Björn Wahlroos | Suomi, globaalit markkinat ja EU:n tulevaisuus | M&A 20.12.2023

because the Gandalf of the Finnish business life has joined us , and Primus Interpares, the economic policy opinion influencer. Björn Walrus, Nalle, it's always as difficult to introduce you when you don't really know what kind of litany should be presented at this point, and then the end result is something flat in the style of an opinion influencer. But welcome anyway. What would you actually call yourself? Among the title choices, I prefer Majori. Major Walrus, welcome. Today's topic was insp

ired by this book of mine, The Makers of Sate, which is admittedly a very good description of, among other things , the time when Finland is breaking away from these things, the time of what I myself call the malformed Martticrina economy . And in order to get rid of it, at least in the eyes of an economist, it required such a change in business and production structures. And this happened right there after the 80s and happened at the beginning of the 90s. And the reason why it is interesting to

hear these views of yours was that you were making these key business arrangements in many industries. In other words, in a way, you were already here, but it can be thought that you were such an omen of capitalism. So you were about to transfer the mandates to become an independent listed company, and in a certain way , a new chapter of Finnish corporate capitalism began, if you could say so. In Mandaattum, you organized share issues, capital loans, and planned the companies' defense strategie

s against hostile takers. And of course you were involved in the hexes of the big companies. At that time, banks, the energy sector, technology companies and, of course, one of the largest forest industry companies were organized. And in its wake, at that point we were left with the four big Enso, UPM10, Metsäliitto and Myllykoski. So how did this investment banking dimension change this Finnish business? That's the big question. To what extent was the change in these ownership structures benefi

cial to this growth of the national economy as a whole? And to what extent was this a bit of a zero-sum game between the ownership arrangement and the participating operators ? Buyer and seller and broker and that's where the big money moved. Of course, there were mergers and other business arrangements that went wrong, so to speak, which in a way represented this kind of zero-sum type of future. But I would argue that taking this bigger picture over the 1990s , which of course had two big thing

s behind it, the change in our taxation so that through the auxiliary tax bill, it was quite easy to organize things so that the tax bill did not become unreasonably large, and secondly we had just joined the European Union and Finland as a country, as a result of which cross-border mergers, among other things, became not only possible, but easy to implement. Then there was a third behind all of this, and this is the answer to your question. Finland's economy, to a large extent, at least its exp

ort part, was built to be de facto dependent on the economy of the Soviet Union. That is, the classic, like the principle mentioned in Wärtsilä and many other companies, he was this 80-20 principle, 20 percent of the exports must go to the Soviet Union, and that becomes 80 percent of the profit, which in a way described this setup. Since the trade in the East was barter, it was controlled by a license warehouse, and it required that at least 80 percent of the delivered goods be domestic. And now

you can, if you think a little, understand what this meant. Jussi Latvala Inefficiency at least. Unfathomable inefficiency when Finland had to make a huge amount of similar raw materials and intermediate products and instruments, and mastered even what we didn't have any natural prerequisites for. We were made miserable copies of the world. We had to build an entire steel factory in Raahe just to get ship-grade sheet, so that we could make ships domestically enough, and that's how it is. And th

is led to completely absurd things, such as the fact that the wool corporation, which produced woolen fabric, was kept up for 20 years, making a deep loss. Jussi Latvala Jussi Latvala And in order to get rid of this lack of efficiency, exactly these changes in ownership arrangements were required. Well, they became mandatory because they walked against when there were many companies that had to completely reshape themselves. Others lost much of their business, not to mention profitability. And a

s a result, they were no longer viable, or at least felt. Of course, this East trade had also led to the fact that when it was so profitable, and the efficiency requirements were quite modest, we had conglomerates, i.e. companies like this, which did absolutely whatever the hell, excuse the word, and as a result of which their product portfolio was quite unimaginably wide , and of course what led to the fact that there were no scaled ones anywhere, so of course they also had to sell these less w

ell- functioning divisions somewhere else and reorganize the whole thing. The trade in time was one of the terribly important reasons why there was a really great need to change in Finland during the 90s . Warren Buffett, who has been relatively successful in business , has for a very long time criticized investment banks quite strongly for making arrangements for the sake of arrangements, because of course they receive a fee, and he has said that investment banks are a casino, or they are the c

