The Secret to Finland's Success With Schools, Moms, Kids—and Everything

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Eero Järnefelt, Burning the Brushwood, 1893. (Wikimedia Commons)

The Finns didn't always have it this good. For much of the early 20th century, Finland was agrarian and underdeveloped, with a GDP per capita trailing other Nordic countries by 30 to 40 percent in 1900.

One advantage Finland did have, however, was enlightened policies towards gender. The country focused on beefing up child and maternal care in large part because women were at the core of Finland's independence and nation-building efforts at the turn of the 20th century. Finnish women were the second in the world to get the vote in 1906, and they were heavily represented in the country's first parliament.

Ellen Marakowitz, a lecturer at Columbia University who studies Finland, argues that because women helped form modern Finland, things like maternity leave and child benefits naturally shaped its welfare structure decades later.

"You have a state system that was built on issues concerning Finnish citizens, both men and women, rather than women's rights," she said. "Government was created in this equal footing for men and women."

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BBC

Finland's strong trade unions pioneered its initial worker protections, but the state soon took those functions over. Today, roughly 75 to 80 percent of Finns are union members (it's about 11 percent in the U.S.), and the groups dictate the salaries and working conditions for large swaths of the population.

And as the country worked to industrialize in the 1960s, its economic policymakers took on a mentality similar to that of CEOs at tech companies with awesome employee perks like free string cheese and massages.

"The thinking was, 'for a country of 5 million, we don't have many resources to waste. If people are happy, they'll maximize their work ethic, and we can develop,'" says Andrew Nestingen, a professor who leads the Finnish studies program at the University of Washington. The theory of the welfare state was that "everyone should get a slice of the cake so that they have what they need to realize their life projects."

The country's unemployment and disability system was in place by 1940, and subsequent decades saw the expansion of child benefits and health insurance.

Meanwhile, thanks to the country's strong agrarian tradition, the party that represents the rural part of Finland pushed through subsidies for stay-at-home (or stay-on-farm, in their case) mothers -- thus the current smorgasbord of inexpensive child-care options.

Over time, Finland was able to create its "cake" -- and give everyone a slice -- in large part because its investments in human capital and education paid off. In a sense, welfare worked for Finland, and they've never looked back.

"In the Finnish case, this has really been a part of our success story when it comes to economic growth and prosperity," said Susanna Fellman, a Finn who is now a professor of economic history at the University of Gothenburg in Sweden. "The free daycare and health-care has made it possible for two breadwinners -- women can make careers even if they have children. This is also something that promotes growth."

With this setup, Finns have incredible equality and very little poverty -- but they don't get to buy as much stuff. The OECD gives the U.S. a 10 when it comes to household income, the highest score, while Finland gets a measly 3.5.

And there are some major lifestyle differences: Finns live in houses and apartments that are about half the size of Americans', and their taxes on the wealthy, like those on capital gains, are much higher than ours. (Hence why taxes make up a huge chunk of their GDP.) Professionals such as doctors make far less there, which helps medical care to stay reasonably priced. (The conservative Heritage Foundation ranks Finland as downright "repressed" in some categories, like government spending, on its "Index of Economic Freedom.")

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Tax Policy Center

It's also worth noting that Finland isn't a total economic Wonderland, either: It's not growing very fast and will probably have issues with its aging population in coming years. The Bank of Finland recently predicted that the country might soon exceed the 60 percent debt-to-GDP ratio mandated by the European Union -- a common problem in Europe these days.

Some of Finland's more conservative politicians have suggested cutting public benefits there in the wake of the economic downturn -- but even with those cuts, social protections there would still be far more generous than ours.

And the economic redistribution there doesn't always work perfectly. Some municipalities inevitably find themselves with lower-quality hospitals and day cares, even when they're supposed to be roughly identical, and recently some pro-business groups have tried to edge the country toward greater privatization (though unions have pushed back.)

Still, the country's small, well-educated population and investments in technology have allowed it to avoid some of the problems currently plaguing other, similarly socialist European countries. Overall, most Finns love the welfare system that loves them back.

I asked my cousin's husband, Reijo, why he was willing to support such an arrangement even though he works full time.

"Money isn't everything. We value equality, not inequality," he said. Fair enough. But does he have any gripes about the Finnish way? Anything he would change? Perhaps kick some of those freeloaders off their indefinite unemployment?

No, he said, but he did point to one small issue: "I think that for university students it is not yet good enough. Many students have to work while they are studying."

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Like Finland, the U.S. also set up massive safety-net programs, in the form of Medicare and Medicaid, in the 1960s. But paradoxically, many Americans began developing a deep aversion to government handouts at the same time.

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Olga Khazan is a staff writer at The Atlantic, where she covers health.

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