Sometimes bad things happen to good economies.
Take Finland. Its schools are among the best in the world, its government is among the least corrupt, and, for rich countries, its public debt is among the lowest. But despite the fact that the fundamentals of its economy are strong, its economy is not, in fact, strong. Finland is actually stuck in its longest recession in living memory. Why? Well, the short story is the euro.
The slightly longer version is Finland has had some bad luck that the euro has turned into a bad recession, or at least a worse one that it had to be. It started when Apple made Nokia go from being synonymous with smartphones to being synonymous with old smartphones. As Finland found out, it isn’t easy to replace a company that, at its peak, made up 4 percent of your economy. Obsolescence came for the timber companies next. There was nothing they could do to make people need as much paper, which until now had been a major export, in a post-paper world. And, on top of that, Finland has felt the effects of Russia, one of its biggest trading partners, staggering under the weight of low oil prices and Western sanctions. Put it all together, and Finland was always going to have a tough time. But it’s been tougher than it needed to be, since Finland hasn’t been able to do what a country would normally do in this situation: devalue its currency. That’s because Finland doesn’t have a currency to devalue. It has the euro.