Helsinki Economics and Politics Seminar

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The Departments of Political Science and of Economics at the University of Helsinki recently held a seminar entitled “Economics: Challenges for Political, Philosophical and Historical Research”. The motivation was a reorganisation of the University that will combine these two Departments. The flyer for the seminar advertised it in the following manner:

This seminar, organized jointly by the Department of Political Science, Department of Economics and Centre of Excellence on Global Governance Research, will start with reflections on the role of economics and economic studies.

  • Can we combine economics and politics through political economy?
  • Have political and economic studies neglected history?
  • How can different methodological tools be combined?

One of the contexts for the seminar is the creation of the new Department of Economic and Political Studies at the University of Helsinki. More generally, we hope to contribute to theoretical and political debates on how to explain recent and future changes in global capitalism.

I was invited to put the perspective of economists who are critical of neoclassical economics, while the perspective of those favourably disposed to this school of thought was put by Professor Vesa Kanniainen from the Department of Economics at the University of Helsinki. The other speakers were:

  • Isabella Bakker, Professor of Political Science, York University;
  • Susanna Fellman, Professor of Economic History, University of Helsinki;
  • Uskali Mäki, Academy Professor of Philosophy, University of Helsinki; and
  • Heikki Patomäki, Innovation Professor of Human Security, Globalizations and Global Institutions, RMIT University.

The seminar was chaired by Teivo Teivainen, Professor of World Politics, University of Helsinki.

I videotaped the talks, and also made an audio recording–the latter includes about an hour’s discussion that was not recorded on video (since my camera’s battery ran out). The presentations and the discussions should be of interest to anyone who is curious about the capacity of economics to reform itself in the light of the global financial crisis, and the failure of neoclassical economics to anticipate this event.

The recording is in three segments: from the introductions and opening address by Vesa to most of the way through my talk:

Steve Keen's Debtwatch Podcast 

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From the end of my talk to that by Uskali Mäki:

Steve Keen's Debtwatch Podcast 

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And from Uskali Mäki till the end of the speeches

Steve Keen's Debtwatch Podcast 

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Discussion then followed for roughly an hour; all the preceding speeches and this last hour of discussion is recorded in the following audio file:

Steve Keen's Debtwatch Podcast


The Powerpoint file for my presentation is available here.

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243 Responses to Helsinki Economics and Politics Seminar

  1. bb says:

    Hi Debtjunkies

    “Excess new supply is not the only requirement for a bubble – the RBA recently admitted that in 2006 we had 8% more houses THAN households”

    I think this comment was sourced to the 2006 Census (please correct me if I’m wrong).

    I think the census data suggest 8% of housholds were vacant on census night (again, please correct me if I’m wrong).

    If I am right, these last three words change the quote significantly.

    For instance, on average 4% of all households should be vacant at any one time (4 weeks holiday per year over 52 weeks x say 50% chance of going away). One must also take into account single people working late, or going out, some people not filling out the census, and natural vanacy required for a functioning market.

    I think this 8% vacant number is no difference to previous census data going back to 1975. Again I don’t have all the data so I am happy to be corrected on these points.

  2. bb says:

    ak / debtJ / BTB / pb / Mech Eng / All

    Thanks for the feedback & Discussion – I have very much enjoyed it. Must go now and read some of ak’s & Mech Eng’s links so I can better contribute to the debate (and also do some real work).

  3. DrBob127 says:


    Thank you for your polite and robust discussion. I look forward to the next installment.

    Thank you to the other members (ak / debtJ / BTB / pb / Mech Eng / All) who have been feeding into the debate.

    I do appreciate the learning opportunity.

  4. debtjunkies says:

    bb @226,

    You are right about the reference to RBA and census data comments.

    If you are interested and have room to squeeze even more reading in, refer back to post 40, 53 & 56 of this blog entry.

    To anyone who has other links that bb may be interested in Im sure he would like the referral.

  5. ak says:


    “You must spend a lot of time thinking about this stuff”

    I missed an opportunity to make >100k by doing exactly nothing – holding on to my flat in Poland when I moved to Australia. I did not see the bubble forming there and I sold at the bottom of the cycle and at the bottom of the exchange rate PLN/AUD cycle – at the end of the artificial recession introduced in Poland to throttle inflation, just before joining the EU. I did not have to sell the flat then – but I wasn’t even remotely aware of the scale of these macro economical processes.

    I think that I have learned my lesson.

    I prefer to spend some time analysing the economy rather than have to swim against the tide again.

    I am generally quite concerned by the processes occurring in Australia but at least I am quite confident that my family should do reasonably well regardless what happens. We simply don’t do certain irresponsible things.

    Thank you for your contribution – by questioning common bearish views of the blog members you are forcing us to rethink the things again.

  6. Keating says:

    Mechanical Engineer @209

    I have been a builder in sydney for the last 15 years and from what I can see in the industry tradesmens wages have stagnated, eg: in 2000 bricklayers were charging $1000 per 1000 bricks layed, the other day I was getting companys only charging $920 per 1000, Also when i was an apprentice carpenters sub contract wages were around the $40-$45 per hour mark, my carpenters still only charge those rates.

    I think when you see tradies driving around in new utes its more a case of most of them being duped by the 50% investment allowance, and not the wages they earn,

    Another note on the price of building, It has gone up but not due to wage increases and certanly not builders profit margins eg: AV jennings marsterton homes are working on 2-5% profit for a new home, and considering the risks builders have to face these days that really is chicken feed.
    I beleive most of the price increase in building has come from government red tape and regulation BASIX, Home owners warrenty insurance, council fees and charges and of course the soaring cost of materials, the cost of steel rose 50% last year alone

  7. GSM says:

    Thanks very much Keating.

    Your comments just go to prove that Govt (all levels) are simply there to line their pockets at the trough filled with taxpayer money. One sure way of doing this is empire building. And bigger empires must create new rules and regulations- the more the better. That way the Empire justifies it’s existance.

    In a shrinking productive base, higher taxes (to pay down rising debt and fund the Govt “empires” and deficit spending) can become higly oppressive. That is where I am certain we are all headed – European levels of taxation but without the benefits. The test for this is simple: name one area or one single instance where you can find Govt CUTTING back real costs.

    Thought so.

  8. gaday says:

    Keating 231
    A very informative post. I agree that labour and earnings have taken an incredible decline. The standard of living has dropped over the years.
    I put this as the most important reason Howard lost the election.
    It was alright for the party to show great economical management skills and provide a surpluss however if one doesn’t address the cost of living standards the electorate will banish the conqueror so to speak.
    Productivity has not been rewarded, more so the leverage of finance through equity of property outstrips the ability of productivity to keep up with demand. Short cuts and inefficient and unqualified tradies enter the field.
    This in turn affects productivity, efficiency and increases malpractice. Bad debts and shonky workmanship increase the prices to the level of incompetency (correction of errors cost more than quality pricing)which eventually collapses the current labour market.
    You might have some suggestions as to how this can be corrected as I believe is is part of the problem and by no means the cause. There is no doubt that easy money, irresponsible lending is the cause. Dubai is classic in example. What waste.

  9. Paul Andrews says:


    I’m looking at the Mirvac annual report:

    Which margins in particular are you referring to? I’d like to take a closer look to see which factors may be impacting their margins and whether they are isolated to only land + development + building (on the expense side) and sales (on the income side).


  10. MechanicalEngineer says:

    Keating @ 231

    Thanks for the information. I appologise for the clumsy accusations in my previous post. I suspected that there was a large cost imposition on the building trades. (insurance was a prime suspect)

    Do you believe that the big developers are realy struggling to make a profit on the job, or is the profit disappearing into ‘overheads’ like executive pays?

  11. MechanicalEngineer says:

    bb @ 221,

    I see your point, It would be interesting to see a chart of ‘net debt’ with our super balances and like assets counted against the debt.

    I have read that the USA has a net debt, that is the richest country in the world has less savings than it owes. Can anyone confirm this? I wonder if Aus is in the same situation…

  12. Keating says:

    MechanicalEngineer @ 235

    In relation to big developers/residential project home builders, of course with any corparation large executive pay outs are a drain on profits, but from what I can see as I have many friends in the project home industry is that these companys rely on a huge turn over on very large estates to make a decent profit,( One house after the other )buying materials in bulk and srewing sub contracters down to the bare minimum.

    But even after all of this these guys are not making anywhere near what they used to, In my opinion the demand just isn’t there, the cost of a new build now exceeds the cost of buying an exsisting house in an established area.

    Basically the builder and the consumer are both getting screwed
    with the government, property investers and real estate agents riding this thing all the way to the bank.

    PS by no way am I saying that project home builders are the good guys either, there quality of work and basic ethics are shocking at the best of times!

  13. joshua says:

    Personally I have dealt with many builders and continue to do so with my sisters home. From my experience this is just another spin to justify the high prices.

    I can tell you that they have a decent profit margin. We did all our research and went for an upcoming builder who charges 30K less than the big builders and he is providing better alternatives (brick, ecobrick, tiles, colorbond) and quality (toilet tiles till the ceiling, better flooring, kitchen…., alfresco, driveway, landscaping, fencing, ducted aircon all included. The other builders only provide the basic house for 30K more everything else is extra.

    You would be looking at 25K~30K for the extras. there is no way for him to be surviving on a thin margin and a loss is out of the question. I have been dealing with builders for 1 year and 6 months. Cant understand why big builders increased their houses by 20K after the stimulus while an upcoming builder charges 30k less for the basic and in total around 60K less. You got to be kidding me mate.

  14. joshua says:

    “In my opinion the demand just isn’t there, the cost of a new build now exceeds the cost of buying an exsisting house in an established area”

    Furthermore the above statement is totally false with my research and own experience. Existing homes were around 30K extra to buy with lesser bed rooms and options( e.g is ducted ac, extra 2 bed rooms, bathroom or an extra bed room and media/study room) In fact it costs around 30K extra for a 3 bedroom house compared to building say a 5 bedroom house. Of course you can deduct 10K in interest over the course of construction so it comes out to 20K. This is the reason a lot of people went for building new homes because it did not make any sense to pay extra for what you could build for. I can provide with more details to back up my experience. I do agree that probably the land component(landcom/government)is the largest chunk of the price and everything is set to deliberately maintain property prices.

  15. Keating says:

    joshua @ 239

    I sorry mate but I don’t know who you are talking too, but they are taking you for a ride. For starters how do you know with only 1 1/2 years experience in just talking to builders what you are truly getting in relation to quality of production, true floor space ratios?

    I mean have taken in to consideration the cost of BASIX alone wich has added 10% – 15% on a new build since it was introduced.

    Are you telling me that ba project home builder with the buying capacity 100 times than that of your upcoming builder can’t give you a better price, You got to be kidding me mate where are you looking?

    @ 239 why are new building approvals dropping then?

    Why live in kellyville when you can live in balmain?

  16. joshua says:

    Keating @240,

    I agree the real estate agents and majority of the big builders are taking everyone for a ride. Initially we were told this story by every real estate agent dont go for construction because of the hidden cost and it will cost much more, interest, delays etc.

    Well, we have close friends who have built around Kellyville, Stanhope, Glenwood,Rouse Hill and Newbury (since 2003) who told us what to expect with hidden cost.

    Every big builder gave us a site cost of 25K for a flat back block of land except Eden Brae. Eden Brae said the site cost would be max 1.5K because the block is flat and they have built several homes in that area . Their price the same but did not include the driveway, ducted ac and fencing. Infact Eden brae gave us an estimate that came close without the turn key package.

    This builder said the same and the only variation will be the peering. Yes he has included the BASIX in the contract and everyone who has gone with them are very happy.

    In fact he was recommended by the sales lady at Landcomm based on feedback by many customers. Also, the colorbond sales lady looked at what he was giving us and she said it was good, his BASIX for the colorbond roofing was the top most range.

    Even Wincrest and Avjennings saw the initial estimate and said it was pretty good they were willing to throw in some freebies like either ducted A/C or extension of the the slab concrete slab at the back and front porch for no extra cost.

    I can definitely vouch for the quality and floor space mate because my dad had been an Architect/Interior Designer for 40 years and can distinguish a quality finish from the lousy work that most big builder charge. Infact my Dad did the plan and most builders would charge us 25K extra for a custom plan. If you are talking about the outside build the options are ecobrick with rendered finish, Austral or PGH bricks, CSR Monier Horizon tiles or Colorbond roofing. By the way I even got a quote of a double brick home from him and it was far less than the 24K quote I got from the other builders.

    I hope to start a blog when construction starts and document every stage of the project then everyone here can see who has been taken for a ride?

    Are you telling me that a project home builder with the buying capacity 100 times than that of your upcoming builder can’t give you a better price, You got to be kidding me mate where are you looking? Yes please see my post above.

    why are new building approvals dropping then? Well this was the case before the 24K grant was introduced and just after it was announced and then going up because of the effects of FHOG and low interest rates. With the full FHOG already elapsed and further to trimmed I believe this trend will continue with coupled with high interest rates. Please note I have always said here the cost of existing home jumped by almost 70K before the grant in this area because of the stimulus and people consider the 450 to 550K an entry market so there has been strong demand just because of FHOG. Most people I talk to dont prefer to build because they have been scared and brainwashed by the real estate agents and MSM.

    And I agree that Land prices are still the major component of the high prices considering the profit margins of builders to be a small component.

  17. Keating says:

    Ok but lets just consider if you didn’t want to build a Mc Mansion in the middle of the kellyville desert? that compared to a well established house in a nice residential area is like comparing cheese and chalk.

    Believe me the reason most people are not building is because it is too expensive, Why wouldn’t more property investors be developing and building new houses?

    And that in my opinion is why Demand is dropping and basically hasn’t been there in recent years, If all these builders are just ripping everybody off making large profits then why are they struggling to get new builds underway? because all they would have to do is lower there margins to lure home buyers, but the reason they don’t is because they can’t.

    Anyway I think all of this has been blown out of proportion, all I was trying to get across in my earlier posts was that the large costs in building new homes is not the result of builders profit margins and certainly not increases in tradesmens wages.

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