A New Deal to Save Europe

Jan 23, 2017 Yanis Varoufakis

In the wake of the euro crisis, Europeans shudder at the thought of giving the EU more power over their lives and communities. That's why an alternative to EU leaders' push for European federalism must be found.

LONDON – “I don’t care about what it will cost. We took our country back!” This is the proud message heard throughout England since the Brexit referendum last June. And it is a demand that is resonating across the continent. Until recently, any proposal to “save” Europe was regarded sympathetically, albeit with skepticism about its feasibility. Today, the skepticism is about whether Europe is worth saving.

The European idea is being driven into retreat by the combined force of a denial, an insurgency, and a fallacy. The EU establishment’s denial that the Union’s economic architecture was never designed to sustain the banking crisis of 2008 has resulted in deflationary forces that delegitimize the European project. The predictable reaction to deflation has been the insurgency of anti-European parties across the continent. And, most worrying of all, the establishment has responded with the fallacy that “federation-lite” can stem the nationalist tide.

It can’t. In the wake of the euro crisis, Europeans shudder at the thought of giving the EU more power over their lives and communities. A eurozone political union, with a small federal budget and some mutualization of gains, losses, and debt, would have been useful in 1999, when the common currency was born. But now, under the weight of massive banking losses and legacy debts caused by the euro’s faulty architecture, federation-lite (as proposed by French presidential hopeful Emmanuel Macron) is too little too late. It would become the permanent Austerity Union that German Finance Minister Wolfgang Schäuble has sought for years. There could be no better gift to today’s “Nationalist International.”

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Building a Progressive International
Justin Sullivan/Getty Images

Building a Progressive International

Yanis Varoufakis thinks that neither neoliberals nor neo-nationalists can answer the key question of our time.

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The Universal Right to Capital Income
Nikada/Getty Images

The Universal Right to Capital Income

Yanis Varoufakis devises a mechanism for financing a basic minimum income that does not rely on taxation.

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Martin Malliet Feb 27, 2017

Voldemort's facebook friend is at it again! "That New Deal will be based on a simple guiding principle: All Europeans should enjoy in their home country the right to a job paying a living wage, decent housing, high-quality health care and education, and a clean environment." - One could ask: haven't the Greeks already tried this out with borrowed money? Well, yes, but it failed when lenders stopped lending. So let's try it again for the whole of European? And finance it with seigniorage profits! Not enough? Well, there is of course Wolfgang Schäuble's idea of a ’permanent austerity union' that needs to be overcome, if we want to make the Germans pay for it. - If anything, Yanis Varoufakis is a symptom of the Greek disease spreading to the whole of Europe.
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Mauricio Duran-Loriga Jan 31, 2017

The European project was based since day one on two main guidelines: Germany will economically conquer Europe, while at the same time France will be granted the political lead.

The Union economic architecture was specifically designed both to permanently transfer wealth from almost every country to Germany and to plunge those countries into debt serfdom (as a double controlling mechanism to ensure wealth transfer to Germany).

Germany is a gigantic mining company that drills every European square foot to extract any available wealth. That is what truly delegitimizes the European project. Is that really worth saving ? Make your bet.

First disinflation, then deflation, both originated by the inclusion in the worldwide labor force supply of the +2000 million Chinese and Indian workers.

On May 6, 1939, Henry Morgenthau, Roosevelt’s treasury secretary, publicly confirmed the total failure of the New Deal to stop the Great Depression. Yannis...?
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D. V. Gendre Jan 30, 2017

"Life for Britons and Germans will improve not by building electrified border fences and withdrawing into the bosom of the nation-state, but by creating decent conditions in every European country."

To create decent conditions in every European country was/is the goal of the EU. But especially the Greek case shows how hard it is to achieve. Mr. Varoufakes and his left wing populist friends are prove enough when they did everything that this conditions can't be implemented in Greece. Every try to renew the Greek economy and government was fought by you and your neo elite friends.

Mr. Varoufakis beliefs that there is a painless way to unwind decade long mismanagemant from Greek elite. The EU should just send more and more money and something will transform the Greek economy in a miraculous way and suddenly the country will be innovative and competitive - that's your idea Mr. Varoufakis. Not to forget that the mismanagement of those elites were always tolerated and even accepted by the Greek voters who like to play the "victim role" today.

The eastward expansion of the EU was bought at very high expenses because those countries and their elite always knew that they are net beneficiaries. Not the noble idea of piece and economic freedom led them to join the EU but mostly a very pragmatic way of thinking.
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Louis Woodhill Jan 30, 2017

Europe's problem is not insufficient socialism, as Mr. Varoufakis asserts, it is far simpler than that. Modern economies cannot tolerate deflation, and the ECB has produced monetary deflation.

