The Filter^

Some Quick Suomi Sibelius Thoughts

I’ll admit it; music has perhaps fuelled my Finnish passion more than any other factor – geography, design, sociology and populace (as important as those factors are). That’s a combination of the country’s contemporary attitude towards the varied art of music, and the big daddy himself: Jean Sibelius.

There’s no point, here anyway, attempting any sort of analysis of why Sibelius’s music sounds like Finland; it just does. Just as Britten’s Peter Grimes makes most sense on the beach at Aldeburgh, so Sibelius’s Fourth Symphony sits enlighteningly upon the Finnish winter snow; his Fifth soaring above the shimmering summer lake.

I remember having the second symphony dissected before my eyes at rehearsal hall near London Bridge in February 2005, where the great Finn Paavo Berglund was taking the London Philharmonic through the Second Symphony. Berglund is an archetypal Finn from his facial bone structure to his economic use of words; ‘play it more like your father would have done’, he called out to one of the clarinettists. That was my first real Sibelius experience proper, and the second symphony is a good starting point for anyone whose a Sibelius newcomer (as is the Guy Rickards Phaidon biography which I read whislt in Finland earlier this month). But for something really remarkable, try the cigar-like, compact Seventh Symphony, or the ‘sketched rather than painted’ fourth - perhaps a startling but chilling evocation of the Finnish winter.

The Finns love Sibelius, and I find myself loving them for their love of him. Last Monday I was taken through a Finnish forest for an exploration, in the spirit of the national epic The Kalevala, of ‘what the Finns are made of’. After hunting, blacksmithing and sauna-ing, the young Helena Kinnunen led me into a pitch-dark log cabin and played Sibelius’s ‘Finlandia’ through the hi-fi. I wanted to probe her, an everyday late-teen or twenty-something Finn, on why a 20th century composer formed the final part of the ‘Kalevala Spirit’ tour. ‘Every Finn feels the same when they hear that music’, she said to me, ‘it represents who we are’.

Finding my Finn

The rumblings which sparked many little projects including this Filter series and my two recent trips to Finland can only be described as being like a distant, alluring smell. I sensed a strong aroma, and sniffed around the Scandinavian countries for a good few years, visiting Norway and Denmark, and exploring the cultures of Sweden and Finland from the safe distance of book, record and internet. Then, some 18 months ago, I began to detect the source of the whiff. I ventured to what I believed was its epicentre in January – as Finland Filtered began.

Then, last week, it was emphatically rubber-stamped. The smell was coming from Finland; from its lakes and forests, its cool cities, its inherited and contemporary cultural values, its wonderful and idiosyncratic populace, its culture of equality and independence, its sonic father-figure Jean Sibelius, its beautiful and utterly unique language, and even its flag-carrying airline. I had seen Finland in the dead of winter and in the heart of summer; in the city and in the country. Leaving on Wednesday felt like leaving my own homeland and returning to a strange island where priorities and customs made no sense. As I sat naked in a forest sauna with fifteen unknown companions the night before, beating one another with eucalyptus branches before running into a black lake at 1am, I felt as though I’d been handed a precious gift; one of physical freedom, of equality, of communion with the earth. I felt as if the inane small-talk of Great Britain was the foreign tongue, and the non-judgemental silence of the Finns my native dialogue.

More soon on Kuhmo Kamarmusikiin and Sibelius, Kuhmo and Finnish Karelia, discovering the Kalevala and the sauna parties…

Forgotton Finish economists

My final post for The Finnlter^ is to publish further transcripts from my interview with Oskari Juurikkala, where he mentions a couple of forgotten Finish economists worthy of contemplation:

Take the case of Andrew Chydenius (http://www.chydenius.net/eng/index.asp). He lived in the 18th century, wrote numerous books and was heavily involved in national life in Scandinavia. His 1765 pamphlet "The National Gain" (http://www.chydenius.net/historia/teokset/e_kansallinen_johdanto.asp) explored economic theory and made a case for free trade - 11 years before Adam Smith's "Wealth of Nations".

Chydenius even advocated turning Lapland into a minimal state (although this plan didn't happen), so that it could develop economically:

" — free state, private ownership and individual freedom. Inhabitants could choose whatever profession, freedom of trade would be complete, there would be no privileges, regulation or taxes. Bureaucracy would be nonexistent, and the only officer would be a judge who would oversee that no-one's rights would be suppressed."

