of left column)

Other related posts:
Fed eyes Nordic Model
Manufactured Landscape - Landscape as Architecture
The Global Business
The current capitalist system