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- (Prov 22:3) A prudent man foresees the evil, and hides himself: but the simple pass on, and are punished.


This writing is about economic depression, how it could be avoided, and (if not avoided) how its negative impact could be reduced. This is not always possible, however, as we can see in several countries that are so dependent upon foreign trade and other activities that they cannot influence their own futures. Something can still be done. An economic depression will always cause more poverty and alienation, and even reducing some of these ill effects will be helpful.


Danger of getting into debt


- (Rom 13:8) Owe no man any thing, but to love one another: for he that loves another has fulfilled the law.


People tend to take on too-large loans when the times are good and the stock exchange rates are on the rise. This is done both by people (who buy too-expensive homes, for example) and governments. People tend to believe that the financial situation will remain the same or improve so they do not prepare themselves for the worst. They do not try to pay back some or all of their debts when times are good. For example, the State will not increase its tax rate to keep its budget in balance and prevent indebtedness. This is usually because decision-makers want to stay in favour with people.

   Preventing indebtedness is one of the most important factors in the prevention of an economic depression. During the economic recession of the early 1990s, the countries that had accumulated the most debt in the late 1980s suffered most. Finland was one of those countries. Countries that had not accumulated a lot of debt had it much easier during the depression.


Saving in advance and monitoring loans


- (Ps 37:21) The wicked borrows, and pays not again: but the righteous shows mercy, and gives.


- (Luke 14:28,29) For which of you, intending to build a tower, sits not down first, and counts the cost, whether he have sufficient to finish it?

29 Lest haply, after he has laid the foundation, and is not able to finish it, all that behold it begin to mock him,


One reason why economic recessions occur is that people fail to check their debtors' personal information or solvency; loans are given to anyone without any collateral regardless of whether or not they will be able to pay the loan back. This is what happened in the United States during the real estate crisis a couple of years ago, and during the economic recession in Finland in the early 1990s. Leo Meller describes the loan offers that people received in the 1980s right before the economic crisis in Finland:


I wrote above about the liquidity in Finland, i.e. the money that is available. The loans offered to ordinary people seem very extreme in Finland and in the other Western countries. Here are some recent examples:

   Newspaper Uusi Suomi described in its financial section on 22 October 1987 (please note the date: around the large stock exchange crash): Kansallis-Osake Pankki, (Bank KOP) offers lifetime mortgages. KOP offers a housing loan that is valid until you die. You do not have to start paying back the loan during your loan-time. The fixed interest always remains the same for a period of five years. The loan can also be transferred to another person approved by the bank. You do not have to start paying back the loan during your loan-time. You will have to pay back the entire sum when the loan period expires. The loan period may be even until the time the customer probably dies. In practice, loan periods are usually between 20 to 40 years. (...)"

   The cover picture and headline of magazine Suomen Kuvalehti on the next day showed an empty studio in Helsinki and stated, "Take a loan of FIM 300,000 – pay back FIM 777,750".

   Harsh messages!

   What about the loans banks offer to their customers? I have received marketing letters from Sweden and Switzerland, all of them offering me loans, even without actual collateral. It seems that financial institutions are offering true discount loans: take a loan, take a loan from us, no matter how – just take it!

   Yhdyspankki Bank whose slogan is "Providing Opportunities" sent me an expensive-looking four-colour brochure whose cover promised "Flexible credit! Up to FIM 100,000 – available right away!" The inner pages of the brochure included the following promise, for example: "You can use your flexible credit where you like".

   Another brochure of Yhdyspankki Bank promised the following: "Freedom to choose! What would you like? We can give you a loan right away... Come and tell us what you want."

   I woke up in a hotel room in Turku on Tuesday, 15 September 1987. I had preached the previous evening about the money-making companies wanting to tie up Finns to huge debts with financial restraints. It was quite tragicomic when I saw on the front page of the local newspaper, Turun Sanomat, an advertisement. The heading was: "Good morning Turku! Here is your loan!" There was also a loan application form, printed right there on the newspaper – just grab a pen and apply for a loan. The text at the bottom said: "We will give you FIM 5,000–50,000 without any negotiations. You don't even have to be our customer! Just return this form to any of our offices!"

   Who could resist such marketing of a loan?

   A loan application form on the front page of a newspaper! (1)


There is a simple way we can avoid errors like those described above: borrowers should already have a sufficiently large amount of money in their savings, and banks should study the financial status of their potential customers in more detail. These two steps can easily be forgotten when housing prices and stock exchange rates are going up and the interest rate is low.


Speculating with borrowed money


- (James 4:13-16) Go to now, you that say, To day or to morrow we will go into such a city, and continue there a year, and buy and sell, and get gain:

14 Whereas you know not what shall be on the morrow. For what is your life? It is even a vapor, that appears for a little time, and then vanishes away.

15 For that you ought to say, If the Lord will, we shall live, and do this, or that.

16 But now you rejoice in your boastings: all such rejoicing is evil.


Speculating with borrowed money is one of the major causes of financial instability. In the past (before the 1929 stock market crash) people took on larger and larger loans to buy stocks. That caused stock prices to go up but when they came back down, many people were in trouble. Charles Mitchell, chairman of the New York National City Bank at the time, was not able to anticipate this. This is what he stated two days before that crash:


The industrial situation of the United States is absolutely sound, and our credit situation is in no way critical... The interest given by all the public to brokers' loans is always exaggerated... The markets generally are now in a healthy condition. The last six weeks have done an immense amount of good by shaking down prices... I know of nothing wrong with the stock market or with the underlying business and credit structure. (2)


What we can learn from this is that we should not start speculating with borrowed money, and that no loans should be granted to people who plan to do so. This has been one of the main causes of economic crises in the past 100 years. David C. Korten writes:


Gambling with borrowed money is a bad idea under any circumstances. When it is done on a scale that threatens the integrity of national financial systems, there is a compelling rationale for strong public measures to eliminate it. Appropriate measures include prohibiting banks from accepting financial assets as loan collateral and from lending to hedge funds and other financial institutions for the purpose of buying stocks or derivatives. Buying stocks on credit should be similarly prohibited. (3)


Solvency of banks is one of the most important factors in preventing an economic recession. If banks are solvent, many problems will be avoided. At least, the advice below should be taken into account.


·        Be careful when granting loans, as mentioned earlier. During the banking crisis of the early 1990s in Finland, the most conservative banks – those who had paid the most attention to risk management –came out the best. They did lose some of their market share at first but then came out of the crisis in better condition. The total cost of the economic crisis to Finnish society was around FIM 50 billion (more than EUR 8 billion).


·        Focusing on basic banking is important. This means avoiding any stock or real estate speculation with customers' money. One of the reasons why the SKOP Bank had so much trouble in Finland in the early 1990s was that the bank had been involved in property and stock investments. When prices came down, the bank went bankrupt.

   A statement given by the former president of the SKOP Bank to the Finnish Parliament in the autumn of 1986 clearly explains this. He describes the situation a couple of years before the crash. His prediction came true:


We may end up with a deep financial depression, very bad unemployment and plenty of bankruptcies in a couple of years.

- The sloppy fiscal policy will at first increase the prices of real property but not even the real estate business can continue forever. If there is a depression and/or the interest rate rises, the property value will decrease.

- The most dangerous recent event is that financial institutions have started to fund the stock exchange with credit and trade stock themselves, which is the most dangerous approach and dubious on many levels when the banks are both owners and sponsors at the same time.  Morals and ethics will be hard to find when even people holding a trusted position in a bank practice stock trading to make themselves richer using information obtained from their employer on whose behalf they make decisions.

   We may end up in ruin. (...) The entire national economy will be shocked. (4)


·        Solvency of banks can be developed by making sure that they have more cash at hand. Even a reserve of 100% has been proposed:


One Hundred Percent Reserve Requirement on Demand Deposits. As far back as in 1948, Henry C. Simmon, founder of the conservative University of Chicago school of economic monetarism, argued for a 100 percent reserve requirement on demand deposits to limit banks' ability to create money and to improve the government’s possibilities to control money flows. Many economists have since called for a similar measure.  The reserve requirement in the United States currently averages less than 10 percent. Phased in over several years to allow the financial system to adjust, this action would deflate the borrowing pyramid and help restore the connection between the creation of money and the creation of wealth. (5)




- (Ex 22:25) If you lend money to any of my people that is poor by you, you shall not be to him as an usurer, neither shall you lay on him usury.


- (Lev 25:35-37) And if your brother be waxen poor, and fallen in decay with you; then you shall relieve him: yes, though he be a stranger, or a sojourner; that he may live with you.

36 Take you no usury of him, or increase: but fear your God; that your brother may live with you.

37 You shall not give him your money on usury, nor lend him your victuals for increase.


The verses above warn us about usury. The interest rate should either be reasonable or not be charged.

   This is also one of the major reasons causing economic recessions. If companies are highly indebted when interest rates suddenly rise, it is like a death sentence for them. This is what happened in Finland twenty years ago and later in Asia. Tens of thousands of large and small companies became bankrupt in Finland alone, increasing the unemployment rate. Furthermore, private persons had trouble coping with their debt. If the interest rate had remained low and usury had not been practiced, the negative impact would have been much less severe. The quote below is about the economic recession in Asia.


Companies highly involved in debt are particularly sensitive to interest rate increases, especially to the extremely high levels urged by the IMF.  At very high interest rate levels, a company highly involved in debt goes bankrupt quickly. Even if it does not go bankrupt, its net worth vanishes quickly as it is forced to pay huge amounts to creditors.

   The IMF recognized that the underlying problems in East Asia were weak financial institutions and companies highly involved in debt; yet it pushed high interest rate policy that actually exacerbated those problems. The consequences were precisely as predicted: The high interest rates increased the number of firms in distress, and thereby increased the number of banks facing credit losses. This weakened the banks further. The increased distress in the corporate and financial sectors exacerbated the downturn, which was caused by the strict money and finance policy by reducing the total demand. The IMF had succeeded simultaneously to reduce the total demand and the supply. (6)


Regulation of the financial market. One of the most important lessons from America’s Crash of 1929 and the resulting Great Depression of the 1930s is that financial markets must be regulated. President Franklin D. Roosevelt’s administration recognised this after the Crash and initiated measures that would allow the federal government to intervene in financial markets. Those financial reforms helped restore trust in the markets.

It is noteworthy that when there have been financial crises in recent decades we have forgotten the importance of regulation and the lesson from the Great Depression of the1930s. Some capital investment groups have demanded complete deregulation of investor controls, which has caused a catastrophe. People have not learned from previous mistakes and acted to ensure sufficient control. Many severe economic recessions have been caused as a result.


Fears of this vicious circle have induced governments throughout the world to strengthen their financial systems through prudent regulation. Repeatedly, the supporters of free markets have resisted these regulations. When their voices have been heeded the consequences have been disastrous. It happened like this in Chile in 1982-83, as Chilean gross national product fell by 13.7 percent and one in five workers was unemployed, or in the United States in the Reagan era, where, as we noted earlier, deregulation led to the savings-and-loan crisis, costing American taxpayers more than $200 billion. (7)


Several examples prove the importance of regulation. These examples show what will happen if investors are given too much freedom:


- The savings and loan association crisis in the United States was caused by deregulation of banking, interest rate generation and crediting. This promoted eager competition between banks and led to huge credit losses.


- Finland followed in the footsteps of the US and deregulated banking in the mid-1980s. Before that, the interest rates were similar in all banks and banks only competed with each other in offering more free services and having a more comprehensive office network. Deregulation allowed them to compete with cheap loans, too. Furthermore, long-term borrowing from abroad was allowed to companies, even though domestic funding was also available. This led to a severe banking crisis that cost around 50 to 70 billion Finnish marks (8–12 billion euro) and to 200,000–300,000 people becoming unemployed.


- The Asian crisis in the 1990s was caused by the countries being forced to liberate their capital markets even though they did not require foreign capital. Nobel laureate Joseph E. Stiglitz proves that this was the most important single factor contributing to the financial crisis. 


International bankers and politicians were confident that this was the dawn of a new era. The IMF and the U.S. Treasury believed, or at least argued, that full capital account liberalization would help the region of East Asia to grow even faster. The countries in East Asia had no need for additional capital because of their high savings rate, but still capital account liberalization was pushed on these countries in the late eighties and early nineties. I believe that capital account liberalization was the single most important factor leading to the crisis. I have come to this conclusion not just by carefully looking at what happened in the region, but by looking at what happened in the almost one hundred other economic crises of the last quarter century. Because economic crises have become more frequent (and deeper), there is now a wealth of data through which one can analyse the factors contributing to crises. (8)


- The real estate crisis a couple of years back in the United States was caused by insufficient control of housing loans. Previously, banks were forced to be cautious when granting housing loans because the lender was always the creditor. However, new procedures and derivatives changed the practices so that creditors were no longer in direct contact with the debtor. This led to credit losses in the billions because control was overlooked.


Bonuses and intervening with risk-taking. The previous chapter was about regulation of the financial market. This chapter continues along the same lines.

   One of the key dangers for the economy is caused by investment banks and the bonuses they give to their employees. Bonuses encourage people to take more risks because their personal liability is low. Bonuses are also considered to be one of the major underlying causes of the financial crisis. A newspaper article from 17 March 2011 explains the situation as follows:


Banks still give out top bonuses


Large investment banks in the United States and United Kingdom continue to reward their executives with huge bonuses, as if the financial crisis never occurred. (...) The financial crisis that started in 2008 led to extensive global discussion on the need to limit the bonuses available to bankers. No major change occurred, however: bankers still continue to earn unbelievable sums.

   Banks continue to give out bonuses as if there was no crisis at all, especially in New York and London. (...)

   This bonus culture is considered one of the underlying reasons behind the financial crisis. The larger the profit a banker made, the larger his or her bonuses were, even though the personal risks taken on by the banker were low. This encouraged people to take on more risks. (Helsingin Sanomat 17 March 2011)


How can we address this problem of bonuses and risk-taking? One way we might create change is by introducing strict taxation – such as 90% – of all bonuses because the risks taken when trying to obtain bonuses create a major hazard for the national economy. Since a single person can be responsible for up to tens of billions of euros in assets and the person may receive a large reward for performance of these assets as the broker, the income obtained in this manner should be strictly taxed.

   Another alternative would be to change the bonus system in such a manner that bonuses would not only be cancelled if the company is unprofitable but the brokers would be liable to repay any losses from previously earned profits. This would cause them to take on clearly fewer risks than before.


The first proposal aims at restoring the symmetry of incentives by making the broker bonus system fully balanced – i.e., a system where negative values are also possible. Losses from risks previously taken should not just cancel the bonuses but make them negative. This would mean that the brokers would have to pay for their current losses from their previous profits in the same relation.

 (...) The objection will probably be that the most "competent" brokers would then go into exile because of salary offers from competing banks which are not bound by the balanced hiring obligation. Let them go! The social benefits offered by these so-called "brains" is highly controversial. It is not a problem as such if only the "mediocre" brokers who are not desired by banks abroad remain here. (...) (9)


One means of intervening in this problem ofrisk-taking is to ban derivatives. They were not used in the previous decades and they are not necessary now. Banks should focus on basic banking – granting credit – instead of creating products whose risks are almost impossible to anticipate. The key reason for the financial crisis was that people were unaware of the risks.


The financial sector managed just fine for decades without the two most toxic innovations, derivative products and securitization. Now they are considered so indispensable that life without them cannot even be imagined. One should not be startled by such squeals from the financing sector.

   Banks practiced their profession of banking up until the early 1990s: they granted credits and retained them in their accounts until their maturation. It would be highly audacious to claim that this caused the banks to fare badly. We propose that banks take this tiny step backwards and stop claiming that nothing would be possible without the securitization tool.

   Deterioration of the quality of credits granted in the beginning of the chain, their volume becoming rampant and tragic illusions of the true risks of securitization products: these are more than enough justification for simply banning these most detrimental "financial innovations". (10)


Speculation is one of the modern traits. People speculate with stock, currencies, foodstuffs, raw materials, etc. Around 90% of the global assets were spent on trade or long-term investments in the 1970s and only 10% went to speculation, but the figures are opposite now (Member of the European Parliament Eija-Riitta Korhola stated in her blog that "if the GDP of the global economy is around 50 billion US dollars, it means that 1,144 billion is being invested in financial speculation.") This means that instead of making long-term investments or investments that would create jobs, people use assets in investments aiming at fast profit. Such fast asset transfers – currency speculation, for instance – are one of the key reasons why the economy is unstable. This can be seen in the fact that, for example, the countries that deregulated their capital markets the most suffered the most during the Asian financial crisis, whereas the economies of India and China that relied on capital restrictions experienced a growth rate of five to eight per cent in the same time period. This was a major difference.

   How can we intervene in the negative impact of speculation? Experts have given a variety of alternatives, one of which is the so-called Tobin tax suggested by Nobel laureate economist James Tobin. This small Tobin tax would be placed on spot conversions from one currency into another. This kind of tax would reduce short-term speculation and exploitation of fluctuations in currency prices.     

   Another alternative is levying a progressive tax on short-term capital gains. This could be done in the following manner, for example: since the average stock market investment period is only one to two weeks (!), the tax would make long-term investments more attractive. This would reduce the stock market fluctuation that is detrimental to companies and the society in general.


Graduated Surtax on Short-Term Capital Gains. A surtax on short-term capital gains would make many forms of speculation unprofitable, stabilize financial markets, and lengthen investment perspectives without penalizing long-term productive investment. If the assets have been in possession of a seller less than a week, the surtax might be as high as 80 percent on the otherwise untaxed portion; if a week but less than six months then the tax might be 50 percent; from six months to three years the tax might be 35 percent; and if the assets are in the possession of the same owner more than three years the selling tax would be 10 percent. This surtax would place ordinary work first and would reduce gains obtained by moving money. (11)


Accumulation of wealth


- (2 Cor 8:13-15) For I mean not that other men be eased, and you burdened:

14 But by an equality, that now at this time your abundance may be a supply for their want, that their abundance also may be a supply for your want: that there may be equality:

15 As it is written, He that had gathered much had nothing over; and he that had gathered little had no lack.


The seeds of the US stock market crash in 1929 were sown much earlier. One of the greatest underlying reasons for the crash was the government’s reduction of taxes in 1921, 1924, 1926 and 1928. Those tax reductions favoured large corporations and wealthy people, in particular. This caused the difference in people's wealth by 1929 to grow wider than ever before. It has been estimated that 59% of all the wealth in the United States was held by just 1% of all families.

   What can we learn from this? We should learn, at least, that we should not recklessly reduce taxes because we may have to pay for it later. We should try to pay back our debt when the times are good because it is easier. In bad times it is much harder.

   On the other hand, we should keep the differences between people's wealth in check. In the 1930s the US Government applied a policy that levelled out the wealth and created a strong middle class. England also switched to a similar operations model, and the economic policy aiming at levelling out people's income benefited the State.


In contrast to their experience during this early period of "economic expansion", conditions for ordinary people in Britain improved from 1914, the year World War I began, through the end of World War II, including the years between the wars, when there was no overall growth in Britain's national income. As explained by Douthwaite, the wars made it politically necessary to control the forces of capitalism. The government introduced heavy taxes on top incomes and controlled wages. Although it held wage increases below the level of inflation, more people were employed, and their work was steady. As a consequence, the real purchasing power of most wage-earner households improved. Furthermore, when the government taxed wage increases, it frequently authorized the same absolute increase for everyone. Thus the raises for unskilled workers were proportionately higher than for schooled workers. The overall result was a massive transfer of income from the rich to the poor.

   After World War I, returning of military personnel to working life was facilitated by reducing the work week from 54 hours to 46 – 48 hours. Because of this, unemployment stayed low and wages high. Those without jobs were protected by the national employment insurance scheme introduced in 1911. Paid for by the substantial taxes on high incomes, it systematically transferred income from wealthier taxpayers to those most in need.

   World War II resulted in much the same consequence for the poor. The benefit came not from the growth in output that accompanied the war effort but from a combination of many factors. These were a high demand for labour, the erosion of wage differentials, government’s control of profits, and the implementation of a highly progressive tax structure. Income equality increased dramatically, and the enforced saving that resulted from rationing left an enormous pent-up demand following the war, easing the transition to a peacetime economy.

   Similar development was experienced in the United States. The depression of the 1930s and World War II galvanized the politicians to take measures that resulted in a significant redistribution of income. These measures led to the building of the strong middle class that came to be seen as the hallmark of America's economic strength and prosperity. (12)


Re-arranging debts. Reducing the interest rate or temporarily suspending the repayment of loans (for a year or two, for example) could help many countries. In some (developing countries) the expenses to repay debt are up to three times the assets they are investing in healthcare and social services; even so, these countries could fully recover if the interest rate were reduced or the repayment of loans were temporarily frozen. The high interest rate has also caused thousands of companies to become bankrupt and thus has increased the number of poor people. The strict financial policy that is favoured by many creditors usually only causes more misery, but lowering the interest rate and restructuring loans could be more effective measures. Might these measures be used to address the Europe’s current financial crisis, in which Greece, Portugal and Ireland are in trouble? Additional loans would probably not assist these states because their debt would only increase. Nobel laureate Joseph E. Stiglitz wrote about this. In his book Globalization and Its Discontents, he mentions interrupted debt management as one of the available alternatives:


Almost everyone involved in development, even those in the Washington Establishment, now agrees that rapid capital market liberalization without simultaneous regulation can be dangerous. They agree too that the excessive tightness in fiscal policy in the Asian crisis of 1997 was a mistake. As Bolivia moved into a recession in 2001, caused in part by the global economic slowdown, there were some intimations that a country would not be forced to follow the traditional path of austerity and have to cut governmental spending. Instead, as of January 2002, it looks like Bolivia will be allowed to stimulate its economy, helping it to overcome the recession, using revenues that it is about to receive from its newly discovered natural gas reserves. In the aftermath of the Argentina debacle, the IMF has recognized the failings of big bailout packages and has begun to discuss the use of temporary suspension in the repayment of loans and alignments through bankruptcy, the kinds of alternatives that I and others have been advocating for years. Two other victories are debt forgiveness and the concessions brought about by the work of the Jubilee movement. Thanks to those concessions a new development round of trade negotiations could begin at Doha. (13)




- (Matt 20:1) For the kingdom of heaven is like to a man that is an householder, which went out early in the morning to hire laborers into his vineyard.


