If you need an ambulance

A very nice catch-22 in Sweden:

You have trouble breathing. You try to call an ambulance. The alarm centre decides that because you can still speak, you don't need an ambulance.

Call us only when you can no longer speak or breathe!

In some other countries, ambulance-chasing (sic) lawyers would have a dream target here. Not in the Nordics.

Pot calls kettle black, pan needed

The Swedish bureaucracy watchdogs, Ombudsman for Justice (Justitieombudsmannen, JO) and Chancellor of Justice (Justitiekanslern, JK) have been actively criticising various authorities in the country for unduly long processing times. For a good reason.

At the same time, it has turned out that JO is unable to measure its own processing times and the JK's processing times have doubled over the past five years.

So, the bureaucracies in the country are slow and arrogant, and therefore these two bureaucracies have been set up to monitor them. Now that the monitoring bureaucracies have become slow and arrogant, what to do? Obviously, set up a new bureaucracy to monitor these two!

I am quite convinced that the Finnish authorities (Justice Chancellor  / Oikeuskansleri, Parliamentary Ombudsman for Justice / Eduskunnan oikeusasiamies) face similar challenges: insufficient resources, more things to do than they can achieve. And they crave for more resources so that they could do good things.

Of course, everywhere the laws of nature are the same: bureaucracies can only expand and get more responsibilities; they very seldom scope down on their own, because every organization wishes to prove how useful and important it is.

In the private sector, companies run out of money, and when owners do not get any dividends, they'll order changes in leadership until something happens. The companies then start to really think what they actually have to do and what not. That leads to rationalization. Not always pleasant, but unavoidable and, in the big picture, extremely useful.

But the public sector does not run out of money, because it can always rise taxes (until it meets the Laffer curve). If the voters disagree, the public organizations can always drop the bottom layer of the bureaucracy: if budget cuts threaten police leadership, you take out the cops from the beat. If cuts threaten hospital bureaucracy, you reduce nurses and doctors until the budget is in balance. The voters soon learn.

Therefore, I think it is an extremely good thing that the Greek and Irish governments are defaulting. It just might make people think. Of course, there's no guarantee that anyone wakes up, but there's a chance.

Market economy invented in Kumpula!

HS runs a story about Kumpulan vaihtopiiri (edit: there is also another one, Helsingin vaihtopiiri, I confused these two but they seem to have the same idea). These are grassroot organizations that enable barter economy of small services in exchange for credits (alternative money). In this system, the credits are called kumpenni, a local penny, 10 kumpennis are worth one hour of work. (In the other one, it is merkkari which originally stands for "pirate coin", in fact a popular licorice candy).

That's all very fine and admirable; this is how communities have worked all along throughout history, and selling and paying for services in local trade through bi- or multilateral barter or more loosely defined gift economy is what keeps communities up and running. These movements pop up and there have been little stories like this in papers every now and then.

What baffles me is that the participants say - according to HS - that "they want to distribute welfare and have alternatives to capitalistic market economy".

Hey guys, wake up. What you have invented is capitalistic market economy: freedom of selling and buying services, freedom of pricing, freedom of who you trade with and who not. It isn't an alternative to capitalism, it is capitalism. There's even a "bank" that keeps track of value of services given, instead of the more traditional way of each person keeping track of who owns him or her what, and who he or she is indebted to.

What the participants seem to forget is that what they do is eroding the welfare state, and that what they do is illegal. I'll elaborate a bit.

1) The eroding of welfare state

Why is buying services with money so expensive? Because you have to pay tax, and because you have to pay for the related bureaucracy (which may be a higher cost than the tax itself). You pay not only the 22 % value added tax, but there are lots of other taxes, particularly the income taxes and social insurance contributions of people who work for each other, and the administrative cost of making these payments. If you hire someone to work for you legally, and pay all the taxes and statutory contributions, often less than half of the money actually goes to the person doing the work. The rest goes to the state to fund the welfare state. And if you have ever employed a person in Finland, you'll know that the process of meeting legal obligations is complex and takes a lot of work to find out.

If you evade those payments, what is that if not undermining the foundations of welfare state? Also, the welfare state has developed mechanisms to restrict worker exploitation, for instance the minimum wage (in Finland, through collective agreements). In local barter trade, all these rules are dodged.

2) The illegality

Yes, I know, it's absurd. It sounds really stupid that if I mow your lawn and then you mend my socks, we should both pay income tax and pay social contributions, and if we do more of it, we should also pay value added tax. But that's the current law; that's the very basic idea of the welfare state. A very large part of the money that the government makes and then uses for various more or less good causes comes from taxing the use of labor, and much of worker protection is achieved through the bureaucracy and the barrier of entry that it creates.

Current law is very explicit about this, and the taxman's guidance in the Web makes it absolutely clear. There are situations where people can work for free - bees (in Finnish, talkoot) for instance. But bartering services is tax evasion.

Even in the case where you and your neighbor work at the same place and only you have a car, giving a ride to your neighbor and accepting half of the gas cost from him is illegal. This is the welfare state.

The outcome

The development in Kumpula is by no means new. This kind of barter economy movements have spawned throughout the Western world for decades. For instance, in the U.S., the tax code was amended to cover them in 1982.

The ideas are the same ("let's fight evil capitalism and support local communities"), the means are the same ("let's use local money to enforce locality, avoid the taxes and bureaucracy"), and the outcomes are the same (unrestricted small-scale capitalism works for a while, it's generally a nice experience, but people grow up, the key people move away, and eventually the system fades away). If any of these trials were to become substantial, they would face investigations and criminal proceedings.

So, to summarize: the activists speaking here have become completely confused with the concepts of market economy and welfare state. They think they're doing "something else", when they are actually doing "more of the same". They think they've invented an alternative to capitalism, and what they're doing is going back to the 19th century style capitalism, just in small scale. If it stays that way, it's OK.