Out here doing the lord's work listening through an hour-long macro podcast IN FUCKING DANISH!
If you don't know the background here (#1593286), it's widely acknowledged and understood that Danish is the hopeless one out in the Scandi languages. Icelandic is a technically difficult language, but Danish is an incomprehensible one to hear.
So imagine the investment when Den spent a full hour, assisted by Spotify's nice little transcription helper, listening to Lars Christensen (#1585380) discussing the ins and outs of the Icelandic economy.
For all of us Nordic aficionados, we should realize that the Icelandic economy operates fundamentally differently from the more mature, developed (and diversified!) Nordic economies. We are not the same… and actually not in a good way.
This tiny island nation has several elements of all the Nordic countries, but none of the mature, balancing, and stabilizing economic safeguards that make those economies work reasonably well. Iceland is also the (annoyingly rich) little brother who hasn’t figured it out yet. “It’s a globally exposed economy” — tourism, fish, aluminum, data centers — all of which become a modern version of a raw-commodity exporting third-world nation: a complete price taker, walloped around by an ocean of capital inflows and outflows into hot sectors that might not be thriving next year:
“It’s an economy where many factors can easily become destabilizing.”
Also, there really shouldn't be an Icelandic króna... it's ridiculous to have this hot/cold inflow/outflow of funds into a currency based on an economy some one-fifth smaller than Vermont. (Also: it should so obviously become a 51st state, #1593383, #1558903)
> “I’m not too worried about the Icelandic economy. It’s doing very well, apart from inflation.” (Vísir)
…which is sort of the point of his monologue.
“The Icelandic economy is too small for its own good,” and inflation becomes the central bank’s only way out in facing the aggressive, centralized labor agreements that push for high wage increases unsupported by economic fundamentals. And because there’s been great price inflation in past years, the next round of negotiations include even stronger demands for wages to compensate for the loss of purchasing power. The other Nordic countries fixed this runaway wage-price spiral in the 1970s and 1980s, usually through a combination of local wage determination, pegging the currency, or forcing the unions to internalize the unemployment externality of their too-aggressive actions. But Iceland has had none of that.
Read the full bit at BTCHEL, and sign up for the biweekly(semi-weekly? I can never remember!) Nordic Node newsletter via: https://btchel.com/#sign-up
Wait…you guys still have unions?
yup, it's insane.
To be fair, most of them most of the time are just outsourced HR services... all sorts of tax-efficient ways (=pre-tax contribution, "membership fees" with payouts/grands/reimbursements received later) to spend on e.g., eyewear or gym membership or educational/conference trips or subsidized weekends at union vacation homes.