Clutter

If last year was the year of cleaning up my life financially as a part of the brief pro-bono stint to the non profit world of NGOs, the theme of this year has undoubtedly bean expanding that exercise to the realm of physical possessions. The housing co-op I've been living in from 2004 has finally pulled its act together and managed to begin the renovation of all the pipes and whatnot in the apartments. For me this in practice means vacating the premises for a good three months at least and packing my entire apartment up for the duration of the renovations.

The opportunity afforded by this change has naturally been to make a radical cleanup of most things. This, for me, has basically consisted mainly of getting rid of a ton of stuff. My wardrobe has, more or less, been reduced to a half of what it was. Most of the older electronic gizmos, laptops, etc. are out, along with a bulk of whatever happened to be in drawers and closets. The more stuff I've thrown out or given away, the better all of this is starting to feel. The counterpoint that some older people have raised has been that they would've in retrospect wanted to preserve some artefacts from their earlier lives. Sure, a nostalgic memorabilia are nice and everything, but more often than not it just adds to all the clutter. At least now for me preserving certain digital artefacts is more than enough; hard drive space is cheap, square meters are not.

Overall I think that this exercise has also highlighted what is important and what is not. In practice I've kept my books, some of my clothes, basic stuff needed for cooking and eating, sports gear (boxing stuff, clothes, kettlebell, ...), laptop (and phone, tablet, ...), hygiene gear, and that's more or less it. Now the real challenge will be to make the appropriate routines to try to preserve this type of lean approach, similar to the way how I've been keeping my financial footprint relatively small after getting things sorted out earlier. We'll see how this exercise will go.

Driving licenses in Finland

Starting last month the process for obtaining a driving license in Finland was changed again. The previous process consisted of two phases with the initial phase containing a bulk of the education and teaching. The second phase of the license consisted of some extra lessons and had to be attended within two years of getting the first phase license. Starting this year the amount of phases has been raised to three and the practicalities of all this are still fairly vague to me.

The multiphase systems have been always motivated by the desire to decrease the probability of young drivers to get into accidents. Proponents argue that more lessons will get young drivers to be more responsible and drive more safely. Perhaps so, but the flip side of the coin is that, well, this costs many more coins. Helsingin Sanomat, a Finnish newspaper, ran a story today where they had found that costs for the end customer obtaining a driving license had gone up by as much as 1 000 euros with the entire driving license costing at most around 3 000 euros.

At the same time we can take a look at the statistics provided by Statistics Finland. The chart in question visualizes the deaths in road accidents from 1970 to 2011, with the black line being total deaths, green line being age group of 25-64 years, yellow 15-24 years, and red 0-14 years.

So, to be honest, at least the mortality statistics do not really paint a very grim picture. The two-phase system was introduced in Finland in 1989 and the three-phase system now in 2013. However, I would venture a guess that a bulk of the decline in accidents can in fact be attributed to the improvement of car technology as well as the fact that Finns are finally buying newer cars with better safety equipment. Regardless, the trend is quite clear.

What, then, is the financial impact? Helsingin Sanomat mentions that on average the total cost for a license has gone up by around 600 euros. Over the past five years the yearly licenses granted have been quite steady at around 70 000, so with this single change the driving license industry has increased its revenues by a rather nice 42 million euros. Not too shabby when the current discourse is on how youngsters in cities are less likely to drive licenses these days as public transport coverage combined with limited parking spaces, high fuel costs, and whatnot make car ownership and operation not too attractive in the urban environment.

Only time will tell how the accident statistics evolve, but one thing is certain: the government has managed to quite nicely prop up an industry by bringing in added bureaucracy and legislation. I do not have statistics at hand, but a gut feeling would be that if road safety is something we want to improve, things like road design and maintenance, quality of cars, even speed limits would bring significant improvements to it. Of course maintenance of a road network is costly, but quality of cars can easily be improved by decreasing taxation of newer cars and offset by shifting taxation to fuels and speed limits can be changed by changing the sign on the side of the road.

Household taxation

The question of how much is enough has been a recurring thing recently in the Finnish press with different parts of society chipping in their two cents worth via comment sections in prominent local papers. On one hand better off individuals have shown up with statements that over 100k per year is enough for anyone while members of six person households have voiced their concerns that aggregate post-tax disposable household income of 9-10k per month is barely something that they can live on. Of course one of the key parameters here is the overall cost structure of your life, which I did not really care to get into here. However, one thing that does merit some comments is how to carry out the taxation.

Both in the aforementioned comment sections as well as in the sphere of people I know, there has been a somewhat interesting trend in people wishing to change from taxing individuals to taxing households. Supposedly this would be farer as it is not entirely uncommon in some families for one partner to earn very well with the other carrying a less well compensated occupation, which would result in the overall tax load of the family unit to be lower. The argument is precisely that: the family functions as a unit, so why not tax it as one.

The obvious reason why not to tax the family as a single unit is obviously precisely that: very many of the good and functioning parts of the Nordic systems have spawned from accepting individuals as the primary component in the equation. Think of it this way: taxing the family as a single unit will drop the tax for the high earner, but will on an individual level increase the barrier to do more work for the low earner as they would be subject to the same higher tax rate. Would this matter? If we accept the assumption of using the family as the unit of analysis, perhaps not, but families do tend to break apart and actively designing a system which demotivates one person from working will be problematic if the family breaks apart.

Moving away from the individual level, household taxation would also introduce problematic things in the context of income equality. I am personally not entirely convinced that income equality in itself is a very crucial or key component in assessing the health of society, but many people do. If we hold income equality important, we also do not want to introduce mechanisms to grow inequality, which would undoubtedly happen if the above is assumed to hold true.

On a slightly unrelated thought, I was recently talking with a friend of mine, and he was saying that one reason given for the relatively well functioning Nordic system is related to the family unit being relatively small. Without the need of maintaining a large direct and indirect family system to ensure survival, the flexibility afforded by a small core family will bring benefits on the level of the entire economy where people are able to move more freely without having to consider safety nets and similar. Of course all of this is afforded by the ability of the state to provide the safety net in an economically efficient way. It is yet to see how economically efficient we will be in the long run, but this idea certainly sounds quite interesting.