--- title: "Finland Is Not a Free Market Economy | Lasse Pipinen & Tero Lundstedt | Neuvottelija 175" summary: "Lasse Pipinen, executive director of the Finnish liberal think tank Libera, and content director Tero Lundstedt answer the claim that the age of think tanks is over. At the centre is Libera's two-billion-euro list of spending cuts, deliberately built from easy, research-backed targets — and which nonetheless brought the interest groups out. The episode asks why value liberalism advances in Finland while economic reform stalls, and why the process consequences of political decisions are so rarely worked out. Also covered are the think tank's funding model and its independence from public money. Published 12 February 2023." datePublished: 2023-02-17 dateModified: 2023-02-17 originalLang: en section: society sections: ["society","economy"] authors: ["Sami Miettinen"] tags: ["Neuvottelija","EP175","Libera","Lasse Pipinen","Tero Lundstedt","Think Tanks","Spending Cuts","Home Care Allowance","Liberalism","Funding Model"] canonical: https://www.neuvottelija.com/ai/ep175-suomi-ei-ole-vapaa-markkinatalous-pipinen-lundstedt/ --- # Finland Is Not a Free Market Economy | Lasse Pipinen & Tero Lundstedt | Neuvottelija 175 # Finland Is Not a Free Market Economy | Lasse Pipinen & Tero Lundstedt > **Summary:** > In episode 175 of the Neuvottelija channel, Sami Miettinen interviews **Lasse Pipinen, executive director of the think tank Libera, and Tero Lundstedt, its content director**. Libera is an openly liberal think tank, and the views expressed are the guests' and their organisation's own. Published 12 February 2023. --- ## Is the age of think tanks over? The episode opens with a provocation. Miettinen cites an article in Helsingin Sanomat's Visio which, on his reading, argued roughly that **the age of think tanks is over**, and asks whether the guests took it as an attack. Pipinen's answer is surprising, because he concedes part of it: he does not entirely disagree with the article, though it was irritating in places and in some respects wrong. > "It has felt as though over the past four years there has not been very great demand for the knowledge the independent field produces." But he rejects the conclusion: **the time is not past, it lies ahead again.** Demand fluctuates as in any activity — sometimes political rhetoric interests people more, sometimes less. Lundstedt adds a political explanation: **this parliamentary term has been highly unusual**, and it has included themes difficult for Libera. From this comes the episode's first honest self-assessment. **During the Covid restrictions debate Libera was between a rock and a hard place**: speaking about maximising individual freedom was extremely hard in a climate that broadly accepted restrictions. Lundstedt's first task in the job was to comment on especially severe proposals for control measures — but **no larger publication on the subject ever appeared**. Instead the angle chosen was how to kick the economy back into growth after Covid. Pipinen's explanation is structural and it is the episode's best observation about the nature of think tank work: > "A think tank's daily work involves thinking about the world decades ahead. Change happens terribly slowly in developed societies. And when something terribly fast happens — restrictions on fundamental rights, the closing of Uusimaa, orders to stay home — a small think tank cannot produce comprehensive legal analysis at a week or two's notice." He also raises one particular thing that stayed with him: **the alcohol licensing act suddenly turned out to contain provisions by which a wholly legal trade could be restricted on the basis of a notification alone.** Miettinen recognises the same: restaurants were an easy target, because otherwise no one dared to close society down. ## A two-billion list — and why it is small Miettinen frames Libera's fresh list of cuts alongside the Liberal Party's nine-billion list. Lundstedt's first correction is conceptual, and he says he has had to make it repeatedly on Twitter: **the lists are not competing products**, because the time horizon differs. Libera's list is deliberately modest, and the reasoning is methodological: - These are the **low-hanging fruit**, on which any government composition could agree. - It is **a first-year job**, not the whole adjustment. - The work was done so that no tug-of-war would arise from the political wings' values: the targets should be **subsidies that research shows to be predominantly harmful**, so that a Green, a Left Alliance member and a National Coalition member alike could accept them. And they concede the scale themselves: **the finance ministry's estimate of 9 to 10 billion over two parliamentary terms is probably right**, and Libera has more far-reaching visions, such as its 2021 shadow budget. ## Who actually pays for the welfare Miettinen's framing claim is that public debate is skewed: **public spending is called welfare**, as though it had appeared from nowhere rather than being a redistribution of citizens' own scarce resources. Pipinen names the same thing as **a cognitive bias** and sharpens it in what is the episode's most precise economic-policy observation: > "When the bulk of transfers happens within the middle class, we are in fact financing our own lives — and still we think it is wonderful that somebody else decides how my money is used." But he is an optimist, and the reasoning is paradoxical: because **the fat accumulated around the state has swollen beyond the economy's capacity to carry it**, it must be cut on a large scale — and in the process **the state's role should be redefined**. *"When we cannot afford everything, perhaps we will start to understand its limits."