There was also J. V. Snellman (http://en.wikipedia.org/wiki/Johan_Vilhelm_Snellman), who during the 19th century Russian rule of Finland was able to get rid of the failing Russian rouble. Instead we got the Finnish markka, in those days founded on silver. Snellman realised that precious metals were the way to stop excessive inflation, and he ha  the courage to fight for it. We would do well to learn from him today.

Thanks to Andrew for instigating the Finnish theme for early 2008 on The Filter^.

Finno-Ugric Joke of the Week

A Finno-Ugric joke tells of migrating tribal forebears finding a signpost on the steppe reading: "To civilisation". Those that could not read it went north and became Finns. Those that could went to Central Europe and became Hungarians. (Finns tell the story the other way around).

(From The Christmas Economist 2005, previously posted on January 10th 2006)

Näin räätäli sakset antaa

Games with concealed rules are an excellent way to teach inductive reasoning. My favourite is Eleusis, but Wikipedia reminds me of the Scissors Game, and the Finnish version, "Näin räätäli sakset antaa". Get playing!

Ireland-Finland

It's still 2008, and the Filter is still in Finland. Or, at least, it will be next weekend. I'm on a press trip to Kuhmo in the north-east Karelia district of Finland from 12 - 17 July for the famous Chamber Music Festival, with some canoeing and sauna-ing thrown in. It should provide a great opportunity to wrap up the Finland Filtered series with some home truths from the region that gave birth to the Kalevala.

Filling me in on Kuhmo last week were a couple of wonderful musicians I met in Ireland. Actually, I met quite a few, but Keith Pascoe, a lightly-accented scouser and now second violin in the RTE Vanbrugh Quartet (one of the Irish broadcaster's four performing ensembles), explained the philosphy behind the Kuhmo Festival in his singularly witty and colourful way, aided similarly by Simon Aspell, viola. I sound like I know these guys - but I and young violinist Aoife (pron. Eefa) only met them on Saturday at the festival's first night party, and three long nights of drinking at the West Cork Chamber Music Festival in Bantry Bay ensued. So glad I met Aoife at the airport; I'd like to think we looked after each other for a few days lost amongst famous and wonderful musicians (actually, she's included in that). What warm, open people (must mention too, musician John O'Brien), which made the slow movement of the Vanbrugh Quartet's Beethoven Opus 135 all the more devastatingly.

The second performance I caught in Bantry (saw eight in total accross three days; the festival concludes this Sunday) was from Finnish pianist Antti Siirala, whose Chopin Preludes were simply breathtaking. It was a very Finnish performance; no flamboyant physiological gestures, though plenty of musical ones. After the concert, in the musicians canteen housed in one of Bantry House's rotund Georgian salons, Antti seemed faintly amused at my broken Finnish. When I told him I'd been on a self-funded holiday to Tampere and Helsinki in January, he roared with laughter. Very un-Finnish, I suggested to keith and Aoife, before we started talking about Karajan conducting Sibelius.

This isn't a review as such, just a roundabout way of saying that Finland is very much still influencing this Filter contributer's daily and musical life. That's also taking into account the 20 minutes of Finnish practise each morning and evening. More, this time from Kuhmo, soon. Nakemiin!

Finnish Education

Wall Street Journal:

Yet by one international measure, Finnish teenagers are among the smartest in the world.

And Finnally...

Sorry for the wait (it must have been simply excruciating), but my review of La Boheme at the Finnish National Opera is now online on the review site here.

Finland and Estonia

I've been racking my brains trying to think of something interesting to say about the Finnish economy for our ongoing Finnlter^ series, and have finally realised: Finland is interesting, not necessarily for what it is, but also for what it is not. Curiously, the relative moribund nature of Finland is a powerful reminder of the effect of comparative economic systems. According to Mart Laar*:

In 1939, it was hard to find two more similar countries as Finland and Estonia. We were very similar in language, culture, and living standards. Our economies were more or less the same. Then in 1940, Estonia was occupied by the Soviet Union and Finland successfully protected its independence. Look at what happened in this context during these fifty years and then you can understand how terrible the communist system really is. And it’s not only in the economy. This is in all fields of life—the social structure, cultural standards, education, healthcare, or whatever. When you compare those two countries, which were exactly the same in 1939[,] in 1989, then you will find what communism really means, and how bad it is. Our economy, our nature, and our environment was [sic] destroyed

The use of Finland and Estonia as a natural experiment has also been made by Robert Higgs, in his series of "Experiments in Political Economy" for the Independent Review. His conclusion**:

The conclusion:

their economic and social differences grew so large that no informed person could honestly dispute the pernicious effect that communist rule had on occupied Estonia.

