Finland’s euro-pie-in-the-sky argument22 July, 2015 at 18:57 | Posted in Economics | 1 Comment
Because Finland has used the euro since its inception, the value of its currency cannot adjust in ways that would cushion the overall Finnish economy from those shocks. If Finland still had its old currency, the markka, it would have fallen in value on international markets. Suddenly other Finnish industries would have had a huge cost advantage over, say, German competitors, and they would have grown and created the jobs to help make up for those lost because of Nokia and the paper industry and Russian trade.
“Rubbish,” Mr. Stubb said. To evaluate the euro, you can’t just look at what he calls a current “rough patch” for the Finnish economy. You have to look at a longer time horizon. In his telling, the integration with Western Europe — of which the euro currency is a crucial element — deepened trade and diplomatic relations, making Finland both more powerful on the world stage and its industries better connected to the rest of the global economy. That made its people richer.
If anything is “rubbish” here, it’s Stubb’s pie in the sky …