Economics

Evropa ztratila cestu

Nov 4, 2015 Anders Åslund

WASHINGTON, DC – Reakce Evropy na strategické výzvy, kterým čelí – na ruskou agresi na Ukrajině, na uprchlíky prchající před násilím na Blízkém východě, na chaos v severní Africe –, vyvolává dojem, že její vedoucí představitelé nemají tušení, co dělat. A možná ho opravdu nemají – tuto realitu je zapotřebí připustit, nikoliv zamést pod koberec.

Jednoduše řečeno určuje reakci Evropské unie na vnější tlaky, jimž čelí, její stagnující ekonomika; vnitřní krize zanechala vedoucím představitelům EU malý manévrovací prostor. Naštěstí má Evropa prostředky, aby této krizi čelila, pokud dokáže mobilizovat moudrost a politickou vůli.

Kořeny problémů EU leží v její reakci na globální finanční krizi z roku 2008: ve dvou letech rozsáhlého fiskálního stimulu. Ten růstu pomohl pramálo, ale jeho výsledkem byl ochromující veřejný dluh. O sedm let později není výkon na obyvatele v EU o nic vyšší než na začátku krize. Průměrný veřejný dluh se zatím vyšplhal na 87% HDP a ponechává malý prostor k politické flexibilitě či inovacím.

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0 Comments on this paragraph, 19 Comments on this article

jagjeet sinha Nov 13, 2015

The Europe described seemingly has infinite capacity for Outward Migration - to The Anglosphere.
The Europe desired perhaps is The Anglosphere V.2.0 - with infinite capacity for Inward Migration.
And the twain cannot happen - unless Europe gets a "Trudeau", with London as its Capital.
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hari naidu Nov 9, 2015

Anders is a Swede who has written a lot on Soviet/Russian
economy while in Stockholm. Yet I venture to guess he didn't take into account the paradigm shift which is (already) in the making in global economic relations (international economics) with push to conclude FTA with mainland China - while US/WH/Pentagon are shifting their geopolitical game theory; namely, Russia (along with China) will continue to undermine US global strategic interest - thereby its economic hegemony.
Containment of mainland China has now become a state policy of this WH - led by Carter (Pentagon hawk). How to ring fence around Putin is more dicey - if Putin delivers some resolution of Syrian civil war.
Bottom line, Brussels is tying its global economic interests with China (with Merkel in the lead); US Congress is denying China of its place in IMF; TPP is fundamentally designed to enforce US strategic containment of China - specially in Asia.
So I don't think Brussels has lost its way, yet!
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Zsolt Hermann Nov 9, 2015

The very topic of this article, the "problems" and "solutions" discussed are exactly why Europe is falling apart.
It has no external problems only internal. It did not follow, execute the initial "dream" it was established upon.

It was supposed to become a true Union of nations, building true mutual solidarity creating a positive example for everybody to follow. It was supposed to show us way before we realized we evolved into a globally interdependent system how mutually complementing cooperation can give all of us a chance of a better future.

Instead the "dream" degenerated into a flat market and financial institution focused and dominated "quasi Union" which is now frenetically trying to pull all stops, sacrifice whatever it can to keep those all important markets and financial institutions solvent, functioning. These basic services that were supposed to be facilitating instrument for human trade have become all important in a typical tail wagging the dog fashion.

But life cannot be defined and measured by quantitative growth, GDP figures and the state of financial institutions. We are emotional creatures who need mutual guarantee, mutual responsibility and mutually complementing collaboration to survive as any other element of the natural system we evolved from and still exist in.

Our present paradigm built on artificial foundations, driven by excessive and unnatural demand, ruthless competition, success at the expense of others, sustained by empty bubbles is collapsing.
Let us hope we learned from our mistakes and we build a truly humane global human society on the ruins of this one.
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Joshua Ioji Konov Nov 6, 2015

The problem, I suppose, was not in stimulating 'too much' the EU Economies but in the weak Transmission ability that through inadequate taxation, lack of consumer and labor protection, high VAT, and inadequate subsidizing - takes from the all and give it to the rich practices; whereas the small businesses and investors were in great disadvantage !
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Karl Barber Nov 5, 2015

Too much ideology without a shred of evidence. The Baltics are growing now at a rate of about 2%, the same rate as G7, euro area as a whole, and EU as a whole. They should be growing faster since they are relatively poor. The catch up phase after their huge GDP collapse in 2008-2010 is over. Comparisons with the U.S. should be in terms of per capita growth, not just GDP.
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William Wallace Nov 5, 2015

Masked in there is the same austerity message that got the EU into this mess. These are not the sanity droids you were looking for.

The EU cannot make strategic policy in the absence of statesmen. Policy, in the face of impossible consensus among such disparate states, is tactical and reactive, not proactive. This is why it is failing to respond well to events; it cannot get out ahead of them in any sense.

Quantitative easing and social support programs are all the EU has had going for it (see relative French stability, with strong protections that act to maintain aggregate demand). The author would do away with both, citing apples and oranges comparisons as justification.

If you are really in favor of a united Europe, best review the foundational postulates available in social contract theory, and control for the excess influence of the 0.1% who drive these mistaken measures. No way the EU will make it without a vision for all its people.
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dan baur Nov 5, 2015

Europe's problem is in one word: socialism.

