The Club of Rome didn’t take into account technological developments, which enable the same output to be produced using less energy and fewer national resources.
With hindsight the Club of Rome report was far too pessimistic about technology. The report warned that copper or silver might run out by 1990, but nothing will ever run out in a properly functioning market economy. For example, if there were a risk that paper might disappear, new alternatives would become available because paper would become unaffordable. The world’s known oil reserves are much greater now than at the beginning of the 1970s, and oil can be extracted in much more difficult conditions than it could then.
The Club of Rome thought in the 1970s that the market economy had an innate tendency to run out of control. But the global economy has shown itself much more flexible than anyone dared imagine.
No one believed in the seventies that the world could adapt to oil crises. The crises of 1973 and 1979 produced a global recession, but they also gave impetus to the technological development that has seen us through. Cars are now much more environmentally friendly, and more nuclear power has come online. Thus the world gained at least thirty years of extra time. None of this would have happened without the oil crises or the Club of Rome’s warnings. They asked the right questions, even if they couldn’t offer answers.
In the 1970s many young and even older politicians would meet Soviet representatives and visit the Soviet Embassy more often than they went to their corner shop. I went there chiefly for set-piece receptions: my contacts with officials were few and formal. As a counter-balance to the Russians it was important to look westward as well. In May 1973 I travelled to the United States for the first time. There was a U.S. Information Service office in Helsinki, which sent two to four student politicians across the Atlantic each year to get to know the American political system and way of life. Our program took in Washington, Denver, San Francisco, Los Angeles, Las Vegas, New Orleans, and lastly New York. We stayed in hotels, but we met local people in every town we went to, who played the part of host families showing us how Americans lived. Compared to seventies Finland, let alone the Soviet Union, I was struck by the sheer prosperity. There was as much Coca-Cola as you could drink, whereas in my teenage years in Finland it had been sold in parsimonious little bottles. T-bone steaks were the size of children’s flippers. Car seats were more comfortable than the sofas in our student rooms. It was a solid introduction to America.
In Washington we visited Congress, where we were given an explanation of the American political system, though there was really only one theme to the discussions: what would happen to the hapless Richard Nixon? During our visit the Watergate scandal was going through one of its most hectic phases and divided America down the middle. The Republicans claimed that the Washington Post didn’t have the right to humiliate Nixon as they had, while the Democrats were overjoyed that “Tricky Dick” was now on the run. Despite its disagreements over Nixon, the country was by no means as politically polarized as it has since become. We had lively discussions of what was healthy about the whole affair, and what wasn’t.
The trip to the United States and the Watergate scandal were an excellent opportunity to study Cold War positions and the Americans’ sincere belief that they ruled the world. Many people in Europe, where Social Democratic support was strong, thought it obvious that the United States had had its day.
American leadership had been discredited by Vietnam, the dollar was shaky, and the first oil shock was just around the corner.
There is documentary evidence from those years. One of the better-known treasures from the vaults is a clip from a television program of a grave, longish-haired, gangly, serious student leader on a trip to the World Youth Festival in Berlin. He boldly condemns the growing power of imperialism in the world. Yes, folks, that was me.
ON THE FIRST DAY OF JULY 1975 Liisa and I received the keys to our new home. We had bought a two-bedroom apartment in a four-story 1950s block in Herttoniemi, a hilly, wooded suburb on the east side of Helsinki. Not much had been done to it: the original bathtub and kitchen cabinets were still there, and it badly needed a makeover. A decorator friend came down from Ostrobothnia to lay new floors and give the place a lick of paint. We got rid of the bath and installed a shower. My parents came for three days to sand down the window frames and kitchen cupboards. I spent six weeks working alongside various workmen. I like carpentry and doing things with my hands; I always got top marks in school for woodwork. I laid a new tile kitchen floor under the decorator’s direction. He explained how the tiles were to be laid and what sort of adhesive you should use. I also painted the cupboards my parents had sanded.
I had finished my time as SYL president at the end of the previous year. But in a way I took part in the Conference on Security and Cooperation in Europe (CSCE), which took place in Helsinki in 1975. This was Kekkonen’s most visible foreign policy achievement and an important occasion for the world’s media. I listened to the speeches on the radio as I painted the cupboards in our new flat. The reports resounded in the empty, echoing rooms. I could follow every twist and turn in the CSCE process long after the conference because I had heard every speech while I was doing up our flat.
Buying our flat had not been entirely straightforward. Liisa had qualified as a nurse, but she was continuing her studies at Helsinki University, majoring in social policy. There was no sign I would ever have a career. We went with these recommendations to see the bank manager, who happened to be an acquaintance. We promised to scrape together a deposit; the rest we would borrow from the bank. My father lent me 3,000 marks (about $3,200 at 2016 prices) which was the only loan my parents ever made to me. We also agreed to use our student loans to increase our share of the capital. The housing market had a growth spurt and house prices rose in its wake. We absolutely wanted to own our own home. Liisa and I were reckless, as were many others, and we believed we would manage. The oil crisis helped us: the Finnish economy had slipped into such a deep bog that rampant inflation seemed to pay off our loan for us very quickly. For once macroeconomic theory was a practical help in our life: we had taken on the loan at just the right time.
I had gone back to studying macroeconomics. I wrote my master’s thesis chiefly in the faculty library. I often found myself alongside another student politician who had put his studies aside for a while – Erkki Liikanen, who was my age but had been a member of parliament since 1972. When he became Finland’s youngest-ever MP Erkki was a politics student and president of the Teiniliitto – the League of Teenagers. We used to see each other during coffee breaks, where we’d put the world to rights.
I completed my thesis in spring 1976. It was entitled “The Theory of International Trade under Uncertainty” and I received a prize for the best master’s thesis in macroeconomics that year. I couldn’t have known that, decades on, I would be working on the very same subject in a very practical way. It’s probably fair to say that Erkki Liikanen’s current work also has a macroeconomic theme, given that he is governor of the Bank of Finland and a member of the board of the European Central Bank.
But even more significant than my graduation was the birth of our first child, our son Jaakko. Liisa and I knew we were ready to be parents, though by present-day standards we were very young.
Becoming a father was a tough job. I was present at the birth and for our son’s first ten days at home, when I gave him a bath every day. The birth was also something of a watershed. Life seemed to have become organized: I had my own apartment, I had graduated, I was a husband and father.
Student and housing loans were not enough to keep a family. I had worked as an assistant lecturer in the economics department for a few months and I wanted to continue at the university, but there weren’t any openings there. So I accepted more short-term work. The Centre Party and its youth organization needed someone to look after its international affairs. I went to work