Keeping the employment rate as high as possible should be one of the key objectives. If the unemployment rate decreases, society's expenses and poverty will decrease. On the other hand, if the unemployment rate rises and people have less money to spend then society’s costs increase, tax revenues decrease and poverty and indebtedness increase. Crime may also be one consequence of a high unemployment rate, particularly in countries where unemployment benefits are not very good.

   Is there any way to prevent unemployment or to stop the unemployment rate from climbing? We will now study this subject and consider some responses proposed by experts.


Put people first. One of the characteristics of modern society is an obsession on financial efficiency. The goal is maximising profit, which is not completely wrong since no company can operate for a long time if it is unprofitable.

   One should ask, however, if we have gone too far with our obsession on efficiency. Many companies make their employees redundant when they are doing well and making profits because they want their balance sheets to look even better and make their shareholders happy. Company income and the benefits of rich shareholders are considered more important than employees and their future. Executives who are not personally familiar with their employees (those of large, global corporations) often act in this way. It is difficult for them to be interested in the well-being of people who seem to be very far from them. Figures and a good balance sheet are more important to them.

   Thus, we should try to retain as many jobs as possible. People should only be made redundant when it is absolutely necessary, not when such drastic measures are not needed. The culture in Japan, for example, is such that employees are, if possible, retained in a single company up until they retire. High employment is far more beneficial for the Japanese society than is higher share value.


Privatization. Another characteristic of modern society is privatization. Even though polls confirm time and time again that people want to preserve public services (healthcare and education), some parties aim to privatize everything because they believe it is more efficient and will be cheaper for society.

   We should look at the bigger picture, however. Privatization may be wise sometimes but its disadvantages often outweigh its benefits. This is because of the following:


- It has been noted that if a country-state maintains high-quality healthcare and social services, the country will not be less competitive. Nordic countries provide a variety of services funded by tax revenues, but on a global scale they remain very competitive.


- Privatization almost always increases the unemployment rate, and this becomes more expensive for society. The incomes of public sector employees would enter the national economy in the same way as the incomes of private sector employees, but if many people become unemployed then society would be subject to greater stress. The government would have to pay more unemployment benefits while receiving less tax revenue, and there would be less money flowing through the national economy.


The neoliberal thinking almost bans simultaneous consideration of a variety of social objectives or several social sectors. For example, the Finnish municipality of Pernaja laid off twelve employees of its school cafeteria because it could save a meagre sum of around 20,000 Finnish marks – buying food from a larger, commercial unit was a little cheaper. However, twelve new unemployed people will cost around one million Finnish marks to the State of Finland in the course of twelve months, and thus this solution that reflects the very idea of the EU competition legislation is senseless when studied from the national economy perspective. Still, the people who made the decision stated in a TV interview that we could not take care of our public administration if such issues should be taken into account when making decisions. They had clearly fully internalised the neoliberal logic. (14)


- Services provided with tax money may seem expensive if just the share paid by the State is taken into account. However, if we were to demolish the State-funded healthcare system in order to reduce the tax rate then people would actually have to pay more. They would have to pay more, and might also need more benefits in order to make ends meet.

   One piece of evidence showing that privatization is not efficient is the healthcare system in the United States. When comparing costs to results, the US healthcare system has been deemed the worst and most inefficient in the entire world. The system is the most expensive and worst at producing positive results than the healthcare systems of all other OECD countries.


Healthcare is a good example. The United States healthcare system costs clearly more than the Finnish system, even if one were to study only the part funded with state tax revenue. If the funds invested by people in their own healthcare are included in the calculation, one can see that the US invests 15% of the GNP compared to Finland's 7% in its healthcare system. In terms of dollars, the US invests a little over three times more money in healthcare per resident than Finland. (15)


- Increased unemployment due to privatization or for any other reason will always cause social problems, which may mean anything ranging from crime and social unrest to urban violence. Diseases usually associated with the poor such as tuberculosis may also become more common.

   What the points listed above mean in practice is that saving money in one place may increase costs elsewhere. Endless privatization and pursuit of efficiency may seem like a good solution in the short term but the final result may be worse when other costs are taken into account. We should always consider overall efficiency.


The lower unemployment also had profound social consequences – issues to which the IMF paid little attention anywhere. Millions of workers who had been excluded from the labour force were brought in, reducing poverty and people living on welfare at an unprecedented pace. This in turn reduced the crime rate. All Americans benefited. The low unemployment rate, in turn, encouraged individuals to take risks, to accept jobs without job security; and that willingness to take risks has proven an essential ingredient in America's success in the so-called New Economy. (16)


Banks and companies. One reason why unemployment started to increase during the Finnish economic recession of the early 1990s was that banks were very inflexible when dealing with companies. When banks got a promise that the central government would compensate all credit losses they took advantage of this. For this reason, thousands of companies that were in relatively good condition – although indebted – went bankrupt. Most of those bankruptcies could have been avoided by drawing up debt repayment schedules, temporarily postponing amortizations and posing stricter terms on the banks. It is always more difficult to establish a new company than aiding an already existing one.


The depression and the banking crisis in Finland in the 1990s drove tens of thousands of small and medium-sized enterprises to bankruptcy. The large Finnish banks caused completely unnecessary bankruptcies of thousands of enterprises that had difficulties in coping with their debts: it was safest for the banks to allow the indebted companies to go bankrupt because this meant that the bank would get back the entire bad debt from the State; there was no top limit for the central Government guarantee. If the banks had tried to assist the enterprises to cope with the depression by negotiating with them on more flexible repayment schedules, the banks' own profit margin could have become smaller and the banks did not consider this a viable alternative because of the increased competition in the Finnish and global markets. (17)


Cooperative model. One way to maintain employment is to apply a cooperative approach whereby employees are also owners of their company. This approach is effective in eradicating the difference between the employees and employer. This is often an efficient approach because employees can participate in business planning and carry their share of the liability. Employment can be maintained by reducing the number of hours worked instead of laying off people when an economic downswing occurs and production decreases.

   This is also possible in a regular company but labour market policy, bureaucracy and inflexibility often prevent companies from reaching any effective decisions. They are unable to negotiate how employment could best be maintained while retaining the company’s economical viability. Inflexibility during negotiations or continuously striving to get higher wages may lead to a higher unemployment rate. These problems would be much less common if employees were also co-owners of a company.


- (Luke 3:12-14) Then came also publicans to be baptized, and said to him, Master, what shall we do?

