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EP208 · Economy · first published 2023-08-22

Finland’s economy and the second cold war | Ville Valkonen | Negotiator 208

National Coalition MP Ville Valkonen joins Sami Miettinen in August 2023, two months into Petteri Orpo’s government. The episode works through the programme’s economic section in order: housing, property tax, the labour market, social security, taxation, and where the €6 billion adjustment is supposed to come from. The most interesting single figure is inheritance tax — some €800 million a year out of a tax take above €110 billion — and the question built around it of what changing the tax type would actually cost. It closes on Valkonen’s long argument about a second cold war. The guest is both a governing-party MP and a housing investor; both are disclosed.

Sami Miettinen · Sections: AI and the Economy + AI and Society

Finland’s economy and the second cold war | Ville Valkonen | Negotiator 208

Summary: National Coalition MP Ville Valkonen joins Sami Miettinen in August 2023, two months into Petteri Orpo’s government. The episode works through the programme’s economic section in order: housing, property tax, the labour market, social security, taxation, and where the €6 billion adjustment is supposed to come from. The most interesting single figure is inheritance tax — some €800 million a year out of a tax take above €110 billion — and the question built around it of what changing the tax type would actually cost. It closes on Valkonen’s long argument about a second cold war. The guest is both a governing-party MP and a housing investor; both are disclosed.

The guest, and two connections that must be stated

Ville Valkonen is a National Coalition MP, appearing on the programme for the third time. The recording is from 22 August 2023, about two months into Petteri Orpo’s government.

Two things are worth knowing before the content, and the episode states both itself:

  1. He is a governing-party MP explaining his own government’s programme. He says so himself towards the end — the host calls him “a prisoner of the programme for government”. This is a case for the defence, not an independent assessment.
  2. He is a housing investor and previously worked in landlord representation — and the first third of the episode is about housing policy. He says he owns five investment flats. That does not make his arguments wrong, but readers should know it while reading them.

The host, for his part, marks his own passages: he calls several of his contributions a “rant”. This write-up uses the same distinction.

1. Housing policy — and an answer to two named criticisms

The episode opens unusually well: the host puts criticism made by another of his guests and asks for an answer. The criticism had two parts — the government treads on municipalities’ toes by forcing a minimum property tax, and the right-of-occupancy housing system is being run down.

Valkonen’s answer on right-of-occupancy is more precise than the criticism: the system is not being abolished, its expansion is being stopped. The distinction matters and is checkable against the programme.

The reasoning is economic, and it is offered as a claim that can be answered:

State-subsidised housing production is not, in his view, economically justified at the scale it has been done, because the market houses the large majority. Public support is justified for special groups — people with challenges related to managing their lives, mental health, substance use or health.

The counter-argument — that supply will not materialise without subsidy, and that “special group” is a sliding category — is not made in the episode.

The minimum property tax gets two justifications of differing strength:

He also concedes the tax’s problem: it can fall on a low-income person who owns a valuable property. The concession is worth marking, because it concerns his own government’s decision.

The housing market, interest rates, and what he does not claim

The section on housing investment is the most honest in the episode, because he refuses to promise anything:

The section also contains the most intellectually interesting aside in the episode: the claim that housing allowance does not raise rent levels is now being put to the test as allowances are cut. Neither man claims to know the result.

Zoning

Short but concrete, and the best example in the episode of deregulation argued without slogans: redeveloping a city centre involves so much public interest that tighter control is justified — but in standardised apartment or single-family production further out, the same control is not. The distinction is useful and it is not party-political.

2. The economic programme — where the €6 billion comes from

The clearest section, because Valkonen lists the structure rather than just the goals.

Three baskets:

  1. The labour market. Collective agreements legislation has not, he says, been reformed since 1946 — which is correct; Finland’s Collective Agreements Act dates from that year. The aim is less risk in hiring and more flexibility.
  2. Social security. Housing allowance, unemployment benefit, incentive traps.
  3. Growth and employment — in his view the most important, because it strengthens the tax base rather than merely moving money.

Scale: roughly €4 billion in direct adjustment and €2 billion from growth and structural measures, six in total. And then the concession that is the most valuable thing in the section:

It is not enough. Reaching balance will, he says, also require the next parliamentary term.

A governing-party MP saying out loud that his own programme falls short is rare, and worth marking.

The employment estimate — some 100,000 additional employed and the employment rate approaching the Nordic 80 per cent — is the government’s own, and is marked as such.