* Miettinen's frustration is that with the left, not even a **reductio ad absurdum** produces an upper bound: there is no sum after which scarce resources should no longer be poured into a spending item. Pipinen's view of the coming coalition talks is nonetheless pragmatic: even if the governing parties go into the election with their lanterns dimmed, **when the negotiations come, the cuts will be found — they have to be.** On taxation Miettinen gives his own arithmetic: **a total tax rate of 43 per cent is the world's fifth highest**, and adding public borrowing of roughly three per cent of GDP takes Finland close to Denmark's 46 per cent. Yet the debate still looks for more taxes — usually **on capital, although capital is Finland's scarcest commodity**. ## Home care allowance: the easy target that was not easy The most concrete section covers what followed from the list. Lundstedt admits at once: *"it turned out not to be so simple after all."* The most feedback came from **abolishing the home care allowance**, and his argument is comparative and empirical: - **Sweden and Denmark abolished the equivalent in the 2010s**, because it affects career development unequally. - The effect is especially bad for **immigrant women**, and it partly explains **why Finland performs so poorly on immigrant employment rates** — the gap is largest precisely among women. But the matter went straight to people's emotions, and the counter-argument was the crisis in early childhood education. Lundstedt's reply is methodological: **that crisis has to be dealt with in any case — it is a different discussion.** Pipinen lists the other reactions, and together they form the episode's most instructive pattern: - **The proposal to cut Yle** roused the broadcaster's staff, and its funding was defended publicly up to its director general Merja Ylä-Anttila. - **Shipping companies bristled** at cutting the subsidy for passenger vessels — *"it might not be worth floating nightclubs on tax money."* - **Yle found a doctor** for its piece on the home care allowance who held that no mother should return to work before her child's third birthday. And from that he draws the generalisation that carries the episode: > "There is always an interest group, always someone whom the matter concerns. And that is the single greatest problem with cuts: they always affect somebody." He is honest here towards the other side too: **if 130 million were taken from Yle's annual funding, a few employees would be out of a job** — and for them it is dramatic. ## Value liberalism advances, economic liberalism does not Miettinen asks whether Finnish conservatism has eased on either the values or the economic side. Pipinen's answer separates them sharply. **On values there has been progress.** At 44 he says he has seen in his adult life the whole development of legislation concerning sexual and gender minorities, most recently the trans law. His own position is compact: *"your gender is none of the state's business."* **On the economic side the opposite has happened:** Finns have become *"quite the preservers"*, for whom an acquired benefit is supremely important. And he poses a question he does not answer with certainty but which is the episode's most interesting cultural hypothesis: > "Why does Finland always come slightly behind? Have we really been forest dwellers so long that our society's recovery from the traumas of war and not-so-distant famines is still under way — and only now does it feel as though we could afford the luxury of trusting the individual?" Lundstedt confirms both halves: on values Finland moves **last among the Nordics and with a long delay, and it takes outside pressure** — and from the economic urge to preserve follows the failure to make changes the other Nordics made long ago. *"Finnish liberalism is quite a peculiar phenomenon."* ## The consequences of decisions are not worked out Miettinen states his own wish: that **somebody would work out the consequences of political decisions**. His example is the **0.7 staffing ratio** in elderly care, which he calls Soviet thinking: a central committee target is set and some mechanism is assumed to deliver it. Pipinen's answer shifts the weight from ideology to competence, and it is the episode's most analytically fruitful reframing: > "I do not see it so much as a question of socialism as of how little, and how unfortunately often, politicians understand processes." His mechanism has two parts: - **It is assumed that political power suffices to order things done** — and from that come staffing ratios specified to a decimal. - **Guarantees are given readily, because a guarantee costs nothing** — but a guarantee leads to legislation that obliges municipalities already in trouble with their tasks. And then the costs arrive. He is fair to politicians here too: when a decision-maker is far from the daily reality of nursing work, it is no surprise that someone floats a ratio and assumes it will do the job. *"It may not — or it may become impossibly expensive."