ard cheats of the financial world. I quote him. Wall Street makes money off the crumbs that fall off the table of capitalism. Investment banks don't make money unless someone does something concrete first. Bankers make a lot more money when people gamble than when people invest. What is your answer to the Oracle of Omaha? This is actually not a terribly peculiar conclusion. Every decent Calvinist, even every decent Lutheran, agrees. Money can only be made by sweat of the brow and a shovel in han

d, and the only real money is that which is made in a mission or something similar. Warren Buffett himself has benefited enormously from the fact that we have such a place run by investment banks and bankers, called the stock market. Of course, the fact that his unimaginably expensive, because he refuses to split Berkshire Hathaway's stock, whose price is now starting to be about half a million or one dollar per share, so it can be sold on the stock market. I'm pretty sure that most, or at least

many, of Berkshire Hathaway's stockholders would walk away if those shares couldn't be sold on any stock exchange. In fact, brokers, various advisers, throwers of ideas, various innovators, of which investment bankers are one such small subfamily. After all, they have taken on an increasingly larger role in our modern society. Look at our digital world. After all, it mainly consists of information brokers and the developers of technologies who paint something on the horizon, who don't work with

a shovel at all , but think. We just talked about the fact that in the 80s business was inefficient, so let's talk for a moment about economic policy during that time and after. What happened in the early 90s, this recession kind of gave a blow. The idea is that when this situation was unprecedentedly difficult, it perhaps offered opportunities or pressure for open-minded solutions. You mentioned Avuar Fiskaal's corporate tax refund system. This is a good example, which under other circumstance

s might not have passed . Is this the conclusion that has sometimes been put forward, so is the situation in Finland that economic policy reforms cannot be achieved unless one is sufficiently in the broth first, that one has to get in order in a time of crisis in order to achieve big and effective solutions? I would be very grateful if even that were true. Now, in my opinion, we have been in crisis for 15 years, and yet no solutions have been made . Here is a necessary condition or a sufficient

condition of the basic concepts of logic. I am sure that a crisis is a necessary condition, but now it seems that it is not a sufficient condition. Do you think that the current economic situation is as serious in terms of crisis as it was in the early 90s? I consider it more serious. It's not because there was any controversy in the early 90s. You saw more of the crisis in the street scene due to the fact that our social safety net was looser then. There were fewer income transfers and fewer ty

pes of compensation than there are today. You don't see it in today's cityscape. You can see it in the state budget deficit. In other words, then the patient was actually more sick. Now that disease is inside, and you can't detect it from the outside as well. You can say, but there's the added bonus of all of this being seen today. The state picks up this bill for all of this, and all of us as taxpayers, I of course pay my taxes mainly in Sweden, but in any case all of you as taxpayers ultimatel

y pay the bill for not being visible on the street, which maybe is a good thing, but in the long run of course it's not come to work. Perhaps so much so that even in the 90s, the Finnish state got into debt at a very high rate. Of course, there was a threat of getting that money. But at the end of the 90s, yes, I know, but at the end of the 90s Finland's only surplus budget, if I remember correctly, was Sauli Niinistö at the Ministry of Finance, meaning the one who even today would do well to re

member that the budget balance was never corrected by cuts, it is corrected by economic growth. And the big problem is that we didn't have economic growth for 15 years. Perhaps this is the background for the entire early 2000s, when the debt ratio decreased. We reached a fairly low level by 2008. But Nalle, we have had a bourgeois majority in parliament for 50 years. We now have a bourgeois government again. And you are of the opinion that nothing seems to change. So what's wrong with the bourge

ois? Have they become completely toothless? Are we somehow permanently drawn into this kind of statism, a belief in the state? What is this about? Well, you yourself gave me a paper once a long time ago, which was about Koste-EU's attitude measurements, in which, somewhat simplified, it appeared that a Finnish member of the Communist Party thinks roughly in the same way as the Swedish legal todemari. I'll simplify a bit. And that's pretty much true. I myself have used a phase transition from thi

s treatment. In other words, there has been a similar phase shift of three steps to the left in Finnish politics. Because it's not just the Conservatives who think differently than their Swedish or British counterparts. The same principle applies to all other parties. Well, it is. And this is why even in Finland you don't hear opinions, i.e. the political speech. That moment, when it comes, everyone else will gather together and say loudly and in a deep condemning voice. That's ideological talk.