* Laar, Mart. 2006. Exporting Hope: An Interview with Mart Laar. Religion and Liberty: A Journal of
** Higgs,Robert "Results of Still Another Experiment in Political Economy" The Independent Review Volume 12 Number 1 Summer 2007) Religion, Economics, and Culture 16 (fall):3,12–13. p.12

An interview with Oskari Juurikkala

Oskari Juurikkala was born in Finland. He studied Law at London School of Economics, and in 2006-07 was a research fellow at the Institute of Economic Affairs, UK. He is currently working as a legal counsel of Magnus Minerals Ltd, Finland; an analyst at hedge fund Hopeahelmi Investment Ltd, Finland; and editor of Kultainfo.com (www.kultainfo.com). The interview was conducted by email in January 2008.

AJE: Where did you study prior to coming to the LSE?

OJ: I studied economics at the Helsinki School of Economics, Finland

Many non-US/UK countries pride themselves on having somewhat distinct "schools" of economics. To what extent do you think that Finland lends itself to a distinct blend of economic analysis?

That's a really interesting question, Anthony. On the positive side, Finnish people have a reputation for being honest and straightforward (which I think is broadly true), and this is a good grounding for economics. There are some good professors teaching, for example, neo-institutional economics, law and economics, and behavioural economics and finance.

But on the negative side, Finns can be rather too shy to challenge conventional wisdom. That is a challenge in economics, because I think that mainstream econ has major defects hidden under the camouflage of maths and stats. Thus economics teaching here tends to be too standard, too US-style.

As one of the better lights once pointed out, this may not be a wise strategy for Finnish business schools, because if you try to copy top US-schools, you inevitable (given lack of resources) end up being a second-class case with nothing to stand out for. In contrast, by being more original and innovative - multidisciplinary - we could be on the forefront of novel discoveries and breakthroughs in economics, despite our small numbers. The potential is there. This is the normal lesson in business strategy and I think it applies to economic research too.

Given that you have a background in Law, what is it about the discipline of economics that makes you interested in a cross-disciplinary approach?

Economics is a really broad subject. Almost all human phenomena have an 'economic' aspect. It shouldn't be seen as the only aspect (as can happen with people like Gary Becker), but it's always there. When you use economics correctly, it brings clarity and rigor to our analysis of all kinds of social issues.

It does need complements, though, which is why I firmly believe in the importance of a cross-disciplinary approach to economics.

undefined or psychological economics is a great development. I don't mean just people like Kahneman, but also Robert Frank and Bruno Frey, who are writing interesting stuff about economics, morality and human motivation. Their discoveries challenge the very foundations of mainstream microeconomics.

Then I'd like to see more work on philosophy and economics. The Acton Institute (www.acton.org) is doing good work in this direction, but we need more. I mean basic questions about life and man: what is happiness? why do we do things? If money can't buy love, why are we so obsessed about economic growth?

There are some people asking these questions - think about Amartya Sen - but it's not mainstream, and lots of questions are unanswered (I don't think Sen has really gotten to the heart of the matter either). It should be mainstream. Philosophy should be the starting point of thinking about economics, and not some esoteric add-on for the bookworms.

At the Institute of Economic Affairs you were part of the "IEA Empowerment Through Savings Programme". Can you tell us a little about the background to that project, and what your role was?

The idea of the project was firstly to take a comprehensive, global look at pension systems and alternatives. One of the limits most discussion around pension reform is that it tends to be narrowly focused on the specifics of each country. This lends itself to tunnel-vision, where you only examine the obvious problems but fail to think outside the box.

In pensions this is a crucial problems, because old-age security is such a complex issue. It is not just a fiscal issue. It is not just an economic issue. It also relates to tax policy, sociological issues, cultural issues, national history, public choice issues and so on.

So the project wanted to look at the big picture. But secondly it sought a global vision understood in geographic terms. We examined a wide range of countries - UK, US, EU, Chile, Eastern Europe, India, China, Singapore - in order to get a better grasp of (1) the broader alternatives available to countries like the UK, and (2) the challenges facing the different approaches.

I think this was crucial, because you can learn so much by studying different kinds of concrete policies and their outcomes. In economically less developed countries, there is presently a push towards Western-style state pension schemes, but little understanding of the problems that they have created or are creating here.

The project was headed by Nick Silver, who is an actuarial consultant. I was the lead researcher in the project. We also had lots of other contributors of articles and analysis.

In an article [http://www.mercatornet.com/articles/poor_countries_need_freedom_and_children/] you've said that "Overpopulation is a myth, and a silly myth at that". What do you think the main danger of people believing that the world is overpopulated is?

