Saturday, August 19, 2006

How propaganda works

A friend of mine wrote in his shared blog (in Finnish) that in Finland the tax-populism works inversely to the rest of the world.

His argument is that in most countries parties promise lower taxes, and that is a form of populism. However in Finland, he argues, tax-populism works in the other direction. He states that when Kokoomus (right-wing, economically liberal and socially conservative party) proposed a tax-cut in the previous elections it did so with good faith and with an appropriate study into the governments expenses, so that the tax cuts would be compatible with the well-fare system so ingrained in the Finnish culture.

He then goes on to argue that, because SDP (center-left, economically socialist-leaning and socially liberal party) stated that the well-fare state could not be maintained with the Kokoomus-proposed tax cuts, SDP was using a tax-populism technique by exploiting the "fear" that people have to loose the well-fare state that is not prevalent in Finland.

His argument can be seen as fair as there is in fact a consensus well-fare state in Finland that people indeed fear to loose (with good reasons as Kokoomus has been trumpeting the end of the well-fair system as have most economically liberal parties all over Europe).

However he forgets to mention that offer to reduce taxes is also a form of tax-populism, especially when it is not followed by concrete proposals on what will be cut if the economy does not grow as expected by the tax-cut proponents.

This missing piece of information (where will the cost-cuts be?) has been many times used to indeed destroy what is left of the well-fare state in some countries. USA comes to mind where "saving Medicare" together with tax-cuts that "require us to cut costs" have been used over and over again to reduce the support given to the least protected in society.

I would suggest that, in Finland, people's resistance to tax-cuts is due to their view that you should always be able to pay your debts without "borrowing" money (in this case money borrowed from a future-growing economy). This "no-borrowing" practice is very ingrained in the Finnish culture where people feel uncomfortable to have even a 20 year bank loan to buy a house, unlike other countries (like UK) where house loans now extend beyond 50 years.

Indeed, Henrik Ruso uses the word/term tax-populism to create an interesting form of propaganda, he tries to turn the opposite side's message (tax cuts imply loss of well-fare state) into "populism", when in fact Kokoomus is the populist party when it defends tax-cuts without mentioning where the costs will be cut should the economy not grow as much as expected.

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