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"In
the early 1990s in the middle of a Finnish
banking crisis and economic depression,
we were a top 30 country in the world in
per capita GDP," he said. "Then
we opened up; we became members of the EU.
Now we're always up there in GDP per capita
or whatever other measure you look at with
Sweden, Denmark, Australia and Canada."
As
to whether the ability to devalue its currency
would help deal with the current economic
downturn, Mr. Stubb is similarly skeptical.
"Devaluation is a little like doping
in sports," he said. "It gives
you perhaps a short-term boost, but in the
long run, it's not beneficial. Just like
anyone else, we need structural reform,
structural adjustment; we need to increase
our competitiveness, and a little bit of
luck."
The
Finnish economy sizzled before the 2008
crisis but has done poorly since. Looking
at the numbers, does Mr Stubb have a point?
Finland was an astounding success story
from the time it joined the Euro to the
onset of the global financial crisis. Its
inflation-adjusted per capita GDP rose 33
per cent from 1998 to 2008, compared with
17 per cent in both Germany and the United
States.
It
is also the case that the last several years
have been harder on Finland than on other
advanced economies, with real per-capita
GDP having fallen eight per cent from 2008
to 2014 (Germany is up five per cent; the
United States is up four per cent).
So
just as the Finland story from 1998 to 2008
is something wonderful to behold, it has
also underperformed other advanced economies
badly since the crisis. Being locked in
a currency with larger and economically
stronger Germany probably is an important
part of the reason.
Of
course, correlation is not causation. Maybe
the Finnish economy did so well from 1998
to 2008 not because of the euro and broader
European integration, but because it was
a well-governed nation with industrious
workers that was poised to rise to the top
of the league tables of global income regardless.
This is in the realm of things that are
hard to prove in any definitive way, but
the case that the euro was crucial isn't
without merit.
At
the same time, you can see in the debate
over the Finnish economy a broader divide
between the American thinking about economics
and how European leaders process their continent's
economic woes.
The
Europeans are thinking about the long run,
and what the euro and the broader integration
it symbolises will do for Europe's potential.
Many of us who write about economics every
day are looking at the cyclical ups and
downs, and want to see policies that are
effective at smoothing them out.
The
euro hasn't shown itself to be very good
at helping the economies that use it stay
on an even keel. Whether it has been good
at driving long-term growth is a more subjective
judgment. The answer may depend on whether
the vantage point is an office in Washington
or New York, or a waterside restaurant in
Espoo.
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