What kind of future should we expect?
The year has started with discussions concerning the decreased share of employed people in
Finland.
I personally do not marvel the state of affairs: During the past years the public sector has done
many things that have led to a situation in which many of the educated and of those who are
honestly willing to earn are put aside. It seems to me that the public sector has had a strong
urge to employ, so strong that in the haste the basics of economics seem to have been
forgotten; Making people work in positions which produce negative value added does not
increase productivity in any way.
In my earlier writings, I already referred to the prominence of value added and the drawbacks
that subsidies may bring. Of course, there is also the discussion concerning the value added
that public services provide and concerning related productivity measures. I think the value of a
public service should be measured by the effect that the service provides to the society in the
long run (e.g. in terms of GDP, though considering also the indirect effects and not referring so
much to the related labor costs).
The list beneath includes examples of potential losses that can occur in addition to direct costs,
when a subsidies are given sloppily:
o
Loss of value added that could have been achieved, if participants were involved in
more productive activities in the same organization
o
Losses in value added that could have been achieved through establishment of new
business or through new innovations (e.g. related to substitutes)
o
Indirect influence to GDP or business opportunities in following years through
potential necessity to increase taxation rate
And the costs can become very personal whenever there are people or organizations obligated
to be involved in an activity.
I have been hoping to hear about better incentives and reduced amount of bureaucracy related
to entrepreneurial activities, additional encouragements to earn (instead of to work), increased
flexibility in markets, enhancements in resources that facilitate interaction, and reduced amount
of unnecessary or growth blocking obligatory public services. Following-up the recent
happenings, I am not sure if that is the direction this society is heading towards. Even small
signs of injustice may accumulate to a huge operational failure.
I am truly worried about the situation.
Johanna Sandman
9. helmikuuta 2016, 0:02
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