The best price index by which to measure the value of a currency is the CRB Index in that currency. In 2005, the euro CRB averaged 252.54. At the end of February 2016, it was 150.05. It is now 180.45. This amounts to some relief from the worst of the deflation, but not nearly enough to permit highly indebted nations to recover.

The one nation that has had significant relief from deflation is the UK, where Brexit has brought the UKP CRB Index up to 153.64, not too fare below the 2005 average of 172.48.

Don't be surprised if the UK economy does much better than that of the eurozone in 2017.
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Bob Aceti Jan 29, 2017

EU challenges are taxation, internal trade and freedom of labor. Consider tax policy. It is one thing to issue policy statements on progressive equaility of opportunity and policy precriptions to deal with tax differences, quite another to actually accomplish fairness and equitable relief to those affected negatively in the over-all result.

Uniform EU taxation policy is necessary for a sustainable EU. A clear and unequivacal tax policy should not result in an orgy of tax litigators dancing on the head of a pin. Tax litigation is a 'sport of kings' and favors deep pocket litigants with end-games to settle claims without recourse to admissions.

Once a uniform and operable tax policy and compliance audit regime is implemented in the EU for individuals and commercial entities, equitable relief would be in order to ensure fairness in similar unexpected circumstances.

Diseconomies, case-by-case results, would be published as guidance for EU tax authorities. The challenge of taxation is that the 'tail wags the dog' : too much effort is made to appease '1%' of taxpayers - mainly transnational corporate and extreme wealth classes, that hold a majority of economic, financial and wealth controls.

The over-all issue is 'sustainability'. A sustainable state must implement a uniform tax policy that is fair, equitable and subject to 'effective' compliance. If the EU is suffering from a risk of failure it can start by looking at the EU quagmire of tax policies that detracts from 'sustainable' governance and harms the unification process that will require material time to resolve. The current financial 'crisises' rolling through EU banks is a result of benign neglect by government officials to implement regulation for fear of being scapegoated for economic decline that results whenever the banking system is called to account.

Europeans would be better-off by cooperating through unification than following the 'American Way' that entails a winners and losers approach to civil society: Corporate Winners are supported through subsidies, grants and federal buying programs while people challenged by global trade and automation job losses are placated through 'social-welfare' subsistence programs. (President Trump's arm-twisting of corporate executives to 'Make America Great Again', instead makes good theater for his supporters.)

Fix the EU's tax and audit-compliance policies as a start; regulate banks; and pay close attention to diseconomies and interdictions to provide a safety net to those unfairly caught in the transition to a 'sustainable' EU. Only cooperation is needed to solve European challenges.

Government leadership, though important, requires 'thought leaders' writning here, elsewhere and through academia to chime-up and press EU representatives to focus on increasing the EU's powers. Implement an EU uniform tax policy and audit-compliance regime as a major step in the correct direction to imporving the lot of all Europeans.
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Bob Aceti Jan 29, 2017

The common market proposed by the EU membership model is a smart course of policy to unify Europe. The BREXIT and similar populaist movements are wrong. They are using nationalist sentiment to cover-up xenophobic strains that are reminisent of the Nzai period in Europe.

The only challenge of EU policy of integrating several cultural nations into a more cohesive and transnational state is timing. The notion that great challenges can be resolved soon are erroneous. The United States required over 100 years of European settlement history before it could become a economic and polictical jugernaut.

Techonology and 'social media' is not the growth, innovation and convergence model to follow when dealing with human beings from desparate cultures with long histories - good and bad.

The EU needs sufficient time to heal within and growth a unified state from the seeds of its genetic sub-states. Stay the course and prosper together or fail. President would like to see Europe in disarray so that American enterprises and real estate developers may contnue to acquire assets abroad that result in further dominace of the world order based on the ownership of commerce that results in economic leverage to politically motivate policy.

The 'old way' is to start wars or rumors of war. The new way, as most here may agree, is through trade and economic dominance. The Chinese understand this well. The last thing China needs is war. China's leadership has succeeded better than all other G8 nations to avoid war and focus on the money - trade and economic influence.
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Erin Harris Jan 29, 2017

Mr. Varoufakis' blog has been a must-read for me ever since the earliest Syriza days, when the Troika's abuse of his nation made me one of many who championed Grexit. Now I hope with him that the EU will accept democracy, end the piracy of banksters and tycoons, do the right thing for the people and survive. Its collapse would most likely be far from pretty, as Mr. Varoufakis has always pointed out. I commend him and the other leaders of DIEM25 for this very insightful and sensible plan. