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Putting People First in Europe

PARIS – The same type of populist discontent that fueled Brexit in the United Kingdom is on the rise throughout Europe, suggesting that policymakers have lost sight of the European project’s central objective: to ensure the wellbeing of all Europeans. As the first United Nations Human Development Report put it in 1990: “People are the real wealth of a nation.”

The best way to capitalize on the people of a country or region is through social equity. Amartya Sen, in his magisterial The Idea of Justice, concluded that true social equity requires not equal treatment for all, but rather unequal treatment in favor of the poor and most disadvantaged. Mere equity in public finance or in the eyes of the law is not enough if we don’t also consider the different starting points for individuals and groups in society. Recognizing this, successive UN development reports since 1990 have made the case that both economies and societies are stronger when public policy puts people’s wellbeing first.

However, this outlook hasn’t yet taken root in the EU’s elite policymaking circles, where well-meaning economists and politicians often believe they are doing the right thing by balancing budgets and reining in spending, usually by cutting health, education, and infrastructure budgets. These policymakers, with little empirical evidence, believe that fiscal prudence today will lead to a stronger economy tomorrow.

This is the thinking behind the current policy mix in Europe, where fiscal austerity is combined with “structural reform,” meaning less spending on the social safety net and less regulation to protect workers. Obviously, the costs of these policies are mostly borne by the poor and the middle class.