---
title: "The Book of Revelation for the Economy | Aki Kangasharju | Neuvottelija 229"
titleOriginal: "Talouden madonluvut | Aki Kangasharju | Neuvottelija 229"
episodeNumber: "229"
guest: "Aki Kangasharju"
datePublished: 2024-01-02
duration: "61:48"
youtube: "https://www.youtube.com/watch?v=k8cN_FhQk7o"
originalLanguage: "fi"
topics: ["finnish_economy_policy","ownership_capital_tax","investing_markets"]
subtitleMethod: "none"
provenance: "Owner page assembled from YouTube metadata, the neuvottelija.fi episode record and a MacWhisper transcript of the Finnish audio. The chapter marks are the publisher's own, as released with the video. No English caption track was produced, so no transcript is published here."
fiCanonical: "https://www.neuvottelija.fi/fi/episodes/355-talouden-madonluvut-kangasharju-neuvottelija-229"
canonical: https://www.neuvottelija.com/podcast/episodes/ep229-talouden-madonluvut-aki-kangasharju/
---
# The Book of Revelation for the Economy | Aki Kangasharju | Neuvottelija 229

English subtitles are not available on this page. This is an episode summary, not a curated transcript.

## Chapters

- [00:00](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=0s) The book's title and the beasts of Revelation
- [00:51](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=51s) The book's proposals rest on research
- [01:41](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=101s) Why GDP is a poor measure
- [02:36](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=156s) Public-sector value added cannot be measured
- [03:30](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=210s) Door handles as the measure of a doctor's visit
- [04:20](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=260s) Improving quality does not show in the statistics
- [05:11](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=311s) Public-sector productivity statistics were discontinued
- [06:58](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=418s) Business-sector value added and intermediate inputs
- [08:42](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=522s) Finance and legal services as a measurement problem
- [09:35](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=575s) A subsidiary economy, and dividends flowing out
- [10:28](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=628s) The household sector's absurd value added
- [11:23](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=683s) Imputed rent and zero interest rates
- [13:08](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=788s) Farm labour hours and a productivity leap
- [13:59](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=839s) Without imputed rent we are poorer than in 2008
- [14:50](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=890s) Two phases in the business sector since 2008
- [15:44](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=944s) IT services as the best-performing industry
- [16:33](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=993s) Service exports and the current-account deficit
- [17:24](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1044s) The national economy borrowing from abroad
- [18:16](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1096s) Eleven billion of deficit a year
- [19:09](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1149s) Capital income cannot cover the deficit
- [20:01](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1201s) Spending cuts as the only durable solution
- [20:51](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1251s) Private goods and public goods
- [21:44](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1304s) Municipalities avoiding tendering through joint ventures
- [22:36](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1356s) Public provision as less efficient than private
- [23:25](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1405s) We do not know where we are efficient
- [24:16](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1456s) The purchaser-provider model as a forgotten option
- [25:08](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1508s) Tenure, politics and the impossibility of efficiency
- [25:59](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1559s) Who decides what a citizen needs
- [26:49](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1609s) Holmström and the welfare state's shadow side
- [27:41](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1661s) The fourth-highest total tax rate in the world
- [28:32](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1712s) The EU's highest marginal tax rate
- [29:21](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1761s) Why the total tax rate is a bad comparator
- [30:11](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1811s) Cutting the top marginal rate could raise more money
- [31:01](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1861s) The Nordics on the wrong side of the Laffer curve
- [31:54](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1914s) Denmark and Sweden cut, Finland was left alone
- [32:46](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=1966s) The behavioural effect is real
- [33:35](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2015s) The Laffer curve sits differently for each tax
- [34:26](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2066s) Capital taxation and the mobility of capital
- [35:15](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2115s) Wealth per adult at Portugal's level
- [36:05](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2165s) The one-sidedness of the tax debate
- [36:58](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2218s) Labour input and the growth of part-time work
- [37:52](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2272s) Where more hours of work come from
- [38:45](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2325s) Structural reform as the source of productivity
- [39:35](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2375s) The marginal rate and the choice of leisure
- [40:29](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2429s) Incentive traps at the benefits end
- [41:21](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2481s) The step from benefit recipient to employed
- [42:15](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2535s) Income differences among the smallest in the world
- [43:09](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2589s) Social mobility in Finland the highest in the world
- [43:59](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2639s) Inequality comparisons, and the year 1993
- [44:49](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2689s) Media, the Overton window and expert selection
- [46:34](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2794s) "Economic right" as a term to be normalised
- [47:27](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2847s) The claims rest on research
- [48:18](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2898s) Is the euro a radical monetary experiment
- [49:09](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=2949s) The optimal currency area, and Mundell
- [50:01](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=3001s) The euro's role in Europe's problems
- [50:53](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=3053s) Fiscal union, or the monetary union unwinding
- [51:46](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=3106s) A basket currency and regional monies
- [52:37](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=3157s) The monetary union has proved resilient
- [53:28](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=3208s) A critique of post-Keynesianism
- [54:17](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=3257s) The logical endpoint of printing money
- [55:08](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=3308s) The central bank replacing private lending
- [55:59](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=3359s) Strikes, and an inward-looking economic debate
- [56:49](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=3409s) Where the government's cuts land wrongly
- [57:42](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=3462s) Defending acquired benefits
- [58:33](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=3513s) Collectivism in wage formation
- [59:27](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=3567s) The state out of the wage table
- [60:18](https://www.youtube.com/watch?v=k8cN_FhQk7o&t=3618s) Universal validity, and a book recommendation

