I have a friend who lives in Finland and works in the government department that imparts skills to immigrants, so that they can become productive and assimilate well in society. In one of our conversations, she mentioned how, in a lot of Scandinavian countries, all public transport, including the trains, is free, and you can hop into any and go anywhere. In Finland, you can also study whatever you want, go to school, college, or get a PhD for free. I went into an I-am-not-sure-how-this-works thought process. And remarked “I guess this can work only in a socialist society.”
What followed was insightful. She asked me what I thought was the most important asset in our society. Honestly, that caught me by surprise. Our economy is measured (and GDP seems to be the holy measure) by the movement of money, and hence companies? She remarked, “Well, it’s the people. It should be, isn’t it? At least in the 21st century.”
Her point was that the concept of companies being valuable is an outdated model. Natural resources and companies being valuable made sense in the industrial era, not really in the knowledge economy era. She said, “Most democracies, even so-called capitalist democracies, see people as a liability — a bunch that needs to be taken care of. So, education is seen as a cost, healthcare is seen as a cost. But in Finland, the model is that people are an asset.”
Her example: If you charge people a fee for college, they will pay a one-time fee. And because of financial difficulties, they might not even pursue further education. Whose loss is it, she asked? I guessed it was the individual’s.
“Nope, if someone who has the potential to be a PhD scientist ends up being a librarian because they couldn’t afford to study, it is the loss to the country. In more practical terms, the government loses 30% of a much higher revenue than they could have made. Instead, they have a citizen who hasn’t reached their full potential but continues to consume the same amount of resources — might even add to the burden.”
If one looks at each individual in the way that everyone has a potential, and if the government helps them achieve the best version of themselves, then for a lifetime (say 40 odd years), the government gets 30% of everything they make.
How does the free bus and trains work, I asked. If you remove traffic and the headaches, employees can reach their office faster. Companies get employees who aren’t half drained by the time they reach their office. The more productive the workforce is, and the more profitable the company is, the more the government benefits from both and earns higher tax money. A scientist who can do their best work creates an asset to the country.
When people are the asset, the system starts as early as the mother being pregnant, to ensure that care is provided to deliver a healthy baby. When the baby is born, the formative years are provided for to ensure nutrition and a healthy mental faculty. Periodic tests to map out the trajectory of every individual are traced to set them on that path.
“So really, Finland is very capitalist. The model is that we value human beings and every human being as an asset. However, most ‘capitalist’ societies see them as a liability and spend most of the money on welfare schemes and burdening the middle class.”
The role of the government should be to enable its citizens/institutions/companies to be the best version of themselves and get the heck out of the way. This idea is simple but radical. It took a few months for me to digest. Give it time. Your first reaction might be similar to mine. But it makes sense.
1. For India, having a bigger population, this approach makes it even more attractive. People are an asset. The more of that you have, the more you win.
2. This is fundamentally flipping the economy to its head. Today, there are a few companies that create value (GDP) that is divided by the population. This model empowers individuals as: Population x Productivity = GDP
3. Almost 90% of a country such as India lives off Rs 12,000 per month. Over 5% of the country pays taxes that support the rest of the country. Moreover, the aspirations of infrastructure are rising. This is simply not sustainable.
4. This seems to be one of the few ways to not just get India to the the 5-trillion economy mark (as a by-product and not the goal) and beyond. In a day and age where civil liberties violation and environmental abuse will and should not be tolerated, this model paves a way. Most countries that are developed today got there through slavery or burning the environment, which is an option we can’t or shouldn’t have.
5. Getting ready for the knowledge economy will not only get us on the world stage, but will get us far ahead in terms of the future. Being a young country, that is a service to future generations we cannot ignore. As they say, “Skate to where the puck is going, not to where it is.”