13 And he said to them, Exact no more than that which is appointed you.

14 And the soldiers likewise demanded of him, saying, And what shall we do? And he said to them, Do violence to no man, neither accuse any falsely; and be content with your wages .


- (Prov 30:15) The horse leach has two daughters, crying, Give, give. There are three things that are never satisfied, yes, four things say not, It is enough:


Takeovers and unemployment. People also become unemployed when their company is taken over. Employees are made redundant so the merged company can become more profitable. No heed is paid to the continuity of employment here, either.  The most important thing is to have a good balance sheet and to benefit rich shareholders. Another problem is that takeovers are often funded with borrowed money, which adds to the debt of the purchasing company and makes the financial system more vulnerable.


One measure the Government should immediately take to control the frenzy is to pass a law against banks and other financial institutions that grant loans for takeovers. Like in the 1920's, there has been a huge boom in corporate mergers in the 1980's.

   (...) What is the final result? The debts of merged companies have increased and the disparity of wealth worsened as the stockholders become even richer than before. Keep in mind that the top 1 percent of wealth holders own as much as 50 percent of common stock in America. (18)


Shorter working hours. One way to reduce unemployment is for people to work shorter days. A four-day work week or six-hour work days have been proposed. This would open the doors for new employees and radically decrease the unemployment rate. This would, however, require lowering people's salaries to reflect this reduced work week, because the cost to companies would be unreasonable if people were to receive the same salary as before.

   The four-day week was tried out in the U.S., in Utah. The state ordered a shorter work week for most of its employees. In this experiment, people still got the same salary as before. It was noted that people would rather work four longer days than five shorter days as long as their salaries were not influenced. The state's costs lowered, and people saved because they had to drive less. The change generated a savings of $1.4 million. Furthermore, people took fewer sick leaves and worked less overtime, which led to additional savings of $4.1 million. (Finnish Reader's Digest, January 2011, p. 44)

   Another example is from France where the working week was reduced in length to 35 hours. This experiment caused a significant decrease in the French unemployment rate; it lowered unemployment from 12.6% to 8.5% over the course of four years. The economy in Finland and other parts of the globe clearly experienced more growth during the same period but this growth did not influence unemployment in the same way. This supports the idea that shorter working hours would reduce unemployment.    

During the late 1990s the social democrat government of Lionel Jospin changed the course of French economic policy and used a Keynes approach to reviving consumption. The government employed 300,000 young people in the public sector and lightened the workload by reducing the work week to 35 hours. This immediately caused an increase in people’s faith, boosted the economy and caused rise in the employment rate. In 1997, the trade balance surplus reached an unparalleled high in France and investments increased by ten per cent compared to the previous year.

   Consulting official Pekka Tiainen of the Ministry of Employment assured that shorter working hours would improve employment in France. He justified this view by comparing Finland to France: "The unemployment rate in France has decreased clearly faster than the unemployment in Finland even though Finland has had clearly better financial growth. In my opinion, this shows that the shorter working hours have worked," Tiainen said, justifying his opinion.

   In the period of five years, the shorter working hours created 265,000 new jobs in the private sector in France according to a study by the research institute Plan ordered by the French government's budgetary planning division.

   An act that reduced per-week working hours to thirty-five was passed – after harsh political debate – in the autumn of 1997. It entered into force for all companies with at least twenty employees as of June 1998.

   During the four-year reign of the left-wing government, the unemployment rate of France decreased from 12.6 to 8.5 per cent. This was the lowest unemployment rate in 18 years. According to Plan, one fifth of the improved employment was directly due to the new jobs generated by the shorter working hours. (19)


Facilitating business. Establishing a company often requires plenty of paperwork, and bureaucracy makes it difficult. If establishing a company were easier and simpler, and new entrepreneurs were continuously supported, then more companies could be established that would employ more people.

   This approach was adopted in the United Kingdom in the late 1970s. A separate unit was established for small- and medium-sized companies. The plan was to cut red tape; anybody planning to start a new business could turn for help to the new unit. The approach was very effective: in the course of eighteen months two million new companies were established in the UK, and these employed almost five million people.


Agriculture and employment. The goal in agriculture should be to retain jobs or create new ones. Trying to reduce the number of people working in agriculture is senseless in the current situation where urban unemployment rates are high. It is not reasonable when looking at the whole picture of the economy. A policy that does not protect basic food production in one’s own country is especially dangerous because it means the country must depend on other countries for food. Swedish newspaper Dagen describes the situation in Sweden:


Dagen agrees with what Gyllenhammar said: "Shutting down Swedish agriculture would be a huge waste of resources. We would smother our resources and cause thousands of people in agriculture and the food industry to become unemployed. If one only looks at the small picture, one will see that food is cheaper outside Sweden. This does not mean, however, that it would be wise from the national economy perspective to shut down our own food production in favour of exported goods. Extensive importing of food would require increased export income in order to even out the trade balance. If we do not have the money to pay for goods, we cannot buy them. The policy practiced currently is dangerous and mad. Abundance of food is hardly likely in the foreseeable future: quite the opposite, the situation seems dire. So how could we justify a country with such excellent preconditions giving itself up to be taken care of by others?" (20)


How could we retain or increase employment in agriculture? The first precondition is for each country to secure its production of basic foodstuffs as stated in the example above. Not trying to achieve this is a dangerous policy.

   Another means of retaining agricultural jobs is providing support for small farms. The more small farms there are the fewer people will be unemployed. Small farms improve employment. They can be supported by making a few important legislative changes:


Agricultural subsidies. Agricultural subsidies are traditionally paid based on the farm's surface area. For example, a farmer with 200 hectares receives ten times more subsidies than a farmer with 20 hectares. This policy has caused farm size to increase and the number of small farms to decrease. The total amount of subsidies being paid has not decreased, though: the same subsidies are simply paid to a smaller group of farmers. This is not wise from the perspective of the national economy because as farms have become larger the number of farm-related jobs has dropped.

   One solution would be to revise agricultural subsidies so small farms get more money. This would mean paying a basic amount to all farmers and then decreasing the relative amount of subsidy as the surface area increases. Here is an example of this alternative:


If the agricultural subsidy package size is retained but the money is divided among fewer farmers, the State's total expenses will increase, because there will be fewer jobs and unemployment benefits must be paid from the state budget to a larger group of people.

   Social income transfers should aim at levelling out differences in people's income and supporting the poorest. The underlying logic of the EU agricultural policy is quite the opposite, however. It rewards ownership: a farmer who owns 1,000 hectares of arable land will receive – directly from the Finnish Government or via the EU – a hundred times more money than a farmer who only owns ten hectares.

   In practice, this policy will increase the unemployment rate and lead to a sort of a reverse land reform and ever faster centralisation of real property.

   This is not the only possible policy, however. What if Finland started to pay a certain annual amount of agricultural subsidy to all farmers who are not receiving unemployment benefits or other state subsidies, regardless of the size of their farm? Additional funds could be granted to highly indebted farmers during a transitional period, and organic farms could receive a little more money each year. Such a system would benefit small farms the most. Large farms would lose a lot of money but this would not be catastrophic because all farms that are sufficiently large should be able to make do on their own if they abandoned the far too expensive and inefficient procedures they have adopted because of the current agricultural subsidy policy, such as excessive fertilization that causes blue-green algae to bloom in the Finnish lakes. (21)


Taxation of lands. Another option is levying a tax on land. Small farms could be exempted from this tax but large farms (100+ hectares, for example) would be progressively taxed. The larger the farm, the higher would be the tax rate. This would cause the land to be more evenly divided and more small farms would be established because increasing the farm size would no longer be beneficial. This would be relevant particularly in developing countries in which farms are huge. Even a small patch of land is very important there because it can provide the basic income of a family.