As if ideology or opinion is a forbidden feature in political debate. A small addition. I have a little hope now that things will change soon, and it will change for two reasons. We have a bourgeois government that, for the first time in 15 or at least 13 years, understands that the situation is serious, and also partially understands why it is serious, and approximately what should be done. Secondly, I have the impression that even the Dems are beginning to understand that they don't want to t

ake responsibility for what's left after 3.5 years . They talked about the toothless Finnish coalition members, who apparently don't all really understand what the market economy is all about. Now let's take the other side. However, isn't it the case that there are groups on the Dunerik side who somehow know a thing or two about the market economy, partly only because Siberia has taught them. Perhaps those parties can be found more easily in the export sector than in other sectors. That's certai

nly the case. The only problem is that we have given power to their highest representatives, i.e. the trade union movement, in a completely directionless way in terms of state law. And from there, that word doesn't always get through particularly effectively. We actually know that the individual AY leaders, many of them understand that something needs to be done, but when you put them all in the same room, that leading shared vision is something else entirely. It's a sad thing, but I think that,

especially on the left wing, after this four-year social-democratic euphoria, which now mainly documents for Paris Fashion Week and other significant European events, after that euphoria, we have now moved to a stage where I would hope that on Paasivuoeri street they will engage in investigation and fund raising themselves . What kind of change force or change agent do you consider basic Finns to be, if at all? If you ask me about the party, as an institution and as a structure, I would say nei

ther. But if you start talking to me about individuals, and I'm not going to start listing them here, I'd be inclined to say that something very significant has happened there. After the populism of Timo Soin, part of the leadership of basic Finns today is the intellectual Finnish political leadership, which is what you can find in the Finnish party field. Even from a formal educational background, there are n't an awful lot of these researchers of Slavic philology elsewhere. And of course Jussi

Halla-aho is not the only person I am referring to. In fact, to say the least, I would say that the leadership of Basic Finns is a very fresh breath in the musty Finnish political debate room. Let's go from politics to the economy and maybe now to the national economy for a moment. That part of researchers, who are interested in and have studied innovations in economic growth, there has actually been a growing and deepening concern for several years that this market economy is starting to funct

ion worse than before. In other words, the reason is that this kind of concentration is happening both globally and within nations . The competition begins to freeze and then it is a rich literature that shows that if the competition in this dynamic sense freezes, then the first things that happen are these less useful innovations. How about you, since you've been to quite a few markets now , can you think of any industries where this competition, specifically dynamic competition, has seemed to

weaken, and then are there any similar industries where the situation has been okay or even improved ? In a way, I understand this concern, because I don't live in a wonderful time when the top five or ten largest companies in the American stock market index, they didn't exist 20 years ago, and they are absolutely gigantic, huge companies, when this good old IBM syndrome begins to update again. If I say it in a business-like way, it's like giving you a taste of how I think about this. I'm comple

tely convinced that European regulatory madness is ten times more dangerous for competition and the economy than American monopolies, if I'm joking a little. In my opinion, bureaucracy and over-regulation, especially senseless over-regulation, promoted in an unconstitutional way by the European Parliament, which is made up of politicians who have one thing in common, namely that in their home countries they are exactly the politicians that everyone else wanted to get rid of and that's why they c

hose Brussels. Parliament has created itself a mechanism where these politicians who are unpopular in their own countries enact even more unpopular regulations in their own countries, which, moreover, are based on a complete lack of understanding of how, say, forestry or something similar works. So, for me, the big obstacle and a big danger factor in the development of the competitive economy and the development of the open market economy, the liberal market economy, is indeed regulation, and no

t the American junk companies. Finally, if I were to say that I look at the performance of the economy and admit that we are still talking about a relatively short period of time, let's say ten years or something like that, then in a way the performance of the American economy gives a little support to this argument of mine, because it is shown to be more dynamic there than it is here in Europe. You said that in an unconstitutional way, i.e. in a way that is against the constitution. What did yo

