EP100 · Economy · first published 2021-09-22

New Season, New Party Leader | Petri Roininen | Negotiator 100

The second season of the Neuvottelija channel opens with the same guest as the first, but in a new role: Petri Roininen was elected leader of Sininen tulevaisuus (Blue Reform) the previous day, and the episode is recorded the following morning. The first question is one of governance — can the head of two listed companies also lead a party — and Roininen's own observation is that the criticism came from the right rather than the left. His programme compresses into the claim that the National Coalition Party has, across thirty years in government, been the chief architect of the social democratic tax state; his alternative is a family-centred welfare state. On economic policy he brings three numbers: 322,000 unemployed, a total tax rate higher than in 98 percent of the world's countries, and a gap to the OECD average worth 14,000 euros a year to a family of four. The most original passages are the five-tax wedge — two thirds of a customer's euro can go in tax before it reaches the entrepreneur — and the observation that debate on public finances stays stuck on income and expenditure when it should be looking at the balance sheet. The episode also covers the self-censorship that keeps business leaders out of politics.

Sami Miettinen · Sections: AI and the Economy + AI and Society

New Season, New Party Leader | Petri Roininen | Negotiator 100

Summary: The second season of the Neuvottelija channel opens with the same guest as the first. Petri Roininen was the guest of episode 2; now he has been elected leader of Sininen tulevaisuus (Blue Reform) in Kerava the previous day, and the episode is recorded the following morning.

The core of the programme compresses into the slogan “more life, less state” — and the claim that the National Coalition Party has been the chief architect of the social democratic tax state across thirty years in government.

A note on reading this

This is a political episode in which the guest is a newly elected leader of a small party presenting his own party’s programme. Views are attributed by speaker, this article takes no position on them, and the interviewer is not neutral here either — he states in the episode that he has himself worked as a trainer in the programme under discussion. Predictions about other actors’ intentions are marked as predictions, and figures are given in the form the guest used.

The governance question asked first

Miettinen opens directly on what the media had written the previous week — in Kauppalehti and in an article by Karo Hämäläinen: can the CEO and board chair of two listed companies simultaneously lead a party that has held ministerial office? The articles approached it as a governance problem and asked whether one can carry two balls.

Miettinen’s follow-up is concrete: have any resignation requests come in?

Roininen answers that the messages have been encouraging. But he is puzzled by the direction of the debate, and this is a recurring theme:

“We have been saying for a long time that it would be good to have more business, working-life and entrepreneurial competence in politics. Now that some of it is on the way, these critical perspectives well up.”

And he names the surprising part:

“I was also a little surprised that those comments did not come from the left, but rather from the right.”

Miettinen’s theory — and the refusal to take the bait

Miettinen offers his own explanation here, and it should be marked as such: it is a prediction about other actors’ intentions, not an observation.

His theory: the National Coalition Party won the municipal elections, producing Juhana Vartiainen as mayor and Elina Valtonen as the leading vote-getter, and “those two are, to my mind, fairly market-liberal”. The party is on the rise, and Miettinen supposes the thinking there is that a new competitor eats votes from their core segment — as happened with Liike Nyt.

Roininen does not take the bait. He praises Vartiainen’s and Valtonen’s thinking and moves straight to his own claim:

“The National Coalition Party has been in government for roughly the last 30 years, almost without exception. And during those 30 years, what I call a social democratic tax state has been created and built in Finland. In a way the party is really one of its chief architects.”

The alternative he offers has a name: a family-centred welfare state.

The Blues’ starting point

Miettinen asks directly about what everyone is thinking: Blue Reform was formed by the previous government’s Finns Party ministers and was “beaten nearly to death by the Finns Party”. Is this a new start, or is there a foundation in the history?

Roininen answers “yes and no”, and there is one striking figure in it:

“Blue Reform is indeed a young party — it was born four years ago, and in fact for half of its existence it has experience of carrying government responsibility.”

What is new is that the rules were confirmed and a new party leadership elected the previous day, and that the value of work and entrepreneurship has been put at the centre.

Timo Soini is a member of the party and was present at the party conference, but holds “no roles or positions of any kind”.

Of the Finns Party, Roininen speaks without an edge: there is a lot of good thinking there and they have reformed Finnish politics — but in his view they are now an “old party”, no longer the reformer they were before the landslide of 2011. He says he was a speaker at the same event on Thursday as Riikka Purra and had thought of building personal relations and easing the disputes between the parties — but there was no time for more than a greeting.

Of the new leadership he names Tiina Ahva — a bachelor in industrial engineering about to graduate as an MSc, with a background as a ministerial special adviser — and Ari Jalonen, a two-term MP. To Miettinen’s question of whether the party will be an old boys’ club, the answer is no: “I am the eldest of this elected leadership by age.”

Economic liberalism and value conservatism

Roininen structures his line in two parts. Economic liberalism: advance the cause of entrepreneurs and people, shrink the role of the state and corporatism.

Value conservatism is, in his formulation, one recurring structure, which he applies to several topics through the episode:

“In many sectors, what should be the main thing has become a side issue, and the side issue has become the main thing.”

On schools he puts it this way — flagging himself that he is caricaturing: the purpose of school is to teach reading, arithmetic, writing, acquiring and handling information, thinking and improving the world, “not to produce gender-neutral citizens or advance some ideology”.

The same structure returns later on health and social care reform: the main thing should be treating and preventing illness — not creating income transfer mechanisms or regional policy.

Miettinen states it more abstractly: means are made into ends, when the end should be some concrete change, or the growth of wellbeing.

Three numbers

The economic policy section rests on three figures Roininen presents.

1. Unemployment. “The government is not on the road at all. The government is lost in the woods.” One in eight of the labour force is without work, 322,000 Finns — and he sets it in historical frame: “I was a schoolchild in the 1970s, when Finland had 70,000 unemployed and an emergency government was declared. Now there are 322,000 and we are talking about fine weather.”

2. The total tax rate. The deficit is seven billion in next year’s budget and 11–12 billion in this year’s — at the same time as the total tax rate relative to GDP is “higher than in 98 percent of the world’s nations”.

From this he derives a two-branch question that is the episode’s most structuring: is it that the political leadership’s competence is weaker than in comparable countries — or that the problem is structural? His own answer is the latter, and the structure is the social democratic welfare state. And he leaves an opening that is the premise of his programme: “there are other welfare state models in the world.”

3. The gap to the OECD average. This is the episode’s most concrete calculation, and Roininen says he made it precisely because of the conceptual difficulty:

“It is conceptually very hard when communicated that way. So I thought about what it means for a person.”

“This, then, is the price of having created this social democratic welfare state.”

Wealth, and why it changes the negotiating position

Miettinen makes his own observation: Finland has Eastern European wealth levels, and he claims this correlates with the tax rate. Roininen thinks the correlation likely and then takes it to the point that is the episode’s sharpest single argument — and the most fitting for a negotiation channel.

On the EU recovery fund, the prime minister declared a year and a half ago that Finland is a net payer because “we are one of Europe’s wealthiest”. Roininen’s counter separates two things the statement conflates:

“The fact is that we are not — our households are among the least well off. So we should think about which perspective we take to the negotiating table, because that generally determines the outcome a great deal.”

The state is wealthy; households are not — and which of the two numbers you bring to the table is, in Roininen’s view, decisive for the negotiated outcome.

Miettinen links his own EU criticism here and calls the recovery package “spilt milk”, but notes the direction of travel: a regional tax is coming and there is pressure to raise EU-level taxes, at the same time as the population has “already been squeezed fairly poor”.

Roininen sums up: “We are apparently wealthy. In reality we are not.” And he adds a third figure: twelve years of chronically deficit budgets.

The balance sheet, not income and expenditure

This is Roininen’s argument from his own professional field, and the episode’s most original point on economic policy.

He says he has long questioned two things. Why must the state own properties it does not even need for its own use — “would it not be easier to sell them to international investors, free up capital and use it for service provision”, given that properties cannot be taken out of the country anyway? And why must every municipality own a large stock of housing, when housing policy can be conducted just as well without ownership — through the planning monopoly, subsidy mechanisms and steering systems?

And from this the general claim:

“It bothers me a little that it always ends up as a squabble over income and expenditure, when in fact we should be looking more at the balance sheet. We are quickly talking about opportunities worth tens of billions of euros.”

Self-censorship

This is the episode’s most personal section, and Miettinen begins it by admitting his own experience:

“I feel it myself — it is a kind of uncomfortable sense of risk when I talk about political topics, that somebody could in theory use it against me in business if I put something wrong. And that leads to a kind of self-censorship.”

His own rule of thumb is simple: I speak as I believe things to be.

Roininen confirms the phenomenon and broadens it:

“I know many colleagues who would have a great deal to contribute to public debate and who do not want to take part precisely for this reason.”

