Interesting this, from John Monks:
I wanted to urge the Greeks to copy the Finns who in the early 90s were faced with a sharp drop of 15% of GDP in their economy following the collapse of the Soviet Union but who produced an agreed national economic plan which put the economy back on the path to growth.
Mmmm, OK. So what did the Finns do?
In 1991 the Finnish economy fell into recession. This was caused by a combination of economic overheating, depressed markets with key trading partners (particularly the Swedish and Soviet markets) as well as local markets, slow growth with other trading partners, and the disappearance of the Soviet barter system. Stock market and housing prices declined by 50%. The growth in the 1980s was based on debt, and when the defaults began rolling in, GDP declined by 13% and unemployment increased from a virtual full employment to one fifth of the workforce. The crisis was amplified by trade unions\’ initial opposition to any reforms. Politicians struggled to cut spending and the public debt doubled to around 60% of GDP. Much of the economic growth in the 1980s was based on debt financing, and the debt defaults led to a savings and loan crisis. Total of over 10 billion euro were used to bail out failing banks, which led to banking sector consolidation. After devaluations the depression bottomed out in 1993.
Like other Nordic countries, Finland has modified its system of economic regulation since late 1980s. Financial and product market regulations were modified. Some state enterprises were privatized and some tax rates were altered.
Oh, they liberalised their economy did they?
As an economic environment, Finland\’s judiciary is efficient and effective. Finland is highly open to investment and free trade. Finland has top levels of economic freedom in many areas, although there is a heavy tax burden and inflexible job market. Finland is ranked 16th (ninth in Europe) in the 2008 Index of Economic Freedom.
Hmm, nice little classically liberal economy then underneath that layer of social democracy.
Economists attribute much growth to reforms in the product markets. According to OECD, only four EU-15 countries have less regulated product markets (UK, Ireland, Denmark and Sweden) and only one has less regulated financial markets (Denmark). Nordic countries were pioneers in liberalizing energy, postal, and other markets in Europe. The legal system is clear and business bureaucracy less than most countries. For instance, starting a business takes an average of 14 days, compared to the world average of 43 days and Denmark\’s average of 6 days. Property rights are well protected and contractual agreements are strictly honored. Finland is rated one of the least corrupted countries in Corruption Perceptions Index. Finland is rated 13th in the Ease of Doing Business Index. It indicates exceptional ease to trade across borders (5th), enforce contracts (7th), and close a business (5th)…
So, leaving aside the tax and rather stuffy labour market, they\’re pretty much straight up and down neo-liberal.
Yes, OK, then, I approve. Might be the only thing John Monks and I will ever agree upon. What Greece needs to be doing is just what the Finns did. Liberalise the economy, deregulate, neo-liberalise, get classically liberal on their arses.
Hey, works for me.