u mean by that? The way the EU was sold, at least to those of us who voted in 1995, but also otherwise, was not truthful to what we see of the EU today. The parliament does everything to make the EU a federal state, and it works when the federal parliament tries to take away as much power as possible, especially from the Commission, to some extent even from the Council of Europe. This is what I mean when I say this is unconstitutional. The EU does not have a constitution, so I cannot legally pro

ve this , but I claim that this combination, that the people who are wanted to get rid of in the member states are elected to the parliament, because more and more power has been constantly transferred, it has been unhealthy, which will create a situation in Europe that is threatening from the point of view of competitors, markets and open European exchange . That important point, in fact, this research has drawn attention to the fact that even measuring competition is a challenging thing, and p

erhaps the traditional measurement that has been rooted in these concentration indices is exactly the economists who have said that this is not quite the right way. The dynamic aspect in particular is a good measure, that it doesn't hurt for someone to be in a decisive market position for a while , if it's only for a moment or short-term. I actually wrote a book in 1980 and did this kind of econometric research on the entire Finnish economy, trivial, interval, econometric, well, multivariate, bu

t in every case, where I just used concentration measures and other things to explain, for example, profitability differences and all sorts of other things, which at that time was made. And for this reason, since I have done all this, I can say that it is essentially zero research. The metrics we have about the institutional determinants of competition, i.e. the market structure, those metrics don't come from anywhere, but in a really dynamic world we want to get an idea of ​​which competition,

which market works and which doesn't. But that's all I can say is that progress has been made and there is probably still a long way to go. Arguably, probably so. And then, at some point, it will start to show in the activities of the competition agency as well, if we are optimists. That requires quite a lot of optimism. There was a song about 20 families, it was a classic of the fighter era and you probably knew it when you were young. You write in this book that entrepreneurship does not seem

to be hereditary , or at least the gene carrying it is not dominant. This is quite a lot to say, to put it bluntly. Is favoring family inheritance a case of ineffectiveness ? After all, a family company is in itself a completely sane construction in the light of modern financial theory . Modern financial theory tells you one undeniable thing and that is that you should always diversify your investments. That is its core conclusion. And of course, in a family company, this is not possible by defi

nition. In this sense, the family company is an absurd construction from the very beginning and completely regardless of the additional problems that may arise from the change of generations. The family company has been the core institution of industrial development and prosperity in Finland, as in many other western countries . But it is an institution that largely belongs to the past. As I say in that book, most smart families have long ago converted their family company in one way or another

into an investment or holding company making diversified investments . And it is a natural development, because no one should put all the many in one nest. When we add to this the fact that in a family company, especially one where management has not been handed over to an external professional manager, this kind of competence issue often arises. So I would be inclined to repeat what I say in my book. It's rarely a winning combination. It works very well in slow-moving, technologically slow-movi

ng industries like agriculture, which I have nothing against, that the farm goes from the big boy, because the productivity differences between good and bad grain are quite small. As it must have been for you. As it seems to have gone with us. But when we are talking about a business that is perhaps a bit more modern, more diverse and requires more individual management and development contributions , then this is already a somewhat challenging form of doing business for this family company. But

if we go back to these wealthy people. After all, we still have some people who are wealthy because Zaari has treated their ancestors somewhat kindly in the 19th century. And now they have, as it were, financial power. Yes, there are so few of them. Okay, that's not a problem anymore. But besides these, maybe there will be others. The advantage of these is of course, they want of course, that taxation and all the incentives of the public Vallo work in such a way that the property then remains i

n the family and a dynasty can be built. And then one, I know of at least one such political action, which can be used to dismantle these dynasties, as it were, or keep them in check, and that is the inheritance tax. At the same time, however, there has been a critical inheritance tax apparently with these incentive consequences. I was an economist, it's been a long time since I officially called myself an economist, it's been 40 years. In principle, I think that the inheritance tax was, as the

