January 19, 2011
January of a New Year in Brussels is always a month of planning, discussion, retreats and, of course, of hope that the policies in the New Year will be successful.
This year, many of the planned activities for January announced that “Europe needs a fresh start for the 2011”. Is this…
· Surprising? Not really after the last years’ troubles!
· Amazing? Perhaps after the last years’ troubles!
· Motivating? It should be after the last years’ troubles!
· Inspiring? It must be after the last years’ troubles!
Looking at the current European landscape we have to admit that some member states are doing very badly and some are in serious economic trouble. Others still are preparing upcoming elections and therefore they are more or less concentrated on “political gaming”. Only few are doing well and are ready to perhaps bring a fresh start to the European project.
The danger for Europe lies in the mainstream debate on economic austerity. A fresh Europe needs a clear alternative economic policy to what is discussed at the moment in Brussels. We need more public investment and a true assessment of the European imbalances in income distribution and in the different production patterns.
Economic policy has two major instruments: Monetary Policy and Fiscal Policy. It is obvious that the monetary policy has not worked and is ineffective. It can even be argued that it has created the problem. So why should monetary policy be the “sauveur”? It is ridiculous to believe this. The only effective policy in the current situation is a truly stimulating fiscal policy. True, this is not the mainstream European opinion, but it can work and renowned economists are arguing the same. Such a policy will create jobs. Investments in infrastructure, in new and green technologies, in better and higher education are among the cornerstones of new job creation. Budget cutting and austerity measures are counterproductive in the situation in which we find ourselves.
Subsequently we must not forget that a balance-sheet has two sides! This is basic and simple economics. Creating assets is creating on the right side of the balance sheet capital. Let us not forget this in the debate.
A fresh start for Europe means looking without any taboo at economic policies and shaping them in a balanced, innovative and socially coherent way.
Hence, such a fresh EU depends on a sound fiscal policy. It ensures the recovery of the European economies and will also help to reduce EU imbalances and different industrial patterns.
But secondly, a fresh EU depends also on a strong willingness to shape the international economy. Around the world, states were forced last year to engage in extraordinary expenditure, not to provide necessary public services, but to maintain stability in the supposedly self-regulating financial sector. Europe should be at the avant-garde of the necessary new international architecture. The 27 European countries are part of a unique project in which economic and political life are not confined to the nation-state. This is supported by an institutional framework which seeks to meet the needs of the people through stability, interdependence and cooperation. Therefore, the European Union represents an inspiring and constructive experiment to be considered when designing the new international architecture.
Such architecture has to guarantee a fair globalization, to reduce inequalities and to ensure sustainable development. We must recognize that politics and democratic institutions must orient and regulate the economy, because this is the only way in which capitalist development can be reconciled with the principles of democracy and social justice.
Is it worthwhile to attend all the January meetings and conferences?
Perhaps, when new and fresh ideas are developed, but not when old and known mainstream policy concepts are brought again and again on the table!Ernst Stetter