The Regulatory Web Is Driving Europe’s Economic Decline

As you, my esteemed readers, have undoubtedly noticed, the European Union’s position as one of the world’s leading economic regions has eroded over the past two decades. This is illustrated by the chart below, which shows the development of gross domestic product (GDP).

One clear reason for this unfavourable trend is the steadily growing — indeed, quite explosive — proliferation of well-intentioned but highly diverse regulatory requirements, namely EU directives. As a researcher, I have even experienced firsthand how they form a kind of regulatory web that effectively prevents publicly funded scientific knowledge from being translated into technological solutions for businesses and drivers of economic growth in the EU.

This has naturally contributed significantly to the EU falling behind both the United States and China in technological and economic development. This is clearly illustrated, for example, by patent application figures. While the Chinese have filed 1.4 million patent applications so far this year, the Americans 262,000, the Japanese 222,000 and even the South Koreans 186,000, the three major EU countries of Germany, France and Italy have filed just over 60,000 applications combined.

* * *

In this respect, it is encouraging that a number of northern member states are seeking to cut the funding allocated to the EU’s central administration, whose bureaucratic inertia spreads into virtually every corner of the Union. That is why I noted with satisfaction a brief news report stating that Finnish Prime Minister Petteri Orpo (National Coalition Party) had announced that Finland could not accept Ireland’s proposal to reduce the EU budget by a mere €140 billion.

According to Orpo, “some savings have been identified, but far too few, and in some cases in the wrong areas.” By the latter, he was referring to budget cuts affecting defence, research and new technologies. In other words, the cuts are being directed at the very areas of expenditure that are most important for the EU’s future, rather than at socialist-style spending, such as cohesion funds intended to reduce disparities between different regions of the Union.

* * *

It remains to be seen, however, what the EU’s administrative machinery will ultimately decide. Germany, the Netherlands, Austria, Sweden and Denmark share Finland’s position, but opposition is particularly strong in Southern and Eastern Europe, whose countries benefit from and advocate for cohesion funding — funding that, in many respects, resembles development aid.

Some kind of resolution may be reached at next week’s summit in Brussels. We should hardly expect miracles, however, since all political systems seem to have an unfortunate tendency to expand bureaucracy and endlessly quibble over details rather than trust in the creative power of the market’s invisible hand.

Previous thoughts on the same topic:
EU Carbon Sink Policy Lacks Cost-Effectiveness
Polish Politics: A Quiet Success Story
A New Beginning: Economic Independence in the Hands of Developing Nations

Putin's Growing Crisis in Ukraine and an Uncertain Endgame for Russia

The European Union has finally awakened to the fact that many Ukrainian men are using its refugee policy as a means of avoiding military service. For this reason, the Commission has proposed—according to the Finnish media—that Ukrainian men of military age should no longer be granted temporary protection in the EU.

One can only hope that the proposal will be processed by the EU's bureaucratic apparatus more quickly than, for example, the proposal to abolish changing the clocks. As a result, Ukraine's manpower shortage could be alleviated at a time when the military situation is otherwise turning so favorable for the Ukrainians that even Russian soldiers reportedly admit they are exhausted and wish to warn Putin of a possible "major catastrophe" ahead.

* * *

The emergence of Russian soldiers speaking out, along with the reactions of Crimeans to Ukrainian successes, suggests that the Moscow government has kept its citizens in an information blackout regarding the problems facing the "special military operation." This brings to mind the year 1940, when Finnish censorship ensured that the public had an overly optimistic view of the situation in the Winter War, and as a result, people experienced the outcome of the war as even more unjust than it actually was.

The same problem now confronts Vladimir Putin and his administration. It is genuinely difficult for them to explain to their subjects why the Ukrainians are capable of destroying Russian infrastructure to such an extent that ordinary people no longer even have fuel for their cars.

If and when a rebellious spirit continues to spread among Russian soldiers, the government will face an acute crisis that will further undermine the operational capabilities of the country's military, and consequently weaken its military performance even beyond its current state.

* * *

All of this could have a truly dramatic impact on the ability of Putin's administration to function. At the moment, it seems to be protected by little more than the absence of a credible opposition—a factor that also makes Russia's future difficult to predict.

Consequently, the final outcome of Putin's special military operation could be anything from a palace coup to complete anarchy and even the disintegration of the Russian state. Of course, the first of these scenarios is the most likely, but then again, hardly anyone at the beginning of 1917 predicted that the Bolsheviks would overthrow and murder the Russian Tsar and his family.

Previous thoughts on the same topic:
Peace in Ukraine Would Be a Risk to Putin
Russia's Predicament Awakened the Trolls and Increased the Risk of Nuclear War
Russia’s Spring Offensive: Gains Unclear, Losses Undeniable

The EU Is Suffocating Under Double Bureaucracy

The European Union was originally established to ensure that Germany would no longer cause a catastrophe like those in 1914 and 1939. In this sense, the project has been highly successful.

