Finnish government resigns over failure to reform social welfare programs

This is a straw in the wind for other, larger European Union countries.

The entire Finnish government resigned yesterday when it became apparent they would not achieve their major policy goal of reforming social welfare programs and the health care system.  Elections have already been scheduled for April, where Prime Minister Juha Sipila will try again to fashion a coalition that can deal with the ever burgeoning welfare system.

Finland, like most E.U. countries, has an aging population and a shrinking workforce to pay for it.  As taxes continue to go up, workers have begun to rebel.  It's a scenario that will play out in other E.U. countries who also see a dwindling tax base as populations age.

BBC:

In 2018, those aged 65 or over made up 21.4% of Finland's population, the fourth highest after Germany, Portugal, Greece, and Italy, according to Eurostat.

Finland's welfare system is also generous in its provisions, making it relatively expensive.  Attempts at reform have plagued Finnish governments for years.

Mr Sipila's proposed solutions included creating regional authorities for health and welfare services, rather than the local municipalities that currently manage the system, and offering including private companies in the healthcare system to a greater extent to offer "freedom of choice".

Mr Sipila's government also famously experimented with a guaranteed minimum income scheme — giving €560 (£480) a month to 2,000 unemployed people as a basic income with no conditions attached.

Initial results suggested the pilot scheme left people happier, but still unemployed.

Mr Sipila's Centre Party has been in a centre-right coalition government since 2015.  Since a 2017 re-negotiation, the government has been formed of the Centre Party, the National Coalition, and Blue Reform.

The opposition Social Democrats have taken the lead in recent polls by several percentage points.

Mr. Sipila's plan to move the deck chairs around on the Titanic by trying to save administrative costs and instituting modest market reforms was a Band-Aid on a gaping wound.  But at least he's headed in the right direction.  That Finland is desperate is evidenced by the cockamamie guaranteed minimum income scheme (pay attention, Alexandria Ocasio-Cortez), which made people very happy to get something for nothing but failed in every other respect.

Contrast Sipila's efforts at addressing their problems with German chancellor Angela Merkel.  Rather than reform the social welfare state, Merkel thought bringing in a couple of million newcomers would eventually solve Germany's economic difficulties.  How'd that work out for ya, Angie?

Is this a political problem?  A demographic problem?  A psychological crisis?  Yes, yes, and yes.  And how Finland deals with it will be fascinating to watch.

Thomas Lifson adds: Too bad Obama didn't follow this model when Obamacare turned out to be an expensive disaster and his "keep your doctor" promise a lie.

This is a straw in the wind for other, larger European Union countries.

The entire Finnish government resigned yesterday when it became apparent they would not achieve their major policy goal of reforming social welfare programs and the health care system.  Elections have already been scheduled for April, where Prime Minister Juha Sipila will try again to fashion a coalition that can deal with the ever burgeoning welfare system.

Finland, like most E.U. countries, has an aging population and a shrinking workforce to pay for it.  As taxes continue to go up, workers have begun to rebel.  It's a scenario that will play out in other E.U. countries who also see a dwindling tax base as populations age.

BBC:

In 2018, those aged 65 or over made up 21.4% of Finland's population, the fourth highest after Germany, Portugal, Greece, and Italy, according to Eurostat.

Finland's welfare system is also generous in its provisions, making it relatively expensive.  Attempts at reform have plagued Finnish governments for years.

Mr Sipila's proposed solutions included creating regional authorities for health and welfare services, rather than the local municipalities that currently manage the system, and offering including private companies in the healthcare system to a greater extent to offer "freedom of choice".

Mr Sipila's government also famously experimented with a guaranteed minimum income scheme — giving €560 (£480) a month to 2,000 unemployed people as a basic income with no conditions attached.

Initial results suggested the pilot scheme left people happier, but still unemployed.

Mr Sipila's Centre Party has been in a centre-right coalition government since 2015.  Since a 2017 re-negotiation, the government has been formed of the Centre Party, the National Coalition, and Blue Reform.

The opposition Social Democrats have taken the lead in recent polls by several percentage points.

Mr. Sipila's plan to move the deck chairs around on the Titanic by trying to save administrative costs and instituting modest market reforms was a Band-Aid on a gaping wound.  But at least he's headed in the right direction.  That Finland is desperate is evidenced by the cockamamie guaranteed minimum income scheme (pay attention, Alexandria Ocasio-Cortez), which made people very happy to get something for nothing but failed in every other respect.

Contrast Sipila's efforts at addressing their problems with German chancellor Angela Merkel.  Rather than reform the social welfare state, Merkel thought bringing in a couple of million newcomers would eventually solve Germany's economic difficulties.  How'd that work out for ya, Angie?

Is this a political problem?  A demographic problem?  A psychological crisis?  Yes, yes, and yes.  And how Finland deals with it will be fascinating to watch.

Thomas Lifson adds: Too bad Obama didn't follow this model when Obamacare turned out to be an expensive disaster and his "keep your doctor" promise a lie.