Skeletons in the closet

Finland’s competitiveness is weathered. The development has been going on for quite some time, but the actual research on the reasons has not been, if not taken into account some of the Government Institute for Economic in the last decade of studies in which it was found during the 2000s recession ended too soon. Researchers would’ve had enough time to explore the country’s economic decisions made before EMU. There are the roots of the current competitiveness of decay.

Tripartite is still wanted, but its real effectiveness or ineffectiveness is not further studied. Tripartite employers (non-entrepreneurs), employees and the state agreed to peaceful work environment. Staff presented the requirements and the governments and the parliament completed the addition of social welfare services. Employers usually whined, but finally agreed, because they knew that the errors will be corrected by devaluation. Social welfare services are not affected by the devaluation, but they stayed as achieved benefits. Of the method is that, even if farting blood, one would not give up the benefits achieved.

This vicious cycle rotation in such a way that all parties have lost. This situation can now be seen. Employer’s contributions are the number of units in Finland for more than four times more than the next closest Euro-countries. State’s internal transfers, most of which are different types of social security, are the highest in the world. Purchasing power of wages has declined with the euro, etc. Well then, who won here in roulette? Maybe no one will win, but large masses of property values were maintained and even increased during devaluation-inflation cycle.

The interesting thing in this roulette is the fact that the trade union movement knew exactly how cycle works. It also was known that the working man is the one who is paying for all. This was based on the fact that the wage increase was always accompanied by the devaluation of the thread, which undermined the purchasing power and required a new wage increases. EK, in turn, does not care for a lot of salary increases; as yet devaluation would close the competitiveness of the restoration. Koivisto governments tried to use the price freeze to prevent the erosion of purchasing power, but even that did not work. A low economic inflation dampened the only sharp drop in demand.

The last was a grim business in the late 1990s, when the attempt was made to revaluation to fight inflation and avoid devaluation. As a result, foreign products became cheaper and the trade balance turned negative. The then Minister of Finance Iiro Viinanen assured that the devaluation will not come. Finland was driven to the point that marks the end you will have to set a float-free. The final value of mark dropped to about 40%. Exports began to drag, and the trade balance moved into surplus. The situation improved considerably for a rapid rise of Nokia and defiance. Once considered a Finnish war-time post-history, so Finland has been beginner’s luck to this day. The first really bad blow was the collapse of the Soviet Union. It came, however, the seam marks of Nokia and floating rates.

Now we are in a situation where Nokia does not help, and benefit of markka’s was float have been eaten away. The rest are left only to vested interests, but not the means to finance. Now the young people in power do not feel the 1980 – and 1990’s teachings and seniors in the ministries, making the budgets work with the old model of waiting for the depreciation of the euro. The competitor countries like the U.S. and China, make sure that the euro is not weakening. In particular, China’s cash reserves are so large that it can by supporting purchases prevent the decline of the euro. The EUhas only to meet internal devaluation, and this also applies to Finland.

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