Posts Tagged ‘European Union’

What is Wrong with the EU?

December 5, 2013 4 comments

Eurostat just released the 2012 figures for poverty and social exclusion in the EU. The numbers are terrifying. Let me quote the press release: “In 2012, 124.5 million people, or 24.8% of the population, in the EU were at risk of poverty or social exclusion,  compared with 24.3% in 2011 and 23.7% in 2008. This means that they were in at least one of the following three conditions: at-risk-of-poverty, severely materially deprived or living in households with very low work intensity
One may be tempted to shrug. After all, 1% in four years, is not that much. Let me put actual people behind the numbers: The number of people at risk of poverty increased of 5.5 millions between 2008 and 2012. Strikingly, always looking at Eurostat data, the number of jobs lost in the EU28 over the same period is almost exactly the same (-5.4 millions).

This is plain unacceptable. And teaches us two lessons

  • Our welfare system is not capable anymore to shield workers from the hardship of business cycles. We progressively dismantled welfare, becoming “more like the United States”. But we stubbornly refuse to accept the consequence of this, i.e. that fiscal and monetary policy need (like in the US) to be proactive and flexible, so as to dampen the cycle. Constraints to macroeconomic policy, coupled with a diminished protection from the welfare state, spell disaster, social exclusion, and the destruction of the social fabric.
  • The second lesson is that these numbers are there to stay. The economy may recover, but the loss of confidence, of capacity, of social status of those who we pushed into hardship, will stay with us for years to come. We are destroying human capital at amazing speed.

What is enraging is that none of this was inevitable. The crisis could have been shielded by less ideological leadership in European institutions and in some most European capitals. Frontloading of austerity in the periphery was a terrible mistake. Not accompanying it with fiscal expansion in the core was a crime, showing of how little solidarity counts, facing the protestant urge to “punish the sinners”.

The result is that one of the most affluent economic areas of the world barely notices that one quarter of its population lives at risk of poverty. What is wrong with us?

A Broader Perspective

October 12, 2012 Leave a comment

The EU received the 2012 Peace Nobel Prize. I think it is an helpful reminder of what the whole construct has been about for the past sixty years. Especially when you are critical of men and institutions, gloomy about the future, exhausted by endless postponements, frustrated by the chronic lack of ambition,it is from time to time useful to take some perspective, and recognize what a tremendous success Europe has been and still remains. I still remember my grandmother, terrorized by the German reunification, saying with a sigh: “We are lucky to have the European Union…”

My first class on the EU economy traces a sketchy outline of the developments from Jean Monnet to today.  I conclude telling to my (mostly non European) students that whatever they will hear from me over the rest of the semester, mostly negative horrible things, they should not forget the first class. This project remains a tremendous accomplishment precisely for the reasons that motivated the Nobel prize.

But then we go back to real life. The first thing that came to my mind when I heard the news was this:

Whatever life holds in store for me, I will never forget these words: “With great power comes great responsibility.” This is my gift, my curse. Who am I? I’m Spider-man The European Union

Precisely because what they have in their hands is a precious object, our beloved leaders need to get their act together, and do something to preserve it.
Those who speak of Grexit should maybe sit in my first class? Better still, the Spiderman DVD is on sale at Amazon…

What the G20 Should Do…

November 3, 2011 Leave a comment

I wrote a piece (with Jérôme Creel)   on the G20 meeting, that just appeared on the web edition of Le Monde.

In short, we argue that (unfortunately) it will not radically change matters in the EU.  The precedent of  the London  G20 meeting  in 2009 is not encouraging. Too many promises ended up being written on the sand…

We also argue that the only possible long term fix for the EMU woes is a radical rethinking of its economic governance, that puts back at the center of the stage discretionary policies.

Finally, out of the meeting  should emerge  a firm commitment (followed by acts) of the G20 to fight the resurgence of protectionism.

An English version of our piece  should follow soon.