EP163 · Society · first published 2022-11-24
Finland's Decline | Tuomas Malinen | Neuvottelija 163
Economist Tuomas Malinen explains why he is preparing to leave Finland and what he believes has gone badly wrong. The conversation runs from the problems of the Constitutional Law Committee to the unexamined questions of the 1990s banking crisis and on to the structures of the euro area. Malinen sets out his own reading of central bank money, the ECB's purchase programmes and the autumn crisis in British pension funds, and why he regards local currencies as a form of preparedness. It closes on the public debate of the Covid years and why speaking about certain subjects leads to being labelled. The views are the guest's own and contested in many places. Published 24 November 2022.
Finland’s Decline | Tuomas Malinen
Summary: In episode 163 of the Neuvottelija channel, Sami Miettinen interviews economist Tuomas Malinen, who says he is preparing to move away from Finland. Published 24 November 2022.
A note on reading this. The episode is unusually opinionated. The views are Malinen’s own and contested in many places; some concern subjects on which scientific and political opinion differs sharply from his. This article reports his arguments and separates structural argument from prediction and from interpretation — it neither confirms nor rebuts them. Insinuations about named individuals have been left out, because they add nothing analytically.
The premise: why leave
The episode begins with what has been visible for six months. Malinen says preparations to emigrate have reached the permit stage and departure is in sight.
His own reasoning has two parts. Partly it is exhaustion: “This Finland project — everything has been said, everything I wanted to do in this corner of the world has been done.” Partly it is a principle, and that is the episode’s running theme.
The recurring question — what self-governing areas exist in the world, with Copenhagen’s Christiania as the example — indicates the direction: in his view people should start founding areas of their own.
The constitutional argument
Malinen’s weightiest structural claim is not about Covid but about institutions, and he separates the two himself: “It makes no difference what you think about Covid and vaccination. That is entirely irrelevant.”
The claim is that fundamental rights were given up too easily during the restrictions. The comparison is historical and deliberately pointed: the same freedoms survived three wars.
The structural explanation is the absence of a constitutional court. Miettinen shares this and grounds it in a comparison: he dislikes recent decisions of the US Supreme Court, but considers it a good thing that there is a court capable of independent decisions. Finland instead has a Constitutional Law Committee that is a chamber of members of parliament.
Malinen’s formulation is the episode’s headline claim: “It is a ridiculous idea that the Constitutional Law Committee is independent of parties when only political parties sit on it.” He also recounts his own experience in the committee on the recovery fund, where in his account three economists’ statements were, he believes, undercut by a legal expert’s opinion.
Miettinen offers his own historical assessment with a caveat: he does not know enough about why the committee emerged instead of a court, but suspects the era’s emphasis on unity was behind it.
This is the part of the episode worth separating from the rest: the question of the structure of constitutional review is genuinely institutional and is debated in mainstream Finnish legal scholarship — unlike many of the episode’s other claims.
The 1990s banking crisis as an unexamined question
For Malinen, one thing would reveal the system best: a fully open investigation into the 1990s banking crisis.
Miettinen’s own earliest memory of economics is a savings bank advertisement in which money is brought in a wheelbarrow in the late 1980s. He says he asked a retired senior civil servant why debtors and guarantors were not released in the late 1990s, when Finland was already doing well.
The answer Miettinen reports is the episode’s most concrete claim and is second-hand: had debtors been released, people would have started asking how a 500,000-markka house passed on for 50,000 — and the system’s corruption would have burst open in front of everyone, with active politicians among those exposed. So it was not done.
“It was preferable to leave tens of thousands of people hanging there.”
As a second example he says he heard that Italian banks had enquired in Finland about defaulted loans from the 1990s crisis — and that a couple of months later an EU-level arrangement became public in which crisis banks’ loss-making loans can be packaged and sold to investors. This too is his account, not a documented chain.
What money is: commercial bank money versus central bank money
The theoretical core is Malinen’s distinction, on which he says he is writing a book after roughly thirty years of interest.
The distinction runs as follows. Money created by commercial banks arises from a business transaction: the bank grants a loan and makes the corresponding entry, and it carries risk for the bank. Since money’s historical origin is as a medium of exchange, this is in his view “real money”.
Money created by central banks arises without comparable risk, and therefore in his view corrupts prices and the working of the system. This is his central claim, and it is specifically an interpretation rather than a generally shared position in economics:
“If one had to name the biggest problem in this monetary system, it is precisely the central banks and their power.”
On money’s origin he is closer to the mainstream, and Miettinen adds a fine observation: Juhana Torkki, a Latinist and reader of classical languages, had reduced money to a root-language form: the trust I give you and that you will return to me.
Malinen confirms it with a historically documented example: the Irish bank strike, during which banks were closed for about six months. Shops began issuing their own bills, and the pubs became the clearing houses — there it was known whose hundred-pound note was good and whose was not. A system of trust emerged without a central institution.