Americans say, a lump sum tax, that is, a lump sum tax that does not affect financial allocation, that is, decisions to work or not to work or to spend in this or that way. And that it was therefore quite ok in a way. Jussi Latvala-altta It is a worse tax than many other taxes. Just like that, just like that. Now that I've been watching this myself from a truly non -academic ivory tower, I'm down there in the trenches of inheritance tax. I have noticed that this is a completely wrong conclusion,

because inheritance tax is very easy to circumvent. And the consequences of that evasion are catastrophically expensive for the Finnish tax base, because the easiest way to avoid inheritance tax is to move abroad. And that move is so easy today, because in Europe, about half of the countries have already eliminated inheritance tax. And this is the problem, that when a wealthy family or individual starts planning an inheritance and moves abroad, it's not just the inheritance tax, it's all the ot

her taxes. All capital income taxes, if he is still in the dune, then income taxes and so on. Then this unfortunate inheritance tax produces the effect that a lot of other tax income disappears from it. Even more fades from there. If we compare Finland and Sweden, we notice that in Sweden, in fact, the removal of the inheritance tax has led to capitalists moving back to Sweden, Holland and London. As a result, this may be difficult for economists to explain, but I have an economic explanation. T

hey actually invest a little more in Sweden than this cold international capitalist. In Sweden, there is still a lot of techno- entrepreneurship financed by local capitalists , as well as traditional factory industry, which has been sold less to distant Asian countries than to Finland. And now an economic explanation, before then, so that you don't believe that this is just the irrationality of capitalism. In fact, the risks when you invest somewhere in the nearby terrain that you can control al

most physically. You can visit those techno-jeeps. Jussi Latvala-Aaltonen Jussi Latvala-Aaltonen Information management ability. That's right, information. I tried to avoid such fine things. Jussi Latvala-Aaltonen Oh, that was a real F book, we try to avoid it. There is a perfectly reasonable explanation for that when I look at my son, who travels once a month to India and China to look at our investments. That's where I start to understand this better, because it's quite tiring to go and look a

t these distant investments. But you are of the opinion that these sheep that have run away from the herd could be brought back, for example by raising the inheritance tax or removing it. However, you yourself would not return from Stockholm with this power. What keeps you there? You should never say never. But now I have to say, unfortunately. In fact, I have been asked several times, including heavyweight political influences, and some civil servant has asked, tell me now, what kind of tax ref

orm would get you back. And I said I have to be honest. To forget me. It went. And it's because both my children and grandchildren live somewhere else. The idea that all the family and others are here, it doesn't get to me. So we need to depressionify your question. The fact is that Sweden experienced a dramatic exodus in the 70s, when I'm told 40,000 Swedes moved to England alone. I don't know if it needs to be told otherwise. Kappa with you, probably. Well, yes, but something like that. Englan

d is a special country because you get a 15-year tax exemption for all foreign income there. No questions asked, sort of. And a very large number of them have moved back in the last two decades. Or during 15 years, when taxation has been changed. So, Matti, in answer to my question. Yes, you can get these capitals back. You can rebuild a working, domestic, national, blue-and-white capitalism. But that requires tax changes. And it doesn't just mean reforming the inheritance tax. It requires a lit

tle more. Let's go back to this recent quote, where in its light it sounds a bit like the central driver of the class that actually owns through inheritance is fear. So the fear of losing the way of life, losing respect, there will be no more invitations. Is fear a regressive state of consciousness? How is it reflected in the market? Well, it's probably fear. Fear may be regressive, but the line drawn between fear and wisdom is well drawn. I mean what is fear and what is wisdom. If I wanted to b

e politically correct and if I wanted to be sure that I wouldn't offend any of my Finnish-Swedish friends, who have lived their whole lives as a smaller partner in a family company, then of course I would have spoken more out of wisdom than fear. But the problem is the same. So, of course, from the point of view of a wealthy person, the biggest worry is always the loss of wealth. It's not amazing. I was thinking of you both. What is your greatest asset? And I think we end up pretty quickly that

it's your human capital. It was the same for all of us, once upon a time, wasn't it? I'm so much older than you that it starts to be that and that, but anyway. It was beautifully said that we only have this scumbag and we're going to try to slip on it now. If you tell a person a scenario and tell them that there is such and such a high chance that some action outside of their control is going to rob them of their personal human capital. That's a terrible thing, isn't it? Of course you are afraid