Taxation

The structure is clear and checkable: taxes on work are cut by well over half a billion, financed by consumption and harm taxes — tobacco, nicotine pouches, alcohol, raising the reduced VAT rate from ten to fourteen, and property tax. The relief is weighted to low and middle earned incomes, with a separate relief for parents of minor children.

Valkonen makes two qualifications that shrink his own side’s claim:

The host’s own long argument concerns the tax ratio: an outturn of 43.2 per cent against the finance ministry’s forecast of 42.6 — and, he says, forecasts systematically undershoot, which produces the recurring “the tax ratio is inevitably falling” argument used to justify new rises. He says he discussed this with an economist. The 43.2 figure matches Finland’s realised total tax ratio for 2022; the claim about a systematic gap between forecast and outturn is interesting but unverified in the episode.

Pension contributions

A short section in which Valkonen separates two things: the previous government’s reform of self-employed pension contributions was, in his view, a patch reacting to the fact that the system does not build a fund — while the actual pension reform is being prepared separately and broadly. He says he opposed the earlier model while on the board of the entrepreneurs’ association. That is a personal connection and he states it himself.

3. Inheritance tax — the best single calculation in the episode

Here the host’s “rant” produces the numbers that make the whole discussion different:

Inheritance and gift tax yields around €800 million a year. The total value of estates passing in Finland is about €6 billion a year — the smallest in the Nordics, on his account. Total tax revenue is somewhat over €110 billion.

The orders of magnitude are right. From them comes an argument requiring no position on the tax’s fairness: inheritance tax is under one per cent of the tax take, so changing the tax type to a capital gains tax is not a large fiscal question — and therefore the heat of the debate is not explained by the revenue.

Valkonen’s answer is what makes the section good, because he does not simply agree:

He adds a technical point that is genuine: a capital gains tax falls differently from an inheritance tax, which creates inconsistencies — addressable, for instance, through a deemed acquisition cost.

This is the episode’s model example of what a discussion looks like when both parties are on the same side and disagree anyway.

4. Demography, immigration, and what both concede

Short but notable. On Valkonen’s account ageing is exceptionally strong in Finland — he names Sweden’s age structure as healthier — and it sits behind every other challenge: pension, care and health spending all rise at once while the birth rate has fallen.

On the conclusion they agree, and it is said plainly: work-based immigration is needed — without it, agriculture and public transport in the capital region would not function even now. Valkonen separates this from other dimensions of immigration and notes that his coalition partner’s emphases there are different.

I mark this because it is a point where a governing-party MP states a difference from his partner’s line — the second place in the episode where an internal tension is acknowledged.

5. Stubb, and what a president should be asked

The section on the presidential candidacy is a position and is marked as one — but its structure is useful regardless of whom you support:

The president’s main task is foreign and security policy. A candidate must therefore be assessed against that. Valkonen says plainly: if we were choosing a prime minister or a finance minister, he would support somebody else.

That is an unusually precise way to justify a preference, because it names the criterion and limits it.

The section also returns to the controversy over nominee registration, and here it is worth separating argument from frustration. The argument: securities custody is competitive elsewhere in the West, and in Finland the defence of a monopoly was justified by risks that, in his view, did not match reality. The frustration: repeated remarks that nothing has been learned.

The host draws a broader observation from it, the sharpest media point in the episode: public debate is driven by controversies, and the controversy does not necessarily concern what is actually being decided.

6. A second cold war

The episode closes with a long argument from Valkonen, clear in structure. The core claim:

The present situation is more dangerous than the cold war, because then the competition was primarily ideological and military — and communism’s economic unsustainability showed. Now the competition is above all economic, and the other side is economically strong.

The reasoning is concrete and checkable: the Soviet Union sat outside the world economy and exported mainly energy and minerals. China is the world’s factory, with connections into financial markets, high-technology products and strategic raw materials — and many developing countries depend on it economically whether or not they share its values.

The end of the passage is rhetorical and should be read as such — this is, he says, about “the soul of humanity”. That is a position, not analysis.

What the section lacks, and I mark it because the episode does not: economic interdependence runs both ways, and it is also the West’s leverage. That opposing reading is not addressed at all.

Claims presented as claims

What survives the episode

  1. Inheritance tax is under one per cent of the tax take. That does not settle the question, but it moves it off fiscal ground — and both speakers accept the figure.
  2. “It is not enough.” A governing-party MP says his own programme falls short and needs the following term too. It is the most honest sentence in the episode.
  3. The distinction between city-centre and suburban zoning is a usable model for deregulating without deregulating everything.
  4. The second cold war is economic, not ideological — which is precisely why the other side is stronger than the last one. The counter-reading about interdependence goes unmade.

How the episode runs

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