TAXATION is one of the keys in balancing the economy. Every country has expenses; if the government is unable to obtain funds to cover these expenses through taxation or some other means then the national economy will become unstable and the country will become indebted. Such fiscal policy cannot be successful in the long term.

   The following points pertaining to taxation should be taken into account.


Tax reductions? It has been observed that one cause of economic recessions is collapse of the tax base. Governments reduce taxes and grant tax relief instead of tightening their fiscal policy. This occurred in Greece and the United States, for example. Those governments probably tried to create more jobs; creating jobs through tax relief is very expensive, however. It has been estimated that if one wishes to lower the unemployment rate by one per cent, one would have to lower salary taxation, indirect labour expenses and value-added tax by 10%. Such a tax reduction would be absurd because it would cause the state to incur lots of debt. There are better and more efficient means of reducing the unemployment rate.


Less taxes, less taxes, less taxes, the choir of economists shouted at the peak of the last boom in the spring of 2000. They had not been as unanimous since the bottom of the last downswing, except that the shout then was save more, save more, save more.

   (...) On average, empirical studies show that reducing structural unemployment by one per cent would require a reduction of the total tax rate on labour – salary taxation, indirect labour expenses and value-added tax – by around 10% total.

   In Finland, this average tax relief efficiency would mean that reducing the structural unemployment rate by 1% – meaning by around 25,000 people – would require tax relief of around FIM 20 billion per year, i.e. the squandering of almost a million Finnish marks of tax income and the resulting need to reduce public expenses per one person employed. This sum would be enough to support several dozen unemployed people. Doesn't seem very wise! (22)


Impact of automation. One reason why many governments lose tax income is automation and its impact on the economy. The more automation there is and the more advanced the Web-based self-service society becomes the more jobs, and thus tax income, will be lost. For example, tens – even hundreds – of thousands of industrial jobs have vanished in Finland because of rationalised production and new technologies. Productivity has increased but the tax income of the state has remained the same because the same volume of goods can now be manufactured with fewer employees. New investments will not necessarily change this situation because they aim to improve efficiency, which runs counter to saving jobs.

   The same problem can be seen in the services industry: jobs vanish because people do their errands themselves, online. This has already occurred in banking. Thousands of jobs have been lost. Any other sectors where self-service is possible are also in danger. Some examples of this are online shopping and buying travel tickets online; these reduce the number of jobs in the services industry.

   What can we do to prevent the reduction of state tax revenues and unemployment as a result of automation?

   The most reasonable approach would be to tax more company profits than just taxing the share of worker wages. If fewer and fewer people are permanently employed by industrial enterprises and the services sector, we will at some point reach a level where society is no longer able to ensure delivery of its welfare services. This will also reduce people's buying power and the profit of other companies because the unemployment rate will increase.

   However, if we were to tax productivity and business volume, then society would have tax revenues also in the future. (For example, Finnish companies earned FIM 184 billion in 2000. This was close to the total government budget for 2000. The government budget never exceeded FIM 200 billion during the 1990s.) Changing the focus in taxation from worker wages to company profits would also favour any companies that aim at employing as many people as possible. This focus could be further enhanced by making each employee tax-deductible. Taxation treatment on salaries would lower the unemployment rate.


Politicians worldwide should make sure that profits – at least as much of them as before – can be obtained from the stagnant production, and by profits I mean money to be shared out as taxes and wages, regardless of whether the work is done by human or robotic hands. The same goes for non-manual labour, regardless of whether the thinking is done by a human brain or a computer.

   (...) Instead of taxing labour, the focus of taxation and social costs should be transferred to other production components; the taxation of production value added instead of human labour, in particular. (...) This would ensure that as the production volumes increase, more money to be divided will be accrued in society's pockets. With the current taxation principle, technology and automation can be legally used to evade taxes. Not even the trade unionists have understood this.

   If the European countries are unable to harmonise their taxation, infrastructure and social security, the only way to secure tax income is switching from the current income taxation system that is based on human labour to a "cash flow based" taxation system. A proposal to this effect has been made by, for instance, Hans-Werner Sinn, Professor in the Faculty of Economics at the University of Munich. A neoliberal professor of economics, Sinn is currently the President of the Ifo Institute for Economic Research and an advisor to the black and red government coalition of right-winger Angela Merkel.

   Scientists have discussed the benefits of this model since the 1970s but it has not been tried out anywhere in the world. Sinn says that the cash flow taxation would provide the benefit of preventing erosion of tax income. Companies would be taxed based on the difference between cash coming in and going out. Investments would be written off as one-off depreciations.

   The scientists say that this is a simple system. It will not require any complex accounting nor are there any complex valuation problems connected with it. Sinn considers cash flow taxation a realistic alternative even though there is no experience with it yet.

   (...) Technology mainly benefits the capitalists even though it should benefit all citizens. Unfortunately, politicians worldwide have not addressed this problem, not even in their speeches. (23)


Income differences. Fair distribution of income is one of the key factors in promoting the economy of a society and a state. The more evenly divided the income is, the more buying power there will be on the market and the lower the society's welfare benefit expenses will be. Let's take an example: we have two super-rich people who already have everything they could need and who spend as much on groceries as other people. If both of them buy an expensive luxury car and gamble away some money in the stock exchange, the society as a whole will not benefit much from their actions.

   However, if 10,000 regular people invest the same amount of money in consumer goods, such as food and clothes, it will have a much more significant impact on the economy. This will benefit the society more because the money will assist in maintaining several services and sectors of industry. When the companies in these sectors can continue their business, people will not lose their jobs and the society will not have to pay more welfare benefits.

   Some means that can be used to reduce the income difference include progressive taxation and higher capital gains tax.  Let's study these alternatives.


Progressive taxation. Progressive taxation at a scale higher than now would reduce the income difference and improve total wellbeing of society. Many rich people complain about their taxes but in Finland, for example, only state income tax is progressive. Total state income taxes amount to less than 20% of all taxes paid by salary earners: they represent a small portion of total tax obligations. Municipal taxes, value-added tax, and other consumption-related taxes are not progressive.

   One way of reducing the income difference is making more taxes progressive. The increase could start when a person's annual income exceeds EUR 30,000, for example. This is close to the biblical model of trying to level out income differences (2 Cor 8:13-15: For I mean not that other men be eased, and you burdened: But by an equality, that now at this time your abundance may be a supply for their want, that their abundance also may be a supply for your want: that there may be equality: As it is written, He that had gathered much had nothing over; and he that had gathered little had no lack.). An increase in taxes of a couple of per cent will not make a huge impact on a rich person, and it should not mean much to such a person.

   What about employment? Some studies strongly suggest that progressive taxation is also a good alternative in terms of employment. The benefits are not limited to the reduction of income differences:


Another claim you often hear from the National Coalition Party and the Confederation of Finnish Industries is that progressive taxation kills people's willingness to work and thus increases the unemployment rate. A survey published a couple of years ago says quite the opposite, however. It says that progressive taxation is favourable particularly from the employment perspective. According to Professor of Economics Erkki Koskela, high progression will keep wages in check, which will lead to a better development of employment.

