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Economic gurus foresee job market transformation, encourage AI investment

Finnish Nobel prize winner Bengt Holmström and banking mogul Björn Wahlroos held forth on Finland's state-of-the-state on Thursday, before receiving recognition for their work to galvanize the country's economic conversation.

Talousnobelisti Bengt Holmström (vas.) ja Sammon ja Nordean hallitusten puheenjohtaja Björn Wahlroos.
Bengt Holmström and Björn "Nalle" Wahlroos. Image: Jarno Kuusinen / AOP

This week the Finnish Chamber of Commerce awarded two of Finland's most influential figures in economics, Bengt Holmström and Björn Wahlroos, with achievement medals as part of a conference celebrating Finland's centennial. Holmström and Wahlroos produced sobering takeaways for the crowd of 1,200 movers and shakers that gathered to listen to their panel discussion. 

Bengt Holmström was the first Finn to receive the prestigious Nobel Prize for Economics last year, together with Oliver Hart. Holmström currently works as an economics professor at the Massachusetts Institute of Technology (MIT) in the US.

He told the audience that it's a misconception that development is always moving forward, as it is always possible that something will cause it to stall or even take a step back.

"Sometimes it can. Even the internet could suddenly stop, as we have seen in China," he said on Thursday.

He said it is also not far-fetched that bad times are ahead, as history has shown us.

"A political tragedy is a distinct possibility, and we must try and prevent this somehow" the Nobel prize-winner said.  

Nalle: Entire vocations wiped out

Björn Wahlroos is the chairman of the board for three multinational corporations, Sampo Bank, Nordea Bank and the Finnish forest product giant UPM. He previously worked as an economics professor at the Hanken School of Economics.

He told the audience that the current ways the world market organizes work are no longer sustainable, so it is imperative that a new system of societal profit sharing be found. Technological changes are quickly transforming both production and services.

"Simple algorithms are replacing some kinds of work. Soon there won't be jobs in these sectors. We saw this in agriculture long ago, and now it's happening in other professions," the banker said.

He raised the example of retail checkout counters.

"Finland's largest vocation is people who mind the till. Within five years, we'll have the technology to not only replace them, but also do the job better," Wahlroos said.

No need to panic though, he says, as new jobs are being created all the time.

"Almost all the new jobs in the US have been the result of new technology. But is other people, not people in traditional occupations, who are benefitting," he told the crowd.

Holmström: Children are the future

The problem with Finland today is that it is concentrating too much on the present at the expense of the future, the two men agreed. Holmström accused today's middle-aged population of being a selfish generation.

"Our parents fought in the wars and we have enjoyed the fruits of the rebuilding era. Now we are eating into the spoils that should be devoted to future generations," he said.

He also said that Finland's fiscal sustainability gap, combined with its increasing pension obligations, make it seem "unrealistic" that future generations in Finland will receive a pension. Decision-makers should spend most of their time thinking about how the status of Finland's young people can be improved, he said.

"University enrolment is down in Finland and alarm bells should be ringing," he said.

He says Finnish students tend to start their tertiary education at an older age. Sometimes it can take three years between when they finish upper secondary school and embark on further studies.

"Student then use seven years to complete a 4.5-year study programme, so ten years have passed before they have a degree."

Wahlroos: Make labour markets flexible

Widely recognized as one of Finland's biggest proponents of laissez-faire economics, Wahlroos says that Finland's projected growth of two percent this year is tenuous.

"After a decade of zero growth, we've got one year of progress. Sweden's economy has grown by 20 percent in the last ten years," he said.

He says Finland's concurrent unemployment and labour market shortages are to blame.

"Finland's system of social benefits makes it impossible to adapt wage levels to create new jobs," he said.

He says Finland's labour market institutions - union confederations and legislation on employment contracts – have run their course.  

"There's not just out of date, they are 25-30 years behind. And they didn't work then either," he says.

Nobel laureate: Invest in artificial intelligence

For his part, Nobel winner Holmström says that Finland should been paying more attention to the increasing significance of artificial intelligence. He says advances in this area make all manner of devices so easy to use that even children master them. 

"Combined with big data, the leap it will engender is extraordinary. Finland has to get on this train. The risk of missing it is just too great," he said.

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