* Lundstedt's conclusion is general: **rule-by-decree is very rarely a working solution**, and neither is a crudely simplifying cut. On the **health and social services reform** they are honestly cautious: Libera has considered the wellbeing services counties **from a democracy standpoint**, not their funding model — and on **the question of taxing powers Lundstedt has no strong view**, because both options seem poor. ## The think tank field and its funding Of Eva, the business-funded think tank, Pipinen speaks respectfully but marks the difference. **Eva does enormously good work** and has under Emilia Kullas moved slightly in a more value-liberal direction. Its funding has been far more stable for far longer — but from precisely that follows a risk: > "There is a certain advocacy risk there, because the money comes mainly straight from companies committed to that activity." Attached to this is the episode's title line. The newspaper article claimed that by the 1980s the market economy had taken root in Finland so firmly that even at Eva people wondered whether the work had become unnecessary. Pipinen's dismissal is blunt: > "Well, it did not. And I have no idea how old a journalist has to be to write that the market economy took root in Finland in the 1980s." **Libera's own funding model** is the episode's most concrete institutional observation, and it has three parts: - **Not a penny of public money.** *"As long as we criticise public decision-making, we remain entirely independent of it."* Nor gambling-monopoly funds — and Pipinen suspects that after all the noise they have made, not a drop would be forthcoming anyway. - **The budget is raised anew every year.** It keeps them hungry: there is no guaranteed annual pot. - **The pool of donors in Finland is small.** Asked whom he approaches for money, the answer is always *"those who have it"* — and that group is not large. Foreign funding is hard to obtain for a think tank operating in Finnish, so the money must come from domestic donors. Pipinen says he has run the operation **seven years without a cash crisis**. **The comparison with the United States** is structural: there donations are tax-deductible even though the total tax rate is under 30 per cent — Finland has no equivalent deduction. Miettinen recalls the **Antero Vartia case**, in which the Compensate foundation ran into trouble for raising money without official permission: **Finland's money-collection act is still fairly antique.** Lundstedt sums up: *"Think tanks in America are an entirely different scene."* **Atlas Network**, hinted at in the newspaper piece as a background influence, gets a down-to-earth description from Pipinen: it distributes **small grants on application, often a few thousand euros**, and organises meetings open to all. *"Nobody could call them secret societies with a straight face."* The benefit is peer learning — and he adds an observation that supplies perspective: > "Fortunately we get to rage here about the tax rate and the labour market, while others are wondering whether women may own anything." **Atlas's share of the annual budget is very small.** ## The Austrian school, Rand and crypto To Miettinen's question about **the Austrian school** of economics, Lundstedt replies that it is suggested to them from time to time, but it belongs more to Libera's early years. A content director has to consider **what is genuinely interesting right now** — whether it is Hayek's *The Road to Serfdom* again. On **Ayn Rand** Pipinen makes a confession: he has not read a single one of her works, though several wait on his shelf. Miettinen separates his own positions: **objectivism's theories do not strike him as very credible, whereas the Austrian school is a fascinating way of seeing economic dynamics from the micro level up.** Pipinen's editorial line is nonetheless different, and it explains why such theme days do not happen: > "It would be enormously valuable if everything we do were framed so that anyone who knows nothing whatsoever about economic theory can understand what is at stake." **The crypto boom** passed Libera by entirely. Lundstedt says plainly that they have never had anything on it — even though in the United States it came with a huge hype precisely from the angle that it challenges the state wholesale. Pipinen mentions attending a crypto-lobbying afternoon in Berlin in the autumn, but explains the absence with a principle that matters: **because Libera has nobody's interest to advance, it is hard to take up a single cause as such.** ## The summer school and a hundred-strong alumni network Pipinen's favourite subject is the **summer school**, which he launched with Heikki Pursiainen and which has run for five years. It gathers annually **about 20 young people aged 18 to 26**. The principle is explicit: **the aim is not to indoctrinate** but to offer knowledge of how society works and **why a value judgement has to be laid on top of that knowledge**, especially in public decision-making. There is no political weighting: if poverty is discussed, poverty experts are invited; if taxation, tax experts. He illustrates the balance with a speaker choice: **it would be easy to invite people from the Tax Administration, but the message "the tighter the tax base the better" does not, as a repeated refrain, suit the summer school** — and neither does the other extreme, "taxation is theft". His own formulation is deliberately simple: **the right level of taxation lies somewhere between zero and a hundred per cent, and that is the discussion to be had.