   Professor Koskela says that both Finnish and international empirical studies have confirmed that progression improves employment. Koskela has written about this in a book called Towards Higher Employment, the Role of Labour Market Institutions, published by the Government Institute for Economic Research.

   Koskela says that this observation has not received enough attention. He continues to say that the observation is supported by empirical studies in Italy, the United Kingdom, Sweden and Finland. Progressive taxation is usually justified only with equality instead of employment. (24)


Capital income. In promoting the economy of a society and a state, a higher tax rate for capital income (from dividends, interest, sales, profit from stocks, etc.) is one of the key factors. One problem of modern society is that the share of salaries in the GNP continues to decrease – which causes states to take on more debt – while the share of capital income continuously increases. Even though the share of capital income has increased, it has -benefited society a little because the tax rate for capital income has remained extremely low (in Finland, dividends became tax-exempt in1993. The tax levied in 2004 is also very low.) The tax rate of a regular salary earner may sometimes be even higher than the tax rate of a person who receives a large share of their high income in the form of tax-free dividends. Many well-off people have become freeloaders in terms of taxes because of this legislative error.

   The taxation for capital income should be the same as for salaries. This taxation could be progressive: small amounts of capital income could remain tax-exempt. If governments agreed on how big this tax and other taxes should be, there would be much less speculation and the heavily indebted national economies could start to revive.


The late professor of fiscal law in the University of Helsinki Kari S. Tikka was also concerned about the current unfair taxation. He stated: "The largest tax-free dividends paid to private persons this year (in 2001) will amount to more than 100 million Finnish marks. At the same time, salary income is heavily taxed and tax must be paid even for unemployment benefits and the smallest pensions. This has caused many people to lose faith in the fairness of taxation."

   The taxation professor was of the opinion that fairness in taxation is a complex issue. "We adopted the principle of not evening out the income distribution for capital income but only for earnings in the tax reform of 1993. We took a huge step towards favouring global competitive ability instead of fairness in our taxation. (...) This could be one reason why people have estranged from politics and feel less solidarity for their fellow members of the society: they see that the people with the highest income seem to be freeloaders," Tikka pondered. This is why Tikka was in favour of reinstating a tax for dividends.

   (...) State income tax, municipal tax and additional capital income should all be added up, and the progressive tax rate should apply to the lot.  The maximum tax rate could be 55%, for example. 45% should be sufficient incentive even for the greediest of people.

   (...) The capital tax rate should be at least the same as the tax rate for salaries. It is incomprehensible that having money "lay around" is currently more advantageous than working. Wealth tax should also be restored.

   It is incomprehensible that people who receive dividends in Finland can get away with paying almost no taxes thanks to the corporate tax compensation system. The capital tax rate in Finland is already one of the lowest in the EU states. It is odd that politicians worldwide accept that the tax rate for capital income is lower than the tax rate for salaries even though there is already excess supply of capital in the world. (25)


Tax havens. Tax havens – i.e. countries where the tax rate is very low and thousands of dummy companies exist – are one reason why some governments have lost tax revenue. These are places where dirty money is laundered: dummy companies are used by terrorists, drug lords and other criminals. They are also used to evade taxes by many regular private persons and companies. Using a dummy company for such activities show’s people’s greed, and shows their willingness to steal. The Bible warns us not to engage in either. People do not want to pay the same taxes that others pay. This will erode society's tax- based foundation; it is one reason why some national economies are in such poor condition.


- (Luke 12:15) And he said to them, Take heed, and beware of covetousness: for a man's life consists not in the abundance of the things which he possesses.


- (Eph 5:5) For this you know, that no fornicator, nor unclean person, nor covetous man, who is an idolater, has any inheritance in the kingdom of Christ and of God.


How can we intervene in such tax evasion? One way to do it is for other governments to start putting pressure on governments that allow tax havens.  The quote below suggests major action to prevent tax evasion. One of the key reasons why governments lose tax income is tax competition. Governments are trapped in a vicious cycle: they have a hard time retaining their welfare services because they fear that capital will leave the country because companies get better benefits in other countries. This insane tax competition could be avoided by means of treaties. Levying a reasonable tax on capital leaving the country could also keep currency speculation in check.


Tax havens and dummy companies should be made illegal globally. The EU should institute a trade block on the tax havens and cut any data communication with them, if necessary.

   The tax administration should have the right to see people's bank account information.  Hidden bank accounts abroad should also be criminalized. Nameless nominee registers in the stock exchange should be closed down to prevent tax evaders using them. Furthermore, attorneys and accounting firms who assist their clients in tax evasion should be made liable for their actions in the same way as their clients. (26)


If value-added tax were increased by a couple of per cent, the national economy could clearly improve. Private persons would not suffer much from paying €103 instead of €100 for a product they are buying. Neither would such a minor increase harm businesses because consumers would not change their behaviour. Such an increase would clearly benefit the national economy, however.

   Raising VAT would be a better idea than raising the fuel tax, for instance, because VAT is a much more comprehensive tax and raising it would not cause unjust harm to people who have to commute from farther away. Furthermore, transport costs would increase if the fuel tax was greatly raised (according to an article in newspaper Etelä-Suomen Sanomat on 20 September 2011, fuel tax will increase the costs arising from a single truck by €15,000). This could cause transport companies to go bankrupt, force cutbacks of public transport and raise the prices of all goods due to the higher transport costs.


Pension ceiling. One means of intervening in the state's expenses is instituting a pension ceiling, an upper limit for the pensionable income. This would mean that one’s tax-free pension could be a maximum of €1,500–2,000 per month. The pension ceiling would clearly reduce the income differences in society. (Income differences among pensioners have become unreasonably high in many countries. Some pensioners are very poor while others have plenty of money.) It would be one way of keeping the budgets reasonable. The problem is that politicians themselves are rich and refuse to make such cuts.


Welfare expenses are a huge expenditure for the state. One alternative of reducing this expenditure is to allocate expenditures more carefully. We should focus on assisting those who have it the worst. For example, wealthy people (those who earn more than €40,000 per year) can make do without child benefits or other benefits. These benefits could be taken away from people whose income exceeds a certain limit. Another alternative is progressive taxation of benefits.


Cost of living. One factor that greatly influences the economy and employment is the cost of living. The more people spend on their home, the less buying power they have and the higher the unemployment rate becomes. If all of people's assets are tied to their home, they will have less money to spend elsewhere. This has been a prevailing tendency in the past few years in Finland where rents and real estate prices have continued to rise.  In 2004, the average Finn had a mortgage of €42,000 whereas the average mortgage in 2008 was €71,500. Increased prices have also raised society's expenses in the form of housing allowances and income support: almost €1.1 billion was paid as housing allowances in Finland in 2009 (Etelä-Suomen Sanomat, 29 May 2011).

   How can we utilise the housing policy to maintain people's buying power and employment? A low interest rate is of key importance for people who own their home. If the interest rate for mortgages remains low, people will be able to pay their debts and still have money to spend elsewhere. This would not be the case if the interest rate soars: people would have less buying power because paying their mortgage loan takes all their money.

   Another, more radical, alternative in the case of people who own their homes is setting a price ceiling per square metre. Prices in many urban areas are so high that regular salary earners can no longer afford to buy a home there. Regulation of prices could prevent people from overpricing their homes.