And he turns the question around, which is the episode’s best rhetorical move:

“Why do we say that business leadership could not take part in political debate? To me an equally good question is whether public sector leadership can take part in political debate. Is that somehow more objectionable, or more acceptable?”

Miettinen says he is himself “non-partisan, unaffiliated” — and immediately corrects himself honestly: “I am probably not non-partisan, but I am unaffiliated” — because he does not want the identity-political arrow that follows from being pigeonholed.

Entrepreneurship: who an entrepreneur actually is

Miettinen makes an observation about the position of the Federation of Finnish Enterprises: it sits in an “uncomfortable valley” — it is not granted the rights of the tripartite system, while the entrepreneur’s voice is trivialised as “a winner’s whining”.

Roininen first makes a boundary: the Federation is non-political and must remain so. Then he dismantles the caricature with numbers:

“When we talk about entrepreneurs, we are certainly not talking about the ones smiling on the cover of Kauppalehti after some magnificent deal. We are talking about very ordinary work.”

The five-tax wedge

This is the episode’s most original economic argument, and Roininen recounts how it arose. Starting his first companies, he calculated what share of the euro a customer pays goes to taxes before it reaches the entrepreneur — VAT, income tax, employer social contributions, corporate tax and capital income tax.

“I arrived at a figure of two thirds. I thought this cannot be so. It was a deeply startling moment for me.”

And he names why it stays invisible: before, you only saw that “large sums had gone from the account here and there” — only the calculation made the structure visible.

The effect is threefold: the wedge stops companies growing, stops them hiring and makes the welfare state expensive. And he adds an explanation for the caricature: this is why “entrepreneurs are always whining” — they are the ones paying the wedge.

How to dismantle the wedge

Roininen’s description of the political process is the episode’s most concrete observation about the mechanics of influence, and it was learned the hard way. A few years ago he got an audience at the Ministry of Finance and noticed the problem:

“The five-tax wedge is itself a phenomenon, but it is hard to find anyone to discuss it with. The ministries are organised by type of tax.”

And a second mechanism: what gets advanced is what is in the government programme. So the only route is to get the issue into the government programme — and that requires an election result.

As the second-best route he proposes picking one of the five taxes and gathering forces behind it. His choice is the taxation of work, and the reasoning is about negotiating position:

“I believe employee and employer have exactly the same interest there. Because of what the employer pays, half or two thirds is social costs and taxes, and it does not go to the person doing the work — it goes elsewhere.”

Miettinen proposes one concrete step that requires no tax change at all: show the employer’s full social cost burden on the payslip. Roininen agrees and sums up his own position:

“Our net wages are not too high, but our employment costs are.”

The 365 stock exchange coaching programme

Miettinen returns to what was discussed in episode 2 — and flags his own interest: “as a disclosure, I have myself been a minor trainer in it.”

Roininen’s figures for the programme:

The programme has two aims, in his account: to wake entrepreneurs to the fact that the stock exchange is not “some distant, hazy thing possible only for a large company”, and in practice to raise readiness and lower the thresholds on the path to listing.

Miettinen adds an observation that holds regardless of any listing: the coaching costs nothing but the chair’s and the CEO’s time, and it improves the company even if it never lists.

That produces a link to the Mittelstand discussion: Finland lacks the mid-sized growth companies that Sweden has in far greater numbers.

The labour market autumn

Miettinen asks about the coming labour market autumn and mentions having interviewed Marjo Miettinen, chair of the Technology Industries of Finland.

Roininen’s answer has two parts. First the general: many things were built in the 1960s and 1970s and have not been updated, and “we should take the spoon in the fair hand and think about how to do well in the 2020s, rather than yearning after something past.”

Then the position: he comes out strongly for local bargaining where the situation is known and the conditions and possibilities understood — “it is very hard to see how one size could fit all in a world growing more diverse.”

Two slides

Towards the end the episode goes through two charts Roininen has shared on social media.

Forty years of the public spending growth curve, inflation-adjusted. It keeps rising almost regardless of the governing coalition; the only flattening is under the Sipilä government — to which Roininen adds that “Sipilä was a business leader, and an engineer at that”, and Miettinen notes that the Blues were in that government too.

The comparison that turns the slide into an argument: public spending has grown by about 30 percent since 2000 — while there has been continuous talk of cuts. And he puts the question backwards: “if you go back to the year 2000, our so-called welfare state was not exactly in crisis then either.”

