Economics

Tichá smrt vedení eurozóny

Aug 10, 2016 Daniel Gros

BRUSEL – Nejdůležitějším děním je někdy to, co se neděje – anebo abychom parafrázovali Sherlocka Holmese pes, který za noci neštěká. Právě to se stalo, když nepřišla žádná reakce na to, že Evropská komise po Španělsku a Portugalsku nevymáhá dodržení podmínek Paktu stability a růstu (PSR).

Podle pravidel PSR měla Komise navrhnout pokutu, která se Španělsku a Portugalsku za výrazné překročení cílů fiskálního schodku uloží. Pokuta by byla především symbolická, ale Komise zřejmě usoudila, že taková symbolika nestojí za to.

A nebyla to jen Komise, kdo se rozhodl neštěkat; mlčení zachoval i zbytek Evropy. Do ráže se nedostalo ani Německo, vůdčí hlídací pes fiskální přísnosti v Evropské unii. Dokonce se objevily zprávy, že německý ministr financí Wolfgang Schäuble lobboval u několika komisařů za neudělení pokuty Španělsku a Portugalsku. Německý finanční tisk, který Evropskou komisi často kritizuje za projevy přílišné laxnosti, rozhodnutí sotva zaznamenal.

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0 Comments on this paragraph, 25 Comments on this article

Paul Friesen Aug 15, 2016

Now is certainly not the time to worry about European government deficits. All EU countries should be running deficits until full employment is obtained.

But there is certainly a problem here. How can we ensure that governments return to running surpluses when times are good? They seldom do. I believe that we need to take the decision of whether or not to run a deficit away from elected officials, in the same way and for the same reasons that we took the decision on interest rates away from them. We already have central banks run by appointed, long-term officials, and this seems to work well, freeing monetary policy from political interference. We need to free fiscal policy in the same way. Give an appointed body control of some key tax rate, such as the rate of a value-added tax. Then they can determine how much fiscal stimulus is needed at any time.
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Philip Palij Aug 15, 2016

Germany and France have been breaking Eurozone 'rules' for years. Recently EU dictator Juncker, when asked why France would not be fined for breaking the 'rules' by running an out of bounds deficit replied - "Because it's France".

My point is that wheras the worlds worthy economists by the basketload treat the people who run the Eurozone with a respect they don't deserve. The Eurozone is a badly architected financial nut-house run by ideological delusionists who are increasingly remote from reality.

Spain and Portugal were not fined because the whole EU/Eurozone basis for existence is crumbling. Eptomised by Merkel arbitrarily inviting in economic migrants and asylum seekers alike from every failed state on the planet and wondering why the rest of the EU nations are up in arms.

Too much globalization, too much corporatism, too much elitism. The Eurozone will disintegrate into sustainable chunks in the not too distant future.
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Stan Sorscher Aug 14, 2016

The headline was more interesting than the story. When you integrate economically, you will need some kind of political structure in parallel.

The first governance structure for the US was the Articles of Confederation. That failed for reasons we see today in Europe. The US Constitution was written in 1789 with a stronger central government, but many protections for individuals and states.

Are the "bureaucrats" we keep flogging really a proxy for weak non-democratic governance?
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Michael Hullevad Aug 14, 2016

Well, Some nations are more equal than others! It has turned in to a beggar thy neighbor economy. A transfer union is looming!
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Robbie Jena Aug 14, 2016

There is a solution to improve Eurozone new deal. Only way to integrate Europe, is Advanced Industrial Ecosystems for USA...keep working...AND while there, get rid of, over 100K of BAD Governance in USA...Thank You...
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jose sousa Aug 14, 2016

Why? Probably because simple common sense lead to such decision. But yes, common sense is not so common, as Voltaire properly remembered.
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John Primm Aug 14, 2016

George's comment about responsibility is spot on. I do wonder if the real reason is that the EU bureaucrats have lost faith in their creation. That is a recipe for chaos. I for one will be glad to see those unelected bureaucrats gone. Europe is in deep crisis due to a lack of will to do the unpalatable but necessary fixes. That and a loss of Faith.
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Jason H Aug 14, 2016

After Brexit they know if one EU member leaves the whole neo-liberal single monetary union collapses. Wherein earth did the 3% deficit target come from? What's it based on? How can Germany run a surplus with Europe while others run a deficit with Germany? By definition one countries surplus is another's deficit? Do economists forget the basic realities in their complex mathematical models?
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JAMES BECKMAN Aug 14, 2016

Jamel, right on. Where is my government when I need it. Pro-cyclical may be for bankers, but contra-cyclical is where governments earn their keep.
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JAMES BECKMAN Aug 14, 2016

I prefer to say that the EU is still a teen-ager, growing into a changing world. The change is largely due to economic globalization & the incessant wars of the Muslim world. Of course, the latter has been abetted by military policy from the West.
I believe many issues regarding sovereignty must be discussed, say the open borders' model which is wonderful for EU workers, all vacationers & most of all EU commerce. But then here come refugees & Isis, both from common situations.
If a 3% deficit limit is important, show each nation why in terms of the well-being of its people. The answer is, you can't. Again the civil servants are guilty of discussing rules, with- out a clear justification. One such justification is the costs of dealing with terror & refugees, to- gether with the matter of supporting the losers from globalization. Oh, I hadn't thought....
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Alan Kirman Aug 12, 2016

THe only missing item in this article is the nature of the terms of the SGP. It never made sense to put arbitrary numbers such as 3% in a treaty, independent of the country or of the country's economic situation. Trying to enforce these requirements rigidly was not viable and finally the European authorities have realised that.
- JAMES BECKMAN Aug 14, 2016
  
  Alan, completely agreed. Rules are meant to generally fit a situation, but globalization with new economic relations in every direction changes daily.
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Walter Gingery Aug 12, 2016

Gros has such a touching faith that all would be well if only everyone played by the rules -- his rules.
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R 3e8 Aug 11, 2016

Perhaps because france and germany did it before as well?
Perhaps because the economic "sucessful" adjustment that led to this result was dictated by the EU itself within the troika?
If it is symbolic the fine why dont you, along with the eurocrats/bankers/specialists that bloodsuck the average european citizen, pay for it saving devasted citizens from further hardship?
No wonder the UK citizens told those rare specialized birds to f.off!
"Get a proper job"!
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Annie Cooperman Aug 11, 2016

Why I am not surprised at the revelation that Schauble's pious cries about the necessity of "fairness" regarding fiscal "discipline" during the recent Greek debt crisis were pure posturing for German public opinion? Are we supposed to conveniently forget Schauble's insistence that Greece be treated like all the other more "responsible" countries that had experienced fiscal starvation under austerity rules? Schauble and the Euro Group insisted that morally intransigent Greece be treated the in same way as the other more virtuous countries (without flexibility or special privilege). In retrospect, it is likely that Schauble's ultimate motivation was to force Greece out of the Eurozone, because he considered Greece a burden, and also because he wished to intimidate other countries that dared to defy the fiscal rules. However, now that the economic stagnation resulting from the strictures of the Growth and Stability Pact are fomenting a populist revolt across Europe, Schauble has realized that it is not politically viable to demand adherence to the dictated fiscal limits. Today, demanding fiscal compliance from Spain and Portugal risks encouraging populist and socialist revolt. Fiscal discipline adherents will listen in vain for a murmur from Schauble about the moral necessity of Spain and Portugal "following the rules" like everyone else. The morality play has been expeditiously and cynically abandoned.
- JAMES BECKMAN Aug 14, 2016
  
  Hi, Anne, as an American prof (engineering/ biz) long resident in Germany, my take on Schauble is that he reflects his East German /Communist political career. Sure he wants to impress his party, but he also knows the Greeks have both a miserable Communist & military government history. He doesn't trust them--as I don't, although I truly like them a lot.
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jonathan Story Aug 10, 2016

Very interesting. But I'd like to know when member states gave priority to the common good rather than national interests.
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Joe Mark Aug 10, 2016

Oh, the sacred 60/3% rules which were given by god himself to the eurozone. Wasn't the original plan sort of "if we stick by them, nothing bad will happen"? Didn't really work that way. So obviously there must be something wrong with that framework.

Of course one can worship self-imposed rules without questioning their original purpose and pretend they will fix everything. But don't expect anything to get better.
The amount of ignorance and lack of analytic capabilities is astonishing - and depressing.
- Jason H Aug 14, 2016
  
  Thanks you said it better than I could. God like belief in made made rules. It's truly bizarre to watch from the outside while groupthink stops anyone asking who are humans rules designed for? They forget humans are the purpose and can change things that don't work!
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Jamel Saadaoui Aug 10, 2016

An European greater good... There is no such thing. The fiscal rules of the SGP are based on flawed economic concepts. The economic policy has been procyclical in the eurozone during the 2000s. The performances in terms of growth have been very weak relatively to the leading countries in the World Economy.

European institutions seem trying to understand that the current institutional setup will generate more and more anger against the European construction.

Best.
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Daniel Esmond Aug 10, 2016

We have a set of significant crises and flexibility/adaptability is needed. Why is that a problem?
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george jonisch Aug 10, 2016

The virus called "No responsibility, No consequences" has infected every area of western modernity; finance, sports, education, certainly politics. Disappointed, yes but Why surprised?
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P. Foofootos Aug 10, 2016

There was nothing in Europe's charter more damaging for the common good than the SGP. Besides, the risk premia you mention, were the sames regardless of debt levels: indeed, the countries with the biggest surpluses and lowest debt levels and conforming to the SGP, Spain and Ireland, were bailout package recipients, since the Eurozone's problems stem from Current Account imbalances.

Indeed, the Macroeconomic Imbalance Procedure is much more important, and helpful to the Eurozone, governance procedure, and yet Daniel Gros and other commentators seem excessively preoccupied with the SGP and debt levels. One wonders why that is, and how something that is now a consensus analysis of the EZ crisis among Economists, somehow eludes the author. Taken together with his other articles, it's clear that either he doesn't have macroeconomics training, or he wants to optimize something else, not Eurozone's GDP and unemployment.
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Steve Hurst Aug 10, 2016

'Wolfgang Schäuble lobbied several commissioners not to impose fines on Spain or Portugal'.

If you are left looking to Wolfgang Schauble to be your fairygodmother you got real problems, I mean real problems

The question is why has Germany intervened to warp governance and you do not cover that. What explains the silence?
- Jason H Aug 14, 2016
  
  Why is Germany running the EU anyway? Surely that's the starting point and every other question after that should be in that context? Control Europe without war?
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