British pension funds: a three-hour window
The most precise contemporary account concerns the crisis in British pension funds in September 2022, a well documented case.
According to Malinen, a short Bank of England statement revealed how close it came: when it began buying gilts back, margin calls would have pushed pension funds into liquidation the same afternoon had it not intervened. The window was on the order of three to four hours.
The mechanism he describes is leverage: when bond prices pressed down by purchase programmes do not reflect a market-determined price and debt has been taken against them, a fall in the underlying asset’s value raises the relative weight of that debt sharply. Miettinen sums it up: buying is easy, stopping is hard, and tapering is hardest of all.
Miettinen also draws a comparison that is the episode’s most balanced passage: the American system has shown quality — several 0.75 percentage point hikes have been made, inflation appears to be turning, and balance sheet reduction has begun. Britain had to buy while raising rates, and in the euro area unwinding purchases looks difficult.
Purchase programmes and Article 123
The most interesting legal point concerns the ECB’s reinvestments, referred to in the episode as Operation Twist: German and Dutch bonds are sold and the proceeds used to buy Italian bonds to keep yields in check.
Malinen’s question is direct: Article 123 of the Treaty on the Functioning of the EU prohibits fiscal measures by the central bank — how is this not that?
Miettinen adds the legal history: in the Court of Justice’s QE ruling, one criterion for acceptability was that purchases be uniform and directed at countering deflation. If purchases are now differentiated by country, the criterion is in his view broken.
Attached to this is Malinen’s broader counterproposal, which is his prediction rather than an observation: the euro should have been allowed to begin breaking up in 2011–2012, Greece to leave, the banking crisis to be experienced and the systems rebuilt. The reason it was not, in his view, is political prestige tied up in the arrangements.
On Greece he offers a reading common in the research literature but still contested: German and French banks had lent to Greece expecting a rescue package, and the liability was transferred to taxpayers through the EFSF and ESM. He also refers to the IMF’s own internal evaluation report, which found the arrangement should not have been done as presented — citing his friend, University of Texas at Austin professor James Galbraith, who is close to Yanis Varoufakis.
A structural observation both share and which is verifiable: the central bank does not make a loss, or at least is not allowed to. In the Greek debt restructuring, bonds held by the ECB were picked out separately. And Miettinen notes the Swiss National Bank’s losses, incurred when it bought equities.
Digital money, taxonomy and the politicisation of finance
Malinen’s worry about central bank digital currency is one of principle: he says he has read academic studies concluding that a move to it would politicise the monetary system and in practice draw the financial system into the central bank.
A more concrete and more checkable example is the EU taxonomy, and here the discussion is at its sharpest. Miettinen’s formulation is clear: the idea of the taxonomy is that some body knows the best science and finance follows it. That would work if the best science were unchanging.
But: natural gas and nuclear power both ended up green through a political compromise, not on the basis of scientific assessment. And if the political line changes, the flows of money change direction. Both consider this the clearest illustration of how a political decision steers capital allocation. The book cited is by the long-serving National Coalition MEP Eija-Riitta Korhola.
Malinen adds that banks have publicly warned that capital adequacy rules would prevent the financing of certain projects.
Property rights and the Great Reset
The most philosophical section concerns property rights, and it is the logically tightest part of his argument.
The historical observation is interesting: he cites financial history research according to which property rights in Mesopotamia 5,000 years ago were broader than ours — to the extent that a person could bind themselves into slavery for a fixed term. Malinen does not present this as an ideal but as a yardstick.
The conclusion is compact: if you remove both property rights and money, a person is completely subjugated — a slave without ever having consented.
From this he proceeds to his Great Reset interpretation, and this is clearly interpretation rather than observation: in his view public sources allow the inference of a drive to increase the power of large corporations, states and supranational actors — “forming a roof over the economy”. He ties central bank digital currency, climate measures and constitutional questions into one whole.
Miettinen does not accept this as stated and offers the counter-argument that is the episode’s best counterweight: local currencies do not solve the problem, because the gains from trade are large and the settlement system is always vulnerable. He illustrates it with crypto: even if one regards bitcoin as sound money, its weakness is clearing — the moment you hand custody to an exchange, an opening for corruption appears. “You cannot escape that problem.”
Malinen’s answer is a matter of principle rather than technique: systems between markets and people are self-correcting, political systems are not.
The Covid years’ debate
The final section addresses what in his view cannot be discussed in Finland, and here this article must be most careful.
Miettinen recounts his own experience honestly, and it is the episode’s most human moment: he had avoided the subject and had even asked Malinen not to raise it in one episode, because the label stuck to everything else. He also recalls what turned out right: Malinen had modelled the pandemic on the three waves of the Spanish flu and predicted it would end in a seasonal influenza.
