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Discussion - How to handle recession (lemmy.world)

submitted 16 hours ago by bigboismith@lemmy.world to c/progressivepolitics@lemmy.world

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Hello. I am personally not decided on how I think a government should handle a recession. I was wondering what you people think, preferably with historical presedence or other sources (if I wanted to know who screams the loudest I would just have asked Facebook :)

For this discussion, let's take Finland. The Finnish economy is not doing too good, and haven't really recovered since covid. The states income are about 80B€ while expenses are closer to 90B€ (rough numbers). The primary reason for this is because Finns are being fiscally conservative, with low confidence in the economy. There are two opinions on how to handle this:

Wait out the recession. Europe is recovering as well, and Finland is bound to catch up, even if they're falling behind. Cuts to the budget will just worsen the purchasing force of the workers and lower faith in the economy
Make cuts in the budget, trim fat where possible to avoid a debt spiral. It's important to make the budget break even, to not continue downwards. Paying of the debt will allow us to recover quicker.

What are you guys' opinions? Are you able to back them up more than "The violent revolution will solve this"?

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[–] Gradually_Adjusting@lemmy.world 2 points 15 hours ago (1 children)

Entirely fair - I don't know much in general, but I'm most familiar with the US and UK, where aside from failing to tax the rich, there are general issues with private equity gobbling up all the value in business and real estate. Does that happen in Finland too?

[–] bigboismith@lemmy.world 2 points 15 hours ago (1 children)

Not really, for example I recently learned that both property-tax (a yearly tax based on property value) and property-transfer-tax (a one time 3% tax on every property transaction) basically kills speculation on properties.

As a result, houses prices are actually humane (between 50k-300k, depending on age, surroundings, size, etc. To compare, the median income is roughly 45k per year).

Of course there is still a capitalist class, but they are nowhere as parasitic as they are in the US/UK. Though if that is due to the welfare culture or a thought out tax policy I can't say.

[–] Gradually_Adjusting@lemmy.world 1 points 14 hours ago

That's fantastic. Obviously there are still economic issues at play though, and it might just be the fact that Finland's economy is more fairly structured making it more realistically respond to the economic reality of COVID. It was a massive hit, and the economies that came out looking the healthiest are, imo, the ones that are faking it the hardest and relying on a lot of weird behaviours (further economic disparity, market irrationality, brutal consolidations of power, silencing of dissent, etc) to pull it off. The answer might just be to stay sane, trim the fat where possible, keep quietly rebuilding, and come out of it genuinely healthy while avoiding the booms and busts abroad.

Personally, having come from a more idealized American mindset I like the "New Deal" approach to recessions. A big spend upfront on investments in people, infrastructure, and land improvement will usually pay long-term dividends. I would love to see Finland attempt some version of a Green New Deal, or possibly something towards water purification in anticipation of fresh water scarcity later this century. Build sustainability and resilience to prevent future economic harms would be my advice.