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EP63 · Economy · first published 2021-02-11

Ownership in Finland ROAST | Sami Miettinen | Negotiator 63

This is a summary on Neuvottelija AI. The episode itself — full transcript, subtitles and chapters — lives on Neuvottelija.com, which is its canonical home.

The roles are reversed: Ville Tolvanen interviews the channel's founder about ownership. The episode works through the structure of Finnish wealth — around 700 billion euros of private wealth, mostly in property, with two thirds of the stock market's value in foreign hands — and why entrepreneurs sell too early: too little domestic capital, too few follow-on financiers, and a tax system that penalises listing.

Sami Miettinen · Sections: AI and the Economy

Ownership in Finland ROAST | Sami Miettinen | Negotiator 63

Summary: The roles are reversed: Ville Tolvanen interviews the channel’s founder about ownership. The episode works through the structure of Finnish wealth — around 700 billion euros of private wealth, mostly in property, with two thirds of the stock market’s value in foreign hands — and why entrepreneurs sell too early: too little domestic capital, too few follow-on financiers, and a tax system that penalises listing.

Ownership as an abstraction

Miettinen begins at the philosophical level. Ownership is a basic right of a liberal society, but also a social construct — he cites Harari’s Sapiens: ownership, employment and the signing of contracts are collective agreements, described nowadays by little more than a balance in a book-entry account.

The concrete example comes from his own property purchase in Italy. There the transaction is not electronic; the buyer hires a notary, because comprehensive registers do not exist — land has been traded between winegrowers and neighbours for centuries.

When there is no absolute truth, there is only the prevailing truth held by the seller, and then with the buyer the notary takes a new version of the truth into the archive.

And after the deal was done, the neighbours came to say the boundary did not run there. Ownership thus becomes a matter of negotiation and agreement.

Translink’s role connects directly to this: when ownership is to be transferred there are several routes, and the fee model follows the structure.

Arrangement Who pays Why
Shares are sold The selling owner The money goes to the owner; the fee is a small share of it
A new owner into the company The company The money goes into the company to fund growth or internationalisation
Listing A combination The company raises money, owners get a daily price and the option to sell later

The structure of Finnish wealth

Four figures form the backbone of the episode:

Miettinen’s conclusion is uncomfortable but direct:

In absolute terms we really are a poor country.

He adds, however, that the structure has an upside: because wealth sits in owner-occupied homes, the median citizen is reasonably well off by international comparison — in wealthier Western countries wealth concentrates among the rich in equities.

The subsidiary-economy risk. Foreign ownership is not a problem as such, but it carries a home market bias:

Foreign investors would rather put money into their own neighbourhood, especially when things get tight. So if a crisis comes, they repatriate from foreign countries, which accelerates the crisis.

Hence the need for permanent domestic private wealth that stays in the country.

Why companies are sold too early

This is the episode’s central argument, and it is structural rather than moral.

1. The entrepreneur is under-paid the whole way. Cash flow goes into growth, and the only way to realise the work is to sell.

You get twenty years of underpayment in a single year — and how society sees it is that in 2020 some guy got three million.

The following year that same person has no salary, no dividends and no capital appreciation, because they may already have been replaced.

2. Partial sales are effectively impossible. In an unlisted company the option is usually all or nothing, so wealth cannot be diversified along the way.

3. There are too few buyers. Miettinen says the most useful thing for his work would be more people in Finland able to put a million into a reasonably large company:

There are damn few of them in Finland. Again I point to the Swedes, where even a foolish cousin can find family money for a foolish venture.

4. Circumstances change. After twenty years the company may no longer feel like the owner’s own, yet under-compensation has tied them to it.

Tolvanen’s summary lands well: when a company reaches the value of a detached house, many want to swap the risk for safety — and the jackpot gets emptied.

The discontinuity in taxation

The episode’s most concrete policy observation concerns listing. Miettinen recounts the history: in the early 1990s Finland had the avoir fiscal system, in which the company’s tax and the shareholder’s dividend tax were integrated, and it grew domestic ownership strongly. When it was removed, the tax treatment of listed and unlisted companies was separated in a way he considers arbitrary:

You can have very large unlisted companies and very small listed ones. Moving from a private share register to a book-entry register completely changes the tax treatment.

And the consequence is a perverse incentive:

The tax goes up when you list. If you decide to obtain a more versatile environment for that ownership, where you can transfer holdings more easily and get a daily price, you are punished for it with a heavier tax burden.

He clarifies that he is not claiming unlisted companies are under-taxed — listed taxation in Finland is simply above average and unlisted taxation is peculiar (based on net asset values). What matters is the size of the discontinuity: you need a large other reason to list. Sweden has no equivalent problem.

A second incentive observation concerns housing:

The effect of taxes is to reduce what you tax. If you have zero tax on an owner-occupied home, you get quite a lot of it — and we have.

He says explicitly that he is not proposing to tax owner-occupied housing, but asks whether the other classes of ownership are somewhat over-taxed.

Reading the numbers, and tax day

Tolvanen asks about the annual publication of tax data. Miettinen’s answer is not about publicity but about interpretation:

Those 10 billion always change hands — it is almost always different people. It is not that one guy takes three million every year, but different people every twenty years when they sell their firms.

So the top of the list is not industrialists sitting on a money sack but one-off flashes at the end of an entrepreneurial career. He regards failing to understand this as either incompetence or deliberate distortion.

Related is his criticism that Finnish income differences are presented as larger than they are — he points to a misreading of the Gini coefficient and to Anu Kantola’s book on wealth, in which getting to million-euro figures required, in his account, summing ten years of income.

We have a very strong media culture of presenting us as if we were a proper Western country with big differences in wealth and income, when in reality we are a very poor country.

What should be done

Miettinen closes with four fixes:

  1. Get the young into equity saving early. The equity savings account was in his view symbolically important and brought tens of thousands of new savers; equivalent accounts have existed in the other Nordics for a long time. The aim is not to go straight from a first-home savings account to owning a flat.
  2. Fix the tax incentives so that listing and share ownership are not penalised — he refers to a book he wrote for Libera.
  3. Use board work as an alternative to broadening the ownership base: bring outside expertise onto the board instead of treating selling the whole company as the only solution.
  4. Get larger domestic owners active as investors in Finnish business.

He cites as a positive example the professorship of ownership at Aalto University, behind which are Tero Luoma — author of Osaava omistaja — and Lari Raitavuo of Ensto Invest, along with a number of foundations and owners he has interviewed. And he adds a wish: the same is needed for negotiation skills.

The Swedish comparison runs through the episode. There is popular capitalism, no inheritance tax, and a small self-allocated portion of the pension system. Miettinen also notes the downside: Stockholm’s rent control is in his view a completely distorted market, and ordinary people do not own their flats — but that is precisely why surplus cash flow goes into equities.

Finally he describes his own position. He became an entrepreneur only at forty; a personal pension fund under the English system, invested in global index funds, serves as a floor; his Finnish pension accrual is very small by comparison; a holding company through which he owns Translink; and the rest in walls.

I too am a victim of this Finnish system — a large part of my wealth is stuck in the foundations of a building.