The Union has also been successful in another way, as it has attracted – and continues to attract – new members for decades. For example, my own country, Finland, joined through a referendum at the beginning of 1995.

However, as the Union has grown, we have also witnessed a development that is all too familiar to my generation. I mean the uncontrolled growth of bureaucracy, much like what happened in the Soviet Union.

This issue was raised by former MEP and current member of the European Court of Auditors, Petri Sarvamaa (National Coalition Party). According to him, “our biggest concern is precisely that the authorities of the member states are no longer even able to properly manage this complex jungle of rules related to the EU budget and budgeting.”

Although the growth of bureaucracy in the EU has been ongoing for a long time, it has been discussed relatively little in public. Therefore, it was good that Sarvamaa brought it up, and one can only hope that his remarks gain visibility across the entire EU and are taken seriously by the Commission, so that it can start working to reduce bureaucracy.

It is quite clear that the EU will not be able to compete with the world's other economic powers if its operations are hindered by double layers of heavy bureaucracy – one at the Union level and another at the national level. In line with the principle of subsidiarity, the first should be limited to only necessary EU-wide regulations.

Otherwise, the EU will suffocate in its own bureaucracy, eventually withering into a second-rate player in global politics. And with that, it will begin a slow but steady decline, eventually culminating in the breakup of the entire Union.

Previous thoughts on the same topic:
Rising Trade Tensions Between the EU and China
General Pekka Toveri, the Chair of the European Parliament's Delegation for Ukraine
EU Decision-Makers Did the Bear a Disservice

History of Finland VIII: Joining of Finland to Russia led to an increase in crime

This is the eighth part of a blog post series where I go through the most significant phases of Finnish history. In the seventh post, I described how King Gustav III's coup continued to strengthen the position of peasants and urban bourgeoisie, thereby increasing their economic activities.

But then a new major turning point in our country's history came. It turned out that Finland's administration was transferred from Sweden to Russia, and the kings were replaced by grand dukes. The first of them was Tsar Alexander I.

At least according to my history education during school, this was said to have happened by elevating autonomous Finland to a nation among nations. In reality, however, the power used in Finland was transferred to the highest officials who shared common interests with the Tsar and further to the nobility, officials, rural businessmen, and urban bourgeoisie, who merged into a Swedish-speaking entity.

During the era of the emerging bureaucracy, the liberalization of the Finnish economy came to a halt, and the economic inequality among people increased. The wealthier population, including the peasant landowners, became richer, while the rapidly growing population became poorer. This was due to the fact that the business sector was not liberalized, and therefore the economy did not grow much. As a result, there were not enough jobs for the growing population.

In Finland, this led to a situation where previously salaried farmhands were reduced to seasonal laborers, whose recruitment principle was to choose the applicant who was willing to accept the lowest wage. As a result, the general standard of living of the people quickly declined.

As living conditions deteriorated, the marginalized and dissatisfied responded with crime, which quickly began to grow, reaching an exceptionally high degree of organization. An example of this was a group terrorizing the area of Nurmijärvi, Uusimaa, and Southern Häme, which included the great-uncle of a noted writer Aleksis Kivi.

This group started their criminal career in 1820, at first with petty thefts and later expanding their operations to include robbery and murder. Eventually, Finland's first organized criminal gang was brought to justice by as many as 700 Cossacks and soldiers - and even after that, they organized a prison uprising.

Another well-known example is the "puukkojunkkarit" (knife-fighters) of Southern Ostrobothnia, whose story may be familiar to some readers. The roots of this group also lay in the lack of future prospects for young men.

As the Finnish economy faltered under the power of bureaucratic administration, and more and more people turned to a life of crime, a growing portion of the population ended up in prison. The numbers were so large that overcrowding in prisons had to be alleviated by even sending people to serve their sentences in Siberia.

Overall, it can be said that Finland's annexation to Russia was initially a step backwards for the country, while our old motherland Sweden continued its positive development, which may explain a significant part of our western neighbor's substantially stronger economy even today.

The original blog post in Finnish:
Suomen liittäminen Venäjään johti rikollisuuden nousuun

All the blog posts in this series:
History of Finland I: How did Finland become culturally part of the West?
History of Finland II: From a hinterland of the Union into a modern state
History of Finland III: The legal and economic weakening of the position of the people
History of Finland IV: The bleakest time in Finnish history
History of Finland V: The pursuit of economic profit saved the country
History of Finland VI: Age of freedom and utility
History of Finland VII: The dictator of the era of Enlightenment promoted capitalist economy
History of Finland VIII: Joining of Finland to Russia led to an increase in crime
History of Finland IX: Enlightended dictator initiated economic growth
History of Finland X: The birth of Finnish identity
History of Finland XI: Finnish democracy and gender equality for women
History of Finland XII: Bloody civil war
History of Finland XIII: The far-right's rebellion
History of Finland XIV: The end of the first Finnish Republic
History of Finland XV: Paasikivi-Kekkonen doctrine
History of Finland XVI: Through rise and fall to a new kind of future