   In the case of people who rent their homes, one means is building more affordable rented flats. The problem with this solution is the lack of available plots. There are the fewest plots available in those same urban areas where new homes are needed the most.

   Another means would be reinstating rent control. The rent control system was initiated in Finland fin 1968 and was in effect until the mid-1990s. Somewhat more rented flats were available on the market after the dismantling of rent control, but rents skyrocketed. If rent regulation were reinstated – keeping in mind the needs of landlords such as building renovation costs – people's cost of living could decrease. A suitable compensation could be mandatory expenses (building cleaning, repairs, waste management, energy expenses, etc.) plus 100% and a monthly compensation of €100 for each apartment regardless of its size.

   If mandatory expenses were €100 the rent would be €300, and if mandatory expenses were €200 the rent would be €500. The rent could be higher in the more expensive areas where apartments cost a lot. Landlords using too high rents could be fined.


Tenants suggested both increasing the number of flats available and instituting rent control as a solution to make rents more reasonable. "Some kind of a maximum level" was wished for the rent per square metre. Abolishment of rent control in the 1990s was considered to have been "a really stupid act" that caused the renting business to become "legalised robbery". Many of the respondents considered reinstating rent control absolutely necessary to prevent arbitrary rents and keep the renting business in check. The fact that financial issues were clearly stressed by the respondents goes to show that tenants are insecure about their living arrangements particularly because of their finances. They do not feel that the housing allowance is a good solution because the allowance paid to low-income households is often insufficient. Furthermore, only a minority or around one in four respondents currently received housing allowance. The desired functionality of the rent market has not been achieved by the transfer to market economy. The fact that too few homes are being built plays a major part in this problem. (27)






1. Leo Meller: Raha ja Raamattu, p. 85,86

2. David Wilkerson: Jumala huolehtii (God’s Plan to Protect His People in the Coming Depression), p. 11

3. David C. Korten: Elämä kapitalismin jälkeen (The Post-Corporate World. Life After Capitalism), p. 239

4. Published in Suomen Kuvalehti in 1996, quote from Suuri lama

5. David C. Korten: Maailma yhtiöiden vallassa (When Corporations Rule the World) p. 403,404

6. Joseph E. Stiglitz: Globalisaation sivutuotteet (Globalization and Its Discontents), p. 160,161

7. Joseph E. Stiglitz: Globalisaation sivutuotteet (Globalization and Its Discontents), p. 165

8. Joseph E. Stiglitz: Globalisaation sivutuotteet (Globalization and Its Discontents), p. 146

9. Frederic Lordon: Rahamyllyt kuriin (Jusqua’a quand? – Pour en finir avec les crices financieres), p. 190

10. Frederic Lordon: Rahamyllyt kuriin (Jusqua’a quand? – Pour en finir avec les crices financieres), p. 191

11. David C. Korten: Maailma yhtiöiden vallassa (When Corporations Rule the World) p. 403

12. David C. Korten: Maailma yhtiöiden vallassa (When Corporations Rule the World) p. 67,68

13. Joseph E. Stiglitz: Globalisaation sivutuotteet (Globalization and Its Discontents), p. 330,331

14. Risto Isomäki: Kohti vuotta 1929?, p. 76

15. Risto Isomäki: Kohti vuotta 1929?, p. 101

16. Joseph E. Stiglitz: Globalisaation sivutuotteet (Globalization and Its Discontents), p. 84

17. Risto Isomäki: Kohti vuotta 1929?, p. 45

18. Ravi Batra: 1990 – Suuri lama? (The Great Depression of 1990), p. 163,164

19. Ari Ojapelto: Ahneuden aika, p. 651

20. Thoralf Gilbrant: EU, peto vai pelastaja (Ef i politikk og profeti), p.114

21. Risto Isomäki: Kohti vuotta 1929?, p. 241,242

22. Ari Ojapelto: Ahneuden aika, p. 349, 352

23. Ari Ojapelto: Ahneuden aika, p. 328,638,660

24. Ari Ojapelto: Ahneuden aika, p. 353

25. Ari Ojapelto: Ahneuden aika, p.356,639,644

26. Ari Ojapelto: Ahneuden aika, p. 644

27. Anneli Juntto, Anne Viita, Sonja Toivanen, Mia Koro-Kanerva: Vuokra-asunto Helsingissä sijoituksena ja kotina, p. 69





1. Ken Ham: Valhe, evoluutio, The Lie: Evolution, p. 55,112,113

2. Matti Joensuu: avoliitto, avioliitto, perhe, p. 12,13

3. Pirjo Alajoki: Naiseus vedenjakajalla, p. 54

4. Pirjo Alajoki: Naiseus vedenjakajalla, p. 126

5. Pirjo Alajoki: Naiseus vedenjakajalla, p. 123 / Graglia p. 2, 127

6. Pirjo Alajoki: Naiseus vedenjakajalla, p. 140

7. Pirjo Alajoki: Naiseus vedenjakajalla, p. 150

8. Nicky Cruz: David Wilkersonin viimeinen varoitus (David Wilkerson: A Final Warning), p. 84,85

9. Päivi Räsänen: Kutsuttu elämään, p. 134

10. Matti Joensuu: avoliitto, avioliitto, perhe, p. 19

11. Pirjo Alajoki: Naiseus vedenjakajalla, p. 21,22

12. Erwin W. Lutzer: Miksi helvetti on (Coming to Grips with Hell), p. 24

13. Bill Hybels: Kristityt seksihullussa kulttuurissa (Christians in a Sex Crazed Culture), p. 132

14. Bill Hybels: Kristityt seksihullussa kulttuurissa (Christians in a Sex Crazed Culture), p. 140

15. Paavo Hiltunen: Ja maa tuli täyteen väkivaltaa, p. 20, 72,73

16. Ritva Santavuori: Rouva syyttäjän paluu, p. 26,27

17. John Graham – Trevor Bennett: Rikoksentorjunnan strategioita Euroopassa ja Pohjois-Amerikassa, toimittanut ja uudistanut Mikael Scheinin, p. 85

18. Reino Sirén & Martti Lehti: Musta maaliskuu, p. 15

19. Dada Maheshvarananda: Kapitalismin jälkeen, Proutin näkemys uudenlaisesta yhteiskunnasta (After Capitalism – Prout’s Vision for a New World), p. 154

20. David Wilkerson: Jeesus-kansalaisen kypsymisen käsikirja (Jesus Person Maturity Manual), p. 93

21. Matti Virén, Matti Wiberg: Kallis rikollisuus, järkevät vastatoimet rikollisuudelle, p. 80

22. John Graham – Trevor Bennett: Rikoksentorjunnan strategioita Euroopassa ja Pohjois-Amerikassa, toimittanut ja uudistanut Mikael Scheinin, p. 1,2

23. Charles G. Finney: Ihmeellisiä herätyksiä, p. 245, 246

24.David Wilkerson: Hei saarnamies, sä pääset läpi (Hey, Preach… You Are Comin’ Through), p. 78

25. Liisa Tallgren: Tarjolla huominen, p. 121

26. Ritva Santavuori: Rouva syyttäjän paluu, p. 208, 209

27. David Wilkerson: Kukkaislapsia löytöretkellä (Purple-violet Squish), p. 9





Jari Iivanainen











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