## Summary

Etla's chief executive **Aki Kangasharju** came on to work through *Talouden ilmestyskirja*,
his book about what Finnish national accounts do and do not show. The title is his
publisher's idea rather than his own, and he admits he found the Book of Revelation harder
going than his own manuscript.

The argument is an accounting argument before it is a political one. Value added arises in
three places — firms, the public sector and households — and only the first is measured in a
way that means what it appears to mean.

**The public sector.** Output is captured through proxies: how often a doctor is visited,
not what happens to the patient's health. Costs and real wages rise while the count of
visits stays flat, so measured public productivity declines as a trend even where the care
has plainly improved. Separate public-sector productivity statistics used to be published
alongside the national accounts; they were discontinued in the 2010s, though the method
behind the GDP figure continues. His conclusion is blunt: *we do not know where we are
efficient or how inefficient we are.*

**Households.** Almost the entire household sector's value added is **imputed rent** — the
notional rent owner-occupiers are recorded as paying themselves, net of housing costs and
mortgage interest. When interest rates went through the floor in the 2010s, less was
deducted, so imputed rent grew year after year. At the same time the hours booked to the
household sector, most of which come from agriculture and sole traders, kept falling. The
arithmetic result is that household-sector productivity rose 26 per cent from 2008.

**The conclusion.** Take away the household sector and the unmeasurable public sector and
Finland is about one per cent poorer per capita than in 2008 — with tens of thousands of
euros of additional private and public debt per citizen accumulated on top. The business
sector fell 10 per cent to 2015 and has since recovered 10 per cent, leaving it roughly flat
across fifteen years. The one industry that has genuinely raised GDP per head is IT
services, largely through service exports; the transformation from a goods-exporting economy
has been real but slow next to competitors.

On tax the argument is that the total tax rate — fourth highest in the world — is the wrong
comparator, because countries differ in how much they route through taxable and tax-free
transfers and in how much they borrow. Compare tax by tax instead, and the standout is the
top marginal rate on labour at 59.4 per cent, the highest in the EU. Kangasharju's position
is that the Nordics have been on the wrong side of the Laffer curve here: Denmark cut its
top rate by ten percentage points in 2009 to good effect, Sweden has cut about five, and
both are now below Finland, which is left alone at the top. He is careful that the curve
sits at a different point for every tax — property tax, he suspects, is not on the wrong
side.

The last third is the disagreement worth staying for. Sami puts it to him that the euro is
itself a radical heterodox experiment, a currency without a state, running against Mundell's
optimal currency area theory, and that the logical endpoints are fiscal union or unwinding.
Kangasharju accepts the framing as interesting and agrees the arrangement is not optimal —
but says the euro is not the root of Europe's problems, that the Commission would regulate
just as eagerly without it, and that the monetary union has proved considerably more
resilient than he expected. On post-Keynesian monetary theory his objection is structural: if
banks were merely an extension of the central bank, growth could only come from public debt
and the private sector would shrink continuously, so the logical endpoint is communism.

Recorded on a strike day, it closes on wage formation — and on one concession. Kangasharju
says he agrees with the protesters on a single point: cutting social security in a way that
hits people who cannot work is the wrong direction, whereas cutting earnings-related
unemployment benefit is defensible because those affected can compensate by working.

## Watch

The recording lives on the Neuvottelija channel:
[Talouden madonluvut | Aki Kangasharju | Neuvottelija 229](https://www.youtube.com/watch?v=k8cN_FhQk7o).
A Finnish edition of this episode is published at
[www.neuvottelija.fi](https://www.neuvottelija.fi/fi/episodes/355-talouden-madonluvut-kangasharju-neuvottelija-229).

---

Cite as: Sami Miettinen, Neuvottelija — The Book of Revelation for the Economy | Aki Kangasharju | Neuvottelija 229, https://www.neuvottelija.com/podcast/episodes/ep229-talouden-madonluvut-aki-kangasharju/, 2024-01-02. For quotes include episode 229 and timestamp.