of it. In exactly the same way, a person who, in addition to this human capital, has monetary capital. Of course it's a terrible thing for him. Just like if our ability to act was taken away from us. Yes, I'm afraid of lobotomy too. Just like this. A lobotomy is a distinct possibility. I can come up with even worse ones. How are your Swedish-Swedish friends? After all, we don't have large family-based investment institutions. We don't have Investor, Aktie, Boolaaget and Wallenberg. In Sweden, a

nd this won't even happen right away. In Sweden, the money passed down in this family seems to do a little better than here. As I recall, I also think that even these current Wallenbergs are quite smart people. Are we Finns somehow weaker in subjects? No, but this involves a bit of scaling. It may not be so central, but it's a fact. Large capitals can be used very well. They have to be lived in symbiosis with great innovation or entrepreneurship, creativity, whatever you want to call it . And th

ey kind of walk hand in hand symbiotically, helping each other. If you look at the difference between Finland and Sweden, for example in the new economy in this techno environment. In Finland, people often talk about the fact that Finns sell their companies way too early, but somehow they immediately start looking for some kind of population genetic explanation for this, which I think is nonsense. There is a very simple reason. It is the fact that there are far more risk-taking capitalists in Sw

eden than in Finland. That is, this kind of technopreneur who has just received an offer from an American fund that will pay so and so many millions for his company. He can turn to someone, he just has to open Dagens Industrii, and he can list these names and the family investment companies that he can turn to and say that I have now been promised this amount of dollars, do you possibly want to make an offer. Then he often makes such a deal that this Swedish family company, whether he is the Inv

estor or something smaller, buys a third or 40 percent of his company. He will still remain there, and it will remain owned by the Swede. When here, in the absence of these capitalists, these Finnish technopreneurs all too often take it up on the American's offer and say, fine, that's it, and let it go. There were many things that appealed to me when I read this , and of course, as an economist, one of the things that appealed to me was these radical innovations. When I have studied and taught t

his, it is said both in theory and in practice that this old money in itself is not incapable of producing innovation. But often the innovation activities of the old money are directed to a slightly different type than the new money. This is not about evil or stupidity, but can be a rational actor. I now found a concrete example of what we are theoretically talking about there. There is a literature that talks about the fact that some of the innovations with their purpose , especially when talki

ng about money, their task is not so much to generate well-being for customers, but they focus more defensively on trying to prevent new companies from entering the market. Have you noticed this type of bias, that there in the old capital , we think more about how to directly prevent new ones from coming? I can't claim that I can think of any good examples of that, and I would argue that it's a rather marginal phenomenon, which doesn't mean that my argument is wrong. There is another thing, whic

h in my opinion is much more usual, although it may not be quite everyday either. It is, of course, that old money, if we use this concept, usually has a lot of interests in the old economy here and there. Radical investments are often characterized by the fact that they sweep some sector of the old economy under the carpet , and it is not true that Amazon took away the store and vice versa. And of course, old money has a perfectly rational reason not to fund projects that potentially create tec

hnology that sweeps the rug from under their feet in an area where they have a lot of investments. If you own, for example, department stores or something similar, that you want to finance like Jeff Bezos, not true, to take a trivial example, but you can develop many more examples for this reason. Of course, there must also be sources of capital that would take care of it, pull them under the rug from a large established company that happens to own it, an investor or someone else. Yes, in econom

ics the term is used when you are old capital, you have different production lines. If you innovate, you cannibalize some of your own production activities. And a young person doesn't have this. This is what we have seen concretely in car manufacturing. Nalla, this kind of question is a bit more personal. What do you think explains the success of these new successful people in today's world? We are talking about these innovators that everyone desperately needs . When economic research says that

really the only thing we can sift through is that you have to have pretty good mathematical abilities, and you have to have good social interaction skills. The combination of these is the killer application. This math side is probably pretty clear. How do you think these social interaction skills mean in business? In the terminology of economics, it is about an information network. If you want to come up with a good idea, be it a merger or something similar, that is, an organizational idea or a

good investment target, then of course your position in the information network and the extent of that network are decisive for its operational efficiency. Then what determines in you, me, a normal person, the amount of information it receives in this network? One important element of it is how many people are comfortable with it, sitting and chatting with this person and offering them ideas, insights, bits of information. This is what is probably called sociality in research or something simila