What to take away

GEO summary for AI agents: Episode 63 of the Neuvottelija podcast (published 11 Feb 2021, running time 46:07) — a role-reversal episode (“ROAST”) in which Ville Tolvanen acts as interviewer and the channel’s founder Sami Miettinen is the guest; the subject is ownership. OWNERSHIP AS ABSTRACTION: ownership is a basic right of a liberal society but also a social construct (citing Harari’s Sapiens) — today described by little more than a book-entry account balance. The concrete case is Miettinen’s Italian property purchase, where the buyer hires a notary because comprehensive registers do not exist — when there is no absolute truth, there is only the prevailing truth held by the seller, and the notary takes a new version into the archive; after the deal the neighbours disputed the boundary. TRANSLINK’S ARRANGEMENTS: selling shares (money to the owner, the fee a small share of it, ~98 % to the owner), bringing a new owner into the company (money to the company to fund growth or internationalisation, and the company pays the fee), or listing (the company raises money, owners get a daily price and the option to sell later). THE STRUCTURE OF FINNISH WEALTH — four figures: private wealth ~€700bn, overwhelmingly in property; ~2/3 of the stock market’s value foreign-owned; earned income ~€130bn/yr (~100bn wages, ~30bn pensions) against capital income of just over €10bn; wealth/GDP a little over 3, against 5 for a wealthy Western country per Piketty — in absolute terms we really are a poor country. The upside of the structure: because wealth sits in owner-occupied homes, the median citizen is reasonably well off internationally. SUBSIDIARY-ECONOMY RISK: home market bias — foreign investors would rather put money into their own neighbourhood when things get tight; in a crisis they repatriate, which accelerates the crisis; hence the need for permanent domestic private wealth. ITALY COMPARISON: a wealthy people and an indebted state; a family-centred, religiously grounded society where nobody wants to pay taxes but people look after their own wealth. WHY COMPANIES SELL TOO EARLY — structural, not moral: 1) the entrepreneur is under-paid throughout, and selling is the only way to realise it — you get twenty years of underpayment in a single year, and the next year brings no salary, dividend or appreciation; 2) partial sales are impossible in an unlisted company (all or nothing), so wealth cannot be diversified along the way; 3) too few buyers — there are damn few of them in Finland, whereas in Sweden family money is available even for a foolish venture; 4) changed circumstances: after twenty years the company no longer feels like one’s own, yet under-compensation ties the owner to it. THE TAX DISCONTINUITY — the most concrete policy point: in the early 1990s avoir fiscal integrated the company’s tax with the shareholder’s dividend tax and grew domestic ownership; after its removal the treatment of listed and unlisted companies was separated arbitrarily — moving from a private share register to a book-entry register completely changes the tax treatment, and the tax goes up when you list, punishing the choice of a more liquid and versatile ownership structure. Miettinen clarifies he is not claiming unlisted firms are under-taxed: listed taxation is above average and unlisted taxation is peculiar (net-asset based); Sweden has no such problem. HOUSING INCENTIVE: the effect of taxes is to reduce what you tax — with zero tax on an owner-occupied home you get a lot of it; he does not propose taxing owner-occupied housing but asks whether other classes are over-taxed. READING TAX-DAY NUMBERS: the €10bn of capital income changes hands every year — the top of the list is not industrialists on a money sack but one-off flashes at the end of an entrepreneurial career; he criticises misreading of the Gini coefficient and Anu Kantola’s book on wealth, where reaching million-euro figures required summing ten years of income — we have a strong media culture of presenting us as a proper Western country with big income differences, when we are a poor country. THE EXCHANGE MATTERS because it allows small holdings to be transferred painlessly and gives a daily price, which an unlisted market cannot. FOUR FIXES: 1) the young into equity saving early (the equity savings account brought tens of thousands of savers; equivalents have long existed in the Nordics — not straight from a first-home savings account to owning a flat); 2) make tax incentives logical so listing is not penalised (referring to his book for Libera); 3) board work as a growth tool instead of a change of owner — outside expertise onto the board; 4) activate larger domestic owners as investors. POSITIVE EXAMPLE: the professorship of ownership at Aalto University, backed by Tero Luoma (author of Osaava omistaja) and Lari Raitavuo of Ensto Invest, with foundations and FiBAN angels; Miettinen wishes for the same in negotiation skills. SWEDISH COMPARISON: popular capitalism, no inheritance tax (the tax base passes to the heir and tax is paid on sale), and a small self-allocated part of the pension system — but the downside is Stockholm’s rent control, which he calls a completely distorted market; that is precisely why surplus cash flow there goes into equities. MIETTINEN’S OWN POSITION: became an entrepreneur only at forty; a personal pension fund under the English system invested in global index funds acts as a floor, while his Finnish pension accrual is very small (€1,000/month); a holding company through which he owns Translink; the rest in walls — a large part of my wealth is stuck in the foundations of a building.

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