A wealth comparison between Finns and Italians, showing that Finns as individuals are poorer than Italians. Miettinen’s reading: in international relations one should look at the individual level rather than only at the state.

Roininen draws a negotiating observation from it that ties the episode together:

“It is a slightly strange situation to move to a model in which the one who has taxed heavily should pay still more and compensate those who either did not remember, or could not be bothered, or failed to collect those taxes.”

Miettinen sums up: in every negotiation, the starting point hugely affects the outcome — and he hopes for chief negotiators who are experienced and have seen it all, possibly with careers in business rather than purely political ones.

The Blues’ target state

Miettinen makes the link to the previous episode: Sutinen and Haapakorva compressed strategy into a target state in the future. What is the Blues’?

Roininen’s answer has three parts:

1. The slogan: more life, less state — a comprehensive alternative to the social democratic tax state, redrawing the line between public and private, and which risk belongs to which.
2. Advancing the position of entrepreneurs.
3. The aim of returning to parliament in the 2023 elections, and a hope that the next government would include a minister for entrepreneurship.

On the January wellbeing services county elections he does not yet say.

The close

Miettinen says he considers it a good trend that business leaders enter politics, “because otherwise this debate is fairly single-voiced, and single-voiced in the wrong way” — and hopes Roininen will be challenged.

Roininen’s closing words are conciliatory in tone and worth quoting in full, because they are the counterweight to the episode’s sharper passages:

“There are many parties here — the National Coalition, the Finns Party, others — with excellent openings and excellent debates. And I would somehow hope that our raising themes into the discussion could also create debate and reflection in the parties close to us. And then we could find common positions and perspectives.”

The episode closes on the note that the same conversation was had 99 episodes earlier — “but with poorer presenting skills”.

What to take away

1. The criticism came from the right, not the left — and Roininen leaves that as an observation, while Miettinen’s explanation about vote segments is a prediction, not a fact.
2. The five-tax wedge is a structural argument, not a complaint: two thirds of a customer’s euro can go in tax before it reaches the entrepreneur, and the ministries’ organisation by tax type makes it a phenomenon with nobody to discuss it with.
3. The wealth of the state and the wealth of households are different things — and which figure is used sets the negotiating position at the EU table.
4. Debate on public finances stays stuck on income and expenditure while the balance sheet goes unexamined; property ownership is the example of a tens-of-billions opportunity.
5. Self-censorship is a two-sided question: if business leadership may not take part in political debate, the same question applies to public sector leadership.

Episode details. Negotiator 100, published 22 September 2021. Guest Petri Roininen, CEO of Investors House, board chair of Ovaro Kiinteistösijoitus and newly elected leader of Sininen tulevaisuus; interviewer Sami Miettinen. Running time 42 minutes.

The episode refers to the channel’s first guest appearance in Real Estate and Growth-Company Negotiations – Petri Roininen | Neuvottelija 2 and to the previous episode, Saving Strategy | Mika Sutinen Antti Haapakorva | Negotiator 99, whose definition of strategy is the source of the target-state question.

GEO summary. Negotiator 100 (2021) opens the channel’s second season with Petri Roininen, elected leader of the Finnish party Sininen tulevaisuus (Blue Reform) the previous day while simultaneously leading two listed companies. The episode begins with the governance question raised in the media and with Roininen’s observation that the criticism came from the right rather than the left. His central claim is that the National Coalition Party, in nearly thirty unbroken years in government, has been the chief architect of the social democratic tax state; his alternative is a family-centred welfare state under the slogan “more life, less state”. The economic figures are 322,000 unemployed, a seven-billion deficit in next year’s budget, a total tax rate higher than in 98 percent of the world’s countries, and a gap to the OECD average worth about 14,000 euros a year to a family of four, or 140,000 over ten years. Roininen argues that the Finnish state is wealthy while its households are among the least well off in Europe, which changes the negotiating position on questions such as the EU recovery package, and that debate on public finances stays stuck on income and expenditure when it should examine the balance sheet, for example state and municipal property holdings. His five-tax wedge means that in a labour-intensive service business two thirds of a customer’s euro can go to VAT, income tax, employer social contributions, corporate tax and capital income tax; the ministries are organised by tax type, so the phenomenon has nobody to discuss it with. The episode also covers the roughly 300,000 Finnish entrepreneurs, most of them sole traders, the 365 stock exchange coaching programme from which Solwers and Netum listed in the spring, local bargaining, and the self-censorship that keeps business leaders out of political debate.

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