Elina Lepomäki’s Transfluent Day talk

Elina Lepomäki, Member of Parliament, talking at the Transfluent Day Seminar, May 9, 2018 in Helsinki.

Elina’s new book, Vapauden Voitto, has just hit the #1 in book sales charts in Finland, so it was a perfect time to invite Elina on stage at Transfluent’s future seminar to explain her proposals of how to make Finland and Europe a better place for all of us.

Transcript

Jani: I’d like to invite to the stage a good friend of mine, a person who was one of the first investors in Transfluent. Someone who believed in in my vision from day one, who was on our board of directors.

Basically you could almost say a co-founder, at least a co-creator of Transfluent: Ms Elina Lepomäki!

Elina: So transfer to miss right way, that’s what a place like this makes, thanks so much Jani.

Actually it’s funny to be on the stage and be asking these pragmatic questions, such as do we have slides or no? Because I can do either either way…

Okey-dokey pizza-rokey as my daughter says. So is there anybody who doesn’t understand finish, because we can take this in Finnish obviously as well, because my intention was to speak a little bit about the book which has recently been published and also the future evolution of policy in this country and in Europe.

Anybody who doesn’t speak Finnish?  Okey-dokey pizza-rokey, as said I will continue in English then.

I think the main challenge we are facing as policymakers these days is, first of all, how to change and how to adopt the way we make policy. How do we make use of artificial intelligence? How do we make use of technology evolving around us? How do we make use of better understanding of knowledge in general?

And the second question I think we need to answer ourselves is, what do we mean by welfare? What is a welfare state in the future? Obviously historically the welfare state was founded on the grounds of transferring means, transferring money, whatever goods, from the rich to poor.

That was at least the basic founding idea. Whatever happened after that is a different implementation in all countries. But these days we are talking about a welfare state which does also this, but so many things which are very little — if at all — related to transferring means from rich to poor.

Actually if you look at Finland, 70% of the Social Security transfers taking place each year, 70% of those are from middle income and high income people to middle income and high income people.

Now, is that a problem?

It is a problem if it actually does dis-incentivize work, if it does dis-incentivize risk-taking, and if it does dis-incentivize making room for happiness and more life and opportunities, which are very individual or which every individual finds attracting to exploit his or her own life.

Now, what comes to the first bit of this, the problem of policymaking, I think this is something which we should focus a little bit more time on, because there’s a current or constant debate on whether politics is broken, that’s sort of “politiikka on rikki”, which tends to pop up in Finnish media every now and then, and also politicians tend to refer to that.

We have seen Trump, we have seen Brexit, we have seen all these events around the world. It’s not just related to Finland only, but what does it mean to be a political decision maker in this world, and how should we perhaps extend the role to a level which better serves its purpose, which is the happiness and the living standards of people, because that’s obviously what we are there for now.

I was giving a speech about artificial intelligence and policymaking this morning and I used as an example the difference between AI or intelligence, and simple automation, the fact that for instance in Finland where we have the tradition of majority governments, for almost 40 years now we’ve had a majority government, which basically means that every bit of legislation which comes into Parliament is directly passed.

The role of committees where MPs sit and scrutinize the legislation and listen to experts who give their thoughts on the new legislation. The the role of committees is basically just to let the legislation pass through and maybe change the place of a comma somewhere. And the role of a government MP – to put it bluntly — is to push the green button when the legislation is actually due to a vote. And the role of an opposition MP is to push the red button.

If we talk simply about automation, and it’s very easy, anybody here obviously and probably quite many of fellow MPs, could automize this process. But if we consider the possibilities of actual intelligent decision making then it’s something completely else.

Obviously, it concerns the process which happens before the legislation comes into Parliament, but also how the legislation is formed. And if we consider the the concept of Parliament and the concept of democracy, I think it’s very much linked to the fact that we should consider the individual values of the people who give their votes to somebody who is representing them in Parliament. And that is a mandate which is very difficult to give to a robot.

But what can be given to robots and what can be made use of more extensively is the knowledge and the learning within the process which technology allows us to do.

My proposal is to cut this story short – I know this sounds boring already now — and it’s becoming evening and a politician is speaking here, but my proposal is that in order to change Parliament, in order to change democratic decision-making, we should change the incentives of people in Parliament.

And in order to change the incentives of people we should make them less dependent on politics itself. My proposal is — and this is also a bit of the book — why not have instead of 200 MPs in Finland, why not have 600. Everyone’s going wow, even more of them! Yes, but make the work part-time, so that every single MP of the 600 does have a regular job to go to, which means they are not fully dependent on politics, if dependent at all. They can focus.

They can make use of the expertise that they build throughout their working life and their education and it automatically transfers the legislation process to a more project-based process, where we can actually make use of people’s knowledge, not just the few MPs who are in the committee making the legislation proposal in government in the first place, and a few experts who are utilized. But we could make use of a fully transparent open platform where more or less everybody in this country can contribute.

The platform would make it possible to value arguments against arguments and not just who is saying what. So, this is one proposal and the second good thing with this would be that there wouldn’t be any full-time politicians, which in itself allows for more — first of all transparency – and secondly allows for more democracy and for people decision-making on things which they consider important. And it wouldn’t make any difference how much we actually pay the MPs, which seems to be a regular concern in Finnish media.

They are paid too much or too little or whatever. We could just pay, I don’t know, a very small amount each year and it wouldn’t play a huge role anyway because everybody would be employed somewhere else.

The second thing which is attached to this — and I already mentioned making use of expertise — but if anybody knows Nassim Taleb and his concept of Skin in the Game, if you have skin in the game, if you are actually part of the real world, if you know what is happening in life, for instance what comes to technology, it is not just an abstract concept that you hear in some committee hearing from an expert coming in or telling what’s happening in the outside world, but you’re actually experiencing it yourself.

Or for instance if you’re laid off from your regular job, then it’s very very concrete and it would perhaps influence your decisions as a politician as well. So that’s about making democracy. There are plenty of more ideas related to this as well.

I’m not going to bore you with this, but the second topic I want to dig into a little bit as well before I let you go. The second concept or actually about 600 pages of the book, is more about how we should transform the Nordic welfare state and the model we have become used to, at least in this country, and actually around Europe as well.

What we know is that automation or traditional intelligence and technology as such it’s going to obviously change the job market in the future, as it is doing now and it’s done in the past as well. I’m not in the business of forecasting when some jobs will be replaced by robots or what kind of profession will be will be automated fully or partly and when that is going to happen. But what I’m concerned about is whether our society, and especially our welfare state, is prepared for that.

I think we need to transform the concept of the welfare state more or less totally. Instead of focusing on say companies, or enterprises, or industries, or organizations, or institutions we should focus on people.

Everybody’s like, well this is what the welfare state is for, right? But as I mentioned earlier, actually the majority of, for instance, transfers within our welfare system are nothing to do anymore with helping the poor.

And quite a huge chunk of not just the budget but of the legislation that is passed through, or that has been passed through in the past, is actually concerned with keeping something alive which wouldn’t otherwise be kept alive — and I’m not talking about people, because people should be kept alive — I’m talking about enterprises or industries or sectors.

There’s been a debate about about subsidies to industries in this country. A very heated debate. It’s very difficult for for politicians to let go of those subsidies. But there’s plenty of examples which actually doesn’t focus on the markets and how to enable better entry for new innovations, new companies, and which at the end of the day would benefit the consumer. Because the focus should be on the consumer.

That is the main main driving force in the book. The main purpose of legislation would need to be serving consumers by enabling transparent and functioning markets which do not discriminate against any participant in the market.

And I think in the future if we have better incentives for policy makers, this could actually be better achieved than it’s currently being achieved. What the welfare state should focus on, is to give everybody a platform independent of the background of the person, independent of whatever he or she has done previously, to always have the incentive to try and reach his or her own full potential.

It means that we need to have a basic income, which can be achieved these days for instance by securing a certain level of social security which is not dependent on whether or not the person is at work, or an entrepreneur, or a student, or whatever, which means simplifying our current system, but also making room for risk-taking in the form of whatever any person wants to do. We need lifelong learning.

And what I also speak about is that we need to make everybody a capitalist.

And capital is not just in the traditional sense that we need physical money — obviously — but what’s happening in our head. We need to have more focus on human capital in the future. What that means from policy perspective, for instance, is that we should stop discriminating against human capital versus traditional capital.

Take the example, probably quite many here have been coding in their lives, or know what software development is about, so these days if you write a software you won’t have to start from scratch. You can use a software which helps you in creating the software, at least finding bugs and this and that. So, what part of  that process is actually made by a human and what part is made by a robot?

It’s very hard to make the distinction today, and it’s even less easy to make that distinction in the future, which means that there is no reason why we should be taxing human labor more extensively than what we are taxing robots, because it just simply means that even though it’s obviously a good thing in the future if humans can focus more on interesting and nice things in life and on the happiness and all that, for instance studying whatever one wants to study, instead of further studying something which perhaps it’s made for making yourself a better employee.

So, it’s a good thing, but we’re not there just yet. So, why not give everybody the opportunity to flourish through their work and their own labor, to the extent they they want to do it.

Social Security, we need a more flexible labor market where everybody is able to, depending on whatever the background, whatever the skills, is able to negotiate or have have a union negotiate for themselves a salary and conditions of work, which are suitable.

And the government should always make sure that there is a floor and that there is the basic income each month that the person can count on. We to focus on taxes where, for instance if you hire a highly skilled professional these days in Finland, the tax wedge for that can be 100 percent.

Or you as a highly skilled professional — I’m not referring to myself, but perhaps quite many of you – the marginal tax rate that you pay is 60%, whereas if you hire a robot to do the same thing, if it’s possible, then the marginal tax rate can be much less than 30%. Why? I think in the future we need to harmonize the tax rates much much lower.

Another concept of this – or the last concept I promise – is that we should focus on transferring welfare in the future more through consumption than through transfers through the social system, because that is obviously happening already.

For instance, 10 years ago, nobody was able to — with any money of the world — or say 12 years ago, was able to buy an iPhone, because it hadn’t been invented yet. And the the amount of value we can buy with only a few euros these days – especially in products which are very technology intensive – it has grown so much over the past few decades.

And what will happen next is that we can buy with those euros even more services than we have been able in the past. So actually, with even less money, we can be much richer than we have ever been dreamt of being – and I haven’t finished those 700 pages, and I promise I won’t do it either – but there’s a lot of focus on how to transform the European Union, I think we should move on to a more federal Europe, and the life account, which is a key driver in my book, which is securing this social security, which is for lowering the tax wedge and harmonizing the tax between human capital and traditional capital, which is for the purpose of buying services, buying human labour, microtasks, entrepreneurship and all that.

We should make that a Pan-European concept and that’s why I’m working on the international edition of my book! And now I’m off the stage, thanks so much and have a nice evening!

 

Jani: Don’t go anywhere yet! Thank you so much Elina. So, here’s the book, hold it please. I want to tell you a little story. Just before this event we had the annual shareholders meeting of Transfluent, and an exciting thing that happened for us is, a person called Asko Schrey join our Board of Directors.

Asko — if you don’t know — is a really amazing Finnish entrepreneur. He started a company called Accountor, and he grew it by acquiring small accounting companies. He started small, like smaller than what Transfluent is today.

He has done more than a hundred acquisitions so far, and they’re doing like 300 million euros a year these days, and it’s hugely profitable. So he’s the kind of guy you want to have on your board if your intention is to do what we are doing, which is that we are acquiring small translation companies and we are building something big by doing that.

Asko joined the board, and it turns out that Asko is a big fan of Elina’s, so he asked me to ask Elina to sign a book for him, because he couldn’t be here today.

<question about audio book from the audience>

Elina: It’s not in the plans right now, but could be in the future. Put some pressure on the publisher!

Jani: Alright thank you so much for coming Elina!