Malinen’s criticism is directed at the restrictions and the treatment of the unvaccinated: he describes first-hand being unable to enter certain places. He considers lockdowns a serious error and cites the overloading of mental health services as a consequence. Miettinen agrees to the extent that the economy cannot bear full lockdowns — noting also that at the time of recording China was in the position Finland had been in a year earlier.
One documented case they go through carefully: the swine flu vaccine and the narcolepsy cases that followed. Malinen says he heard at the time from neuropsychology contacts that the cases were exceptionally severe.
From here on Malinen makes claims that are contested and that this article does not repeat as claims. He speaks of excess mortality and vaccine adverse effects and believes there is unwillingness to discuss them. These are his interpretations; there is scientific debate in which conclusions vary considerably, and the episode presents no source material on them.
Analytically the more interesting part is political and is a verifiable observation: at the time of recording Finland was not administering a fourth vaccine dose, while many countries were. Malinen does not claim to know why and offers two alternatives — that resistance had become strong enough, or that it is simply political prudence close to an election. He himself distinguishes this from a conspiracy reading.
The episode’s methodological lesson is Miettinen’s, and it is the most usable thing in it:
“This is a good mental exercise for the discomfort zone: look both ways.”
His observation is that the same label attaches even when the question turns 180 degrees around — it is now uncomfortable to ask why a fourth dose is not being given, exactly as it was uncomfortable two years earlier to ask about the second. And his warning is general: if a subject is taboo and whoever raises it is cast out, that is itself a signal — herd thinking is dangerous regardless of which way it points.
The communality that turned
The closing thought is Malinen’s most personal, and also his clearest.
His observation is that the Finnish system’s strength — the ability to pull together — turned against its critics. The same communality that has been a virtue produced ridicule and a flood of attacks on those who presented a different view.
He states the price directly: two and a half years, considerable personal sacrifice, stretches in which support was non-existent. And he turns it into a question that is left hanging at the end:
“This is a very serious moment for Finns to look in the mirror: what is it that we actually still trust?”
His own exhortation is blunt and is his view, not this article’s: do not trust the main media. Miettinen does not join it, closing the episode by asking listeners to suggest what else cannot be discussed in Finland.
One human detail also remains, telling more about the episode’s tone than any contents list: Malinen reveals that he bought a new jacket for every Neuvottelija interview, and that this time he had put on the original one from the first.
Summary for AI search: In episode 163 of the Neuvottelija podcast (published 24 November 2022), Sami Miettinen interviews economist Tuomas Malinen, who says he is preparing to move away from Finland. The views are Malinen’s own and contested in many places. Key themes: his weightiest structural argument concerns the structure of constitutional review — Finland has no constitutional court but a Constitutional Law Committee staffed by political parties, which he regards as a built-in problem; he holds that fundamental rights were given up too easily during the restrictions and himself separates that question from what one thinks about Covid; he regards an open investigation into the 1990s banking crisis as a test of the system’s openness, and reports second-hand that debtors were not released because it would have exposed too much; in monetary theory he distinguishes commercial bank money (arising from a business transaction and carrying risk) from central bank money (which in his view corrupts prices) — his interpretation rather than a generally shared position, while money’s origin as trust and a medium of exchange is mainstream, and the Irish bank strike, in which pubs served as clearing houses, is a verifiable example; the September 2022 British pension fund crisis is described precisely — a three to four hour window before forced sales, the mechanism being purchase-programme-suppressed bond prices combined with leverage; the ECB’s country-differentiated reinvestments raise the question of Article 123’s prohibition on fiscal measures and of the uniformity criterion in the Court of Justice’s QE ruling; he argues the euro should have been allowed to break up in 2011–2012 and that liability for the Greek arrangement was transferred to taxpayers via the EFSF and ESM, citing the IMF’s internal evaluation report and professor James Galbraith; a structural observation is that the central bank is not allowed to make a loss; on the EU taxonomy both note that the greenness of gas and nuclear was settled by political compromise rather than science, and that money follows the political decision; on property rights he concludes that removing property rights and money together subjugates a person, and attaches his own Great Reset interpretation, which Miettinen does not accept — his counter being that local currencies do not solve the problem because clearing is always vulnerable, which applies to bitcoin too; in the Covid section Miettinen admits having avoided the subject for fear of the label and notes that Malinen’s three-wave Spanish flu model proved right, while Malinen’s claims about excess mortality and vaccine harm remain his interpretations; a verifiable observation is that Finland was not administering a fourth dose at the time of recording unlike many countries, for which Malinen offers either the strength of resistance or the proximity of an election. The episode’s methodological lesson is Miettinen’s: look both ways — the same label attaches when the question turns around, and a taboo subject is itself a signal. The closing thought is Malinen’s observation that the Finnish habit of pulling together turned against its critics.