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.
Yes, but you are talking about a time when the structural conditions for growth in the global economy were quite different from what they are now. The key growth industries are linked to developments in IT and global communications, new materials science, bio-technologies and environmental sciences. The big players able to indulge in long term investment for a later return will be the ones who will rise above the economic recession the fastest. Greece is nowhere in this scenario and Britain also lags behind As just one example, more money was spent in 2009 on mobile phone ring tones by the British public than was invested by the Government on their behalf oninany of these growth industries.
“..than was invested by the Government on their behalf [in] any of these growth industries”: but I don’t want the effing government investing on my behalf. I want it doing those few things that are better done collectively than individually, and then standing out of the way.
That’s given me a blinding idea. Direct democracy when it comes to public funding of research.
Write a catchy tune to go with your big idea then pimp the ringtone to get funding.
Or a cross between Dragon’s Den and Tomorrow’s World where the boffins plead with the public for money.
“than was invested by the Government on their behalf oninany of these growth industries.”
I also don’t believe that government investment was what brought Finland out of their mess, you see government investment and liberalisation is not the same thing. In fact, UK companies seems to be pretty well positioned in the markets you cite as growth markets, in the IT and global communications market you e.g. have UK-based companies such as Vodafone, AMR, C&W and you also have a bunch of international companies who have located research and development facilities in the UK (i.e. invested in the country).
Please note the phrase in Tim’s blog entry that said “Finland is highly open to investment and free trade”. This means that it is highly open for others to invest in the country, not that the government does the investing.
“Yes, but you are talking about a time when the structural conditions for growth in the global economy were quite different from what they are now. The key growth industries are linked to developments in IT and global communications, new materials science, bio-technologies and environmental sciences”
surely Nokia was one of the Finnish success stories…
“surely Nokia was one of the Finnish success stories…”
It does n’t really matter what neo-liberalisers think should happen in Greece (what right they have to impose their ideas on another country is an unanswered question): the EU has rescued their economy with Quantitative Easing
which is basically creating new money with backed-by-nothing cheques.Of course instead of
an Aztec blood sacrifice of the public sector in the UK ,the wondrous New Government of all the Public Schools could just increase the amount of quantitative easing (250 billion so far) by the 64 billion designated for public sector cuts in the Greek way.But that’s not what they have been elected/ not elected for is it?
Tim you missed out commenting on this line
….After devaluations the depression bottomed out in 1993…….
Greece is F**ked