Well, I think there are lots of dangers associated with the overpopulation myth. The main one is cultural. If you believe that the world is getting overpopulated, you will be more inclined to supporting policies that favour small families and even no families. You will more likely behave that way too on a personal level. Of course, having a large family requires lots of sacrifices, and these people need a lot of support. It seems to me that ultimately he overpopulation myth is an excuse for pseudo-feminist and anti-family
ideologies.

(I say 'pseudo-feminist', because feminism is totally contra femininity, opposed to the real dignity of women as women. It wants to measure women on a masculine scale and ends up degrading true
femininity.)

But apart from the cultural side, the overpopulation myth appears to be destructive economically too. Artificial or forced reduction in population size causes challenges economically and socially, as we see is the case with pension systems. It is also bad for economic development, as Julian Simon has persistently argued.

In fact, one of the things we realised in our research, is that families and extended families are the main source of old-age security and social security in economically less developed countries. What's more, it works. There are even theoretical studies by economists showing that families better avoid the typical information and agency problems that pervade both public and private pension and insurance arrangements. Families and other informal types of association are also more flexible and thus capable of reacting to difficult circumstances. True, these people would be even better off if they could combine family-based security with savings and formal pensions. But if you build the latter to the detriment of the family, you are creating problems.

Funnily enough, you often hear these conspiracy theories about how top investment banks and the oil industry are deliberately trying to stop LDCs from developing economically, so they would be easier to control and exploit materially. (You've probably heard this too.)

Earlier I would have brushed it off as Marxist propaganda, but I've been coming to different views now. Even Julian Simon wrote about these things in his classic "The Ultimate Resource" (http://www.juliansimon.com/writings/Ultimate_Resource/). He clearly was no Marxist! I haven't studied the arguments carefully, but I don't rule out the possibility any more.

This takes my thoughts to another topical issue (if you can bare with me). If you look at what's going on right now in financial markets, with the deepening credit and derivatives crisis, you see a total
double standard.

The people who created the mess are trying to hide the truth as long as possible - and they're using our money (including pounds and euros) to bail out the bad guys. I wonder if Bernanke, King and Trichet are
all puppets of much more powerful sources.

That sort of speculation naturally raises the question: Who's running the show? I don't know. But it's not all accidental. Did you read the news about how Goldman Sachs made a fortune with the "subprime
crisis". It was no surprise for them. I think they played too well for it to be just good luck, especially when you consider how deep they were in the same game just a while earlier.

You have two articles available through the Mises Institute [http://www.mises.org/articles.aspx?AuthorId=309]; "Old-age Security Without the State" and "Making Kids Worthless: Social Security's Contribution to the Fertility Crisis, and "Pensions, Fertility and Families"  [http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1044351] was published in the December 2007 of Economic Affairs. What are the most important lessons about this research?

Some of the ideas are related to what we were just discussing. Namely that the family (and extended family) is and should be the natural, primary source of social and old-age security in a free society. This
doesn't mean that it's the only source, and certainly people should be free to save, invest etc. in order to get other sources of financial security too. But the state should not force them to do much or anything, and it should keep out as far as possible.

That's precisely the argument in "Making Kids Worthless": when you study the facts, it's clear that state-run and tax-financed pension systems have created a big problem, they have undermined families and encouraged low fertility rates. This is well supported by both economic theory and empirical evidence.

What are your plans for the future?

Right now I'm involved in a number of related projects which may give rise to something interesting.

I've started working as analyst for a precious metals fund in Finland, called Hopeahelmi Investment Ltd. We invest in gold, silver and the mining sector, with a view to profiting from the rising prices of precious metals.

A closely related project is Kultainfo.com (http://www.kultainfo.com), which stands for "Gold Info" in Finnish. We launched the site just a moment ago, but it's already becoming the leading information source in Finland on gold, silver and precious metals investing.

Our purpose is to inform people about this market, to share news and analysis. But it's not just about trading, it's about the macro economy, the banks, monetary policy, economic history - everything related to gold and silver, and that covers a whole lot more than many people realise.

In my "spare time" I'm also setting up a small macroeconomic consultancy, called Ansgar Economics
(http://www.ansgar-economics.com). "Ansgar" means "spear of God", although I chose the name because it's the same as Oskar, and Saint Ansgar (http://en.wikipedia.org/wiki/Ansgar) is thus my patron saint. Anyway, the idea of Ansgar Economics is to provide "big picture" analysis and training on macroeconomics in our unstable and changing world.
 
thanks!!

Thank you!