r. It is very easy to understand that a person who is able to swim in this network of information effectively and collect those pieces will be more successful. Then the math probably comes in there. I'm not sure that mathematics as a technical science. Perhaps there is a broader logic. Just like this. There is logic, cold judgment and drawing a rational conclusion. Trust calculation. Yeah, something like this. We've probably all encountered natural social networks like this at some point in our

lives , which are in the lounge lizard category, as the Americans say, who just have this social characteristic, and none of what you call mathematics. They usually don't succeed either. Then we have met these pure mathematicians, who of course can make great mathematical conclusions and papers. But you don't go to the cabin and sauna with them. Just like this. I think it's actually a pretty good way to say that being successful is some kind of combination of rationality and sociality. Good. Fin

ally, let's change the topic for a moment. Let's talk about a very current topic and look a little beyond the borders of Finland. Globally, what is happening now is that the US and China's technological political schism has led to the fact that industrial policy has come back with a bang. The Americans have gone for it, and their reaction has been reflected in Europe. Macron was the first to start demanding state subsidies for French companies here . The Germans have realized that they have fall

en behind in technological product development. Now they are trying to straighten back to the top with massive government subsidies. Here it seems that this is such a race. The race was near the bottom. What do you think? You see that this policy works in such a way that those who have money have now moved to inefficient, reckless investment, and a large part of the rest, and these rest of us include the small countries of northern Europe, so let's keep a close eye on what is happening here. Of

course, the description of this is correct, and such a development in this direction is clearly noticeable and has been seen. However, I don't agree that it's such a wild translation. I say this with the experience that I have gained a little from the industry, when I chaired the company UPM10 for a long time, which has a lot of business in Germany, as a side effect of which I got to know a little about different forms of state and other support in Germany, and without going into details. I can

only promise you that there have been massive ones before. Germany, like France, has specialized in the EU to invent some general concept under which they can hide the subsidy measures they want and claim that they are all approved by the EU. From Germany there has been Energivende, i.e. energy transfer, which is now bankrupt because it turned out that the transfer went in the wrong direction. But that's another matter. Under Energivende, industry in Germany has been supported with billions in t

he most diverse ways. Now I don't even have to go to France, where you don't necessarily always come up with cool concepts. The French are more flexible than the Germans. You don't need to come up with fancy concepts, they just subsidize anyway. With a weak result, if I can say that the French economy is not in good shape and the French industry is in even worse shape, especially in the north of France, I would not be worried. History teaches us that economic policies guided by state interventio

n and support always lead to disaster. If you are involved in a disaster, you should be worried. You are involved in a much bigger disaster, which is Finland and AB. My main concern is that this is a minor disaster in comparison. What can OOI, Finland and AB do? We cannot start sowing billions. We have a very simple solution. Which is? The Irish Way. Elaborate a little. There are four countries in Europe with a structural weakness in competitiveness. They are border countries. Greece, Portugal,

Ireland and Finland. They all have higher transport costs. They've all been in the bigger neighbor's back yard, haven't they, and that's it. Greece, it became a mess early on, and now it is quietly emerging from Kuopa. Portugal and Ireland decided a long time ago that the only way to survive here is to compete even more aggressively than the others. Finland is the only one in this group that hasn't realized that they are competing with Finland through taxation and regulation. Ireland has attract

ed a huge number of American companies and their European holding companies, group companies, which has produced an absolutely incredible renaissance for Ireland, because at the same time it has produced a huge number of companies being born in the Dublin area and so on. Portugal, as we know from this isolated Finnish debate, tax compliance, has invested a lot in upper middle class tax compliance and thus has moved forward with less success than Ireland. Ireland's concept is better. Now Italy an

d many others have joined that competition . The myth that Europe somehow keeps tax competition under control is completely empty. In fact, the tax competition has become even tougher in Europe and Finland doesn't even seem to understand what kind of competition is going on. The fact is that in Finland, as in many other countries, industrial policy is now being feverishly planned. I don't know, I'm sure the officials have also asked you what tunings you need for it. Did I understand correctly th

at your answer is that both industrial policy, which you want to define quite broadly, would then be these tax relief lines? It probably won't be. Maybe it should be, but it won't be. That's why I asked. Fortunately, there is so little money in Finland that there are direct subsidies for this work, I mean there is not enough money in the state budget, so I doubt now that this will not mean a big change in one direction or the other. I am so old, as it has become customary for me to say these day

s, that I still remember the picture tube factory Valko, which was the end point for the social democratic activist industrial policy. I do not hope for a new White in Finland. This is a perfectly clear matter. This is now getting sadly close, this sad discussion about business subsidies and other things. We know how difficult it is to measure where was there. As it was talked about at the time, I reminded that I don't live in this kind of economists' first mess world, i.e. a perfect market econ

omy, but we compete with countries, such as Germany, which messes up the price formation of the market economy in many ways, in which case we have to participate in it to some extent, in what way, where. One thing I am sure of, the state is a lousy investor and the state is a lousy entrepreneur. It comes down to a very simple thing. It is due to the fact that the state agent, which is either a politician or a civil servant, has a completely different income distribution than the state, i.e. the

common income distribution of all taxpayers. It's very simple. Think about it yourself. If an investment is really successful, the politician and civil servant does not get the slightest bit from it, it is considered completely wrong if he gets it from it. On the other hand, if it goes even a little wrong, he gets fired immediately. This means that his income distribution is completely different and much more uneven. It is both slanted and its peak is at the very other end. He makes completely d

ifferent decisions than what he should do in the interest of the taxpayers. This is why he avoids risks. He makes stupid decisions just so he doesn't have to pay this downside, i.e. to get fired. The Chinese have visibly marketed themselves. They have announced investment projects. This Kotka is a planned battery factory investment of a couple of billions. I, and many others, wonder that when we were doing laundry from the Russian stores in recent years, we wondered at what point we would have s

tarted to break away. Do you see any concern about what we will think five or ten years from now in terms of solutions regarding China? First of all, it should be said that I have said before and I repeat it now , that in my eyes a large part of the so-called green transition and related investments, on the one hand wind power, on the other hand hydrogen production, is complete nonsense. It's bullshit in two ways. Not all technology works the way politicians think. It will lead to disaster, thro

ugh wind power overbuilding and bankruptcies. Producing hydrogen is not a particularly efficient energy storage process. We can talk more about that. Another aspect that worries me is, of course, that this kind of promise to start supporting or helping some part of the economic life, such as the green transition, immediately backfires. It's like fly paper. It usually attracts the fastest, but also the most unreliable international investors. If we take your Chinese aspect, in Finland there is su

ch a person's idea that as soon as it is Chinese, it means that it is an investor with some kind of guarantee stamp of the Beijing Central Committee. It's not like that. I myself have dealt with a Chinese investor very close to the Central Committee of the Communist Party of China , who I heard is now serving 18 years in prison in Beijing. He wanted to buy various companies from me, but it turned out that his business skills weren't quite up to that level. Then, when the keys were taken away fro

m him, his Anbang company then had a balance sheet of 315 billion dollars and just under a billion in capital, and you can guess what happened to that. These Chinese entrepreneurs are not representatives of the Chinese central government. They are entrepreneurs, and often have to bear the consequences of their failure in a rather strict way . If we look at other investors who are now coming to Finland. We have these two men sitting in Kaljuhanni, Oslo, in a small office without a penny of capita

l, who have promised a steel factory in Inkoose, and there are many more. We have to remember that the water carried rarely stays in the well. If we now try to attract the world's market economy or world capitalism and the most agile investors, and we think that these will bring a new tomorrow for Finland, then I am very afraid that we are on the wrong path. Christmas Nalla, it's nice that you seem quite calm, even optimistic. You don't believe that the EU will fall apart due to the new arrival

of industrial policy, that there will be some internal corruption, and we are in deep trouble in the EU. You don't think the Chinese are as dangerous now as they are generally thought. The world seems to be pretty well under control. I just have to fix that EU, I'm absolutely sure that the EU will fall apart, but it will take 20-30 years, and it won't fall apart due to industrial policy. That's why I'm very happy at the moment , because in 30 years I won't have to worry about the EU falling apar

t. Jussi Latvala Bjoern Walrus, we really appreciate that you came as our guest today. Thanks for this discussion and gud jul. Thank you and Merry Christmas. Merry Christmas.