The end of the summer was a rather turbulent period for Finnish Prime Minister Sanna Marin. It has become a relevant competitor to the war in Ukraine in the fight for centrality on the front pages across Europe. At the same time, the reason did not lie in her political moves, but in her private preferences. Footage of her dancing and generally having fun at parties was "leaked" to the public. The debates went far beyond the Finnish public space, but also the framework within which they were allegedly conducted. Namely, the discussion was not about what would be the appropriate behavior of high officials in their free time, but about how a young woman should behave. It was this patriarchal drive to control and regulate women's entertainment that was the key driver of all discussions. However, after a few weeks and a negative drug test, the discussions died down, and Sanna Marin returned exclusively to the domain of Finnish public life.
And there she intervened with an interesting post on Twitter a few weeks ago. Namely, Marin retweeted a link to an article by a Finnish university professor and accompanied it with a quote in Finnish from the article that reads: "There is something seriously wrong with the prevailing ideas of monetary policy as soon as central banks protect their credibility by driving economies into recession." Marin and the quoted professor are referring to the policy of raising interest rates in order to curb economic activity, the growth of unemployment and the supposedly consequential calming of inflation. It is therefore not a radical idea, but a common-sense question: is recession really the only solution for curbing inflation? And let's dig a little deeper into its implications: if it is, what does it tell us about the economic system we live in? Or at least about the distribution of the costs of the crisis of that system?
Marin's intervention on Twitter in English, and therefore in the global public sphere, was reported by Financial Times columnist Martin Sandbu and noted the possible political consequences of the lack of discussion about the content of the quote that the Finnish Prime Minister made public. Namely, the key problem is the political independence of central banks. Unlike politicians who have to justify their moves to the electorate, central bankers are guided by a "professional" and legal mandate: price stability. So, if the "profession" justifies causing a recession and if it is a cure for inflation, then there is simply no political space to condemn such a move. However, as Sandbu points out, the credibility of central bankers depends on the credibility of the macroeconomic regime as a whole. And there are no legal provisions or expertise that will stop strong political reactions. For the simple reason that these provisions and expertise are political phenomena, not given physical parameters.
And when those political reactions appear, which will most likely be created from democratically extremely questionable ideas and attitudes - such as those quite close to right-wing extremism - the establishment, both politically and economically, will be surprised by the development of things and attack opponents with rhetoric about civilizational values and liberal procedures. And at the same time, they did not allow even a minimum of any democratic discussion about the most effective and socially just solutions for curbing inflation. However, there may be a chance for a slightly different trajectory compared to the one that followed after the outbreak of the economic crisis in 2008. At that time, the primary policy that had the effect of lowering the standard of living was the fiscal policy. Therefore, it is under the control of elected politicians. Admittedly, this control was limited by the Maastricht rules and other parameters of the European Union, but still.
Today, however, it is the monetary policy that "produces" undesirable results, and the political consequences will again be borne by the politicians. And they don't seem to like that division of roles very much.
In addition to Marin, French President Emmanuel Macron also questioned the recessionary policies of central banks. In the absence of a strong and massive left that can rely on both pressure from below and an economically elaborate model of a different approach to inflation, we are dependent on the fears of the political center. Not much hope, but anything is better than nothing.
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