Too bad the US is moving in the wrong direction, looking more and more like Europe.
- Mr Econotarian Nov 7, 2015
  
  EU unemployment rate: 10%, US: 5%
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- Jose araujo Nov 5, 2015
  
  That's why we are still the continent with higher living standards.
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Stefan Siewert Nov 5, 2015

A brilliant analysis which conclusions follow ideological (religious?) assumption akin to voodoo or soothsaying.
The USA is for more than 100 years the leading power in terms of per head GDP. Freedom, liberalisation, structural reform, low welfare spending are part of the narrative, but not independent of other growth determinants. Not to forget, as often before in history, the US gained escape velocity through shale oil/gas, a technological breakthrough AND a natural condition that Europe and Japan do not have. The US does not have a refugee crisis due to its geography.
Stupid: It is much simpler to gain political support for demanding reform and compensate for losers, if resources are available. The main main reason, for instance, that market reforms do not succeed or succeed only slowly in Ukraine is the negative tradeoff between efforts and results. Europe is somewhere between and will overcome the current crisis. Cheap oil, cheap Euro and cheap money will work its way, as it did in the past. Referring to political will is cheap talk. So are easy answers to complex challenges.
- Mr Econotarian Nov 7, 2015
  
  There are trillions of cubic feet of shale gas in Europe that could be tracked, but the mineral rights belong to the government instead of the land owners, and tracking has been banned (likely for that reason, the land owners have no political desire to encourage production).
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Shoshon Tama-Sweet Nov 5, 2015

It makes being a young American sound pretty good. I have to say, American culture values enterprise, entrepreneurship, innovation, optimism, and hard work. I feel very very compassionate fro any European under 35- The elder generation has destroyed opportunity in Europe and kept basic elements of human dignity- a job, a marriage, young children, a place to live- out of reach for two many young Europeans. What kind of culture eats its own children?
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M M Nov 4, 2015

A ship cannot have more than one captain. A ship cannot follow different sailing paths (can adjust its route but cannot go too much of course. Where is the Captain in the EU? where is this highly qualified, trained, unbiased and disciplined crew? Before talking about reforms, one should start talking about true leadership and developing a true democratic process in the EU, respecting people rights, identity and freedom to live in peace and prosperity.
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Adrian Lucas Nov 4, 2015

The EU has problems, but they are solvable, since economic; the problems of the US are unsolvable, since cultural:
-unbelievable dumbness (about the world as a whole; about other States, etc)
-political deadlock (what, apart from initiate wars, has the Congress achieved in the past 30 years? the EU at least moves, 2 steps backwards and 3 steps forward)
-a Main Street environment that is poisonous for discourse, on account of its being in the hands of white male bullies who are anti-science, anti-rational, anti-Enlightenment
-out-of-control racism
-inability to compromise (since unable to acknowledge the Other's perspective)
-denial of reality (precarity of US water resources; earthquake risk)
-obese way of life.
The US has silk pockets, but they are only for the 10%; the coat itself is dishevelled and unkempt.
- Mr Econotarian Nov 7, 2015
  
  Economic freedom means the US can achieve far more with dumber people...it is also easier for Europe to have less racism because its countries are far more homogenous (for example, US has 0.491 ethnic fractionalization index, France is 0.272, Germany 0.095). Have a few Syrians move into a European town, and the racism comes out...
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- Petey Bee Nov 4, 2015
  
  correction (below): should read: "that is not really new"
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- Petey Bee Nov 4, 2015
  
  As for the article, to the limited extent that I can understand what Aslund is trying to say, it sounds like an economically conservative, austerity-cum-tax-cut program. I thought the US did the opposite and outperformed the EU.
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- Petey Bee Nov 4, 2015
  
  That's a bit of an exxageration. Neither the US, nor certainly not the EU have a single "center of cultural tendency". The leadership is by nature dysfunctional and effectively careless in new and increasingly creative ways, that much is true. But is that really new. As democracies, we've been lucky enough to have a standard of living which affords us the option of apathy toward this. This is uncertain now.
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Avraam Dectis Nov 4, 2015

.
This column is an interesting mixture of insight and defeatism.

The insights on European performance deficiencies are good.

The prescriptions though are mostly deafeatism.

Europe does need technological sharpening up, this is true.

Abandoning social protection is not necessary.

Social investment, state capitalism, monetary and fiscal restructuring are the answer.

For examples:

1) Social investment: promise every married citizen a significant sum if they produce a child. Keep raising that sum until birth rates rise and average age declines. This improves demographics, demand and raises inflation.

2) State Capitalism - an EU startup fund should be established, targeting growth of new business. Identify personnel, opportunity; add capital; mix; bake till done. Repeat as needed.

3) Monetary and fiscal restructuring - EU, especially Eurozone, is hobbled by obsolete gold standard inspired funding mechanisms. Switch to bond funded government. Most funding raised through floated bonds, balance through asset taxes and transaction taxes. No income taxes. Inflation controlled through interest rates, reserve requirements, loan to value constraints and so forth. Bonds monetized when due.

That would address the problems without throwing the citizens under the bus - which should be the primary goal.

.
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Evropa ztratila cestu

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