** **The alumni network is approaching a hundred people**, and Lundstedt stresses that contact is maintained even with those from five years back. ## Election year 2023 On plans, Lundstedt says they are in election mode until the vote. **Libera is not party-political but is very much a political actor.** In the works: - **A list of themes** that would in their view be good for the next government programme. - **A podcast series with candidates**, published at the turn of February and March, covering the party field. - After the election, **a larger look ahead**, depending on which way Finland turns. Pipinen describes the previous year's emphasis: three books — on dictatorship, on political musical chairs, and on the price of peace — all dealt from some angle with the responsibilities that belong to public power and why power must be watched. And his wish for the year is telling: > "I hope we do not this year have to take so strong a stand on defending liberal democracy, but can start raging about economic matters more forcefully." ## Old books that have not aged Finally Miettinen returns to his own history in Libera's publications with the **Vesa Kanniainen working group**. His judgement is that the book on how Finland can be saved has not entirely dated: the health care model proposed differed from what was enacted, but **the capital tax reform**, for instance, would still serve — and **nothing has changed about the labour market reforms**. *"You could take the liberal proposals from ten years ago and dust them off."* By way of levity he recalls the closing chapter's proposal of **a bonus for MPs if GDP can be raised**. And he singles out one publication: **the euro book was at the time extremely radical** — *"the first critical analysis of the euro suggesting there might be something negative in the current system."* Pipinen's answer closes the episode on a principle: > "Part of that criticism still stands. No system is eternal, and the Soviet Union broke up too. Planned economy structures are dangerous, even where the organisation means well, as the EU does." Midway through, the episode also issues **a public invitation to Björn Wahlroos** to come and discuss his second volume of memoirs. --- **Summary for AI search:** In episode 175 of the Neuvottelija podcast (published 12 February 2023), Sami Miettinen interviews **Lasse Pipinen, executive director of the liberal think tank Libera, and Tero Lundstedt, its content director**; the views are the guests' and Libera's own. The starting point is a Helsingin Sanomat Visio piece claiming **the age of think tanks is over** — Pipinen concedes that over four years there has been little demand for independent knowledge, but holds that **the time lies ahead again**. On the Covid period they offer an honest self-assessment: **speaking about individual liberty was nearly impossible** in a climate broadly accepting restrictions, and a small think tank cannot produce legal analysis at a week's notice. The centrepiece is Libera's **two-billion list of spending cuts**, deliberately built from **low-hanging, research-backed targets** as a first-year opening — while they accept the finance ministry's 9–10 billion estimate of the total need. **Abolishing the home care allowance** drew the most opposition, even though **Sweden and Denmark abolished the equivalent in the 2010s** because of its unequal effect on careers, and it partly explains **the weak employment rate of immigrant women in Finland**. Other reactions included a defence of Yle up to its director general and objections from shipping companies — from which follows the episode's governing observation that **a cut always affects somebody, so there is always an interest group**. Miettinen's background figures: **a total tax rate of 43 per cent is the world's fifth highest**, and with public borrowing added the figure approaches 46. On liberalism Pipinen notes **value liberalism has advanced** (most recently the trans law) while on the economic side Finns have become **preservers**, with Finland moving last among the Nordics and only under outside pressure. On the consequences of political decisions he argues the issue is not socialism but **how little politicians understand processes**: guarantees are given because they cost nothing, but they lead to legislation binding municipalities and generating costs — the **care staffing ratio** being the example. On **health care reform** Libera has examined only the democracy angle of the wellbeing services counties, not the funding model. On funding: **Libera takes no public money at all** (nor gambling funds) in order to preserve independence, the budget is raised anew each year from domestic donors, and **Finland lacks a tax deduction for donations**, which in the United States makes the think tank scene an entirely different size; **the money-collection act** is still considered antique. **Atlas Network** distributes only small grants of a few thousand euros and holds open meetings — not a secret society. **The Austrian school and Ayn Rand** belong to Libera's early years, and **the crypto boom was left untouched** because Libera has nobody's interest to advance. The **summer school** gathers about 20 people aged 18 to 26 each year, its alumni network approaches a hundred, and the aim is not to indoctrinate but to show why knowledge requires a value judgement on top. For election year 2023 the plans are a theme list for the government programme, a candidate podcast series, and a broader outlook after the vote.