I have noticed a creeping trend in the European press over the last 18 months or so claiming that Finland’s economic malaise, which continues to deteriorate, is nothing to do with the euro. The latest effort in this campaign of denial suggests that the real problem is the “the Finnish welfare state and society”. My view is as follows and it couldn’t be any clearer – whatever structural problems there are in the Finnish economy (following the decline of Nokia and the impending decline of its paper industry due to changing patterns with respect to newspaper consumption), Finland’s decline into the status of a Eurozone basket case along with Greece is all down to the euro and the ridiculous fiscal rules that prevent its government from countering a sharp decline in both the export revenue and private capital formation. Without the limitations imposed by euro membership, Finland would be in a position to stimulate its own economy just as it did during the bleak years of its recession in the early 1990s. Certainly, it would not be a sufficient condition just to exit the euro zone. The neo-liberal infestation that interprets the fiscal rules in the harshest manner (that is, denying even the minimal flexibility that is possible within the Stability and Growth Pact) an additional layer of the problem. But if Finland was to restore its own currency then at the political level the neo-liberal politicians would not be able to shift blame onto the Eurozone rules when they deliberately pushed up unemployment through unnecessary fiscal cuts. Then it would be more obvious that the political leadership was responsible which would bring the destructive neo-liberal tendencies into relief.…Bill Mitchell – billy blog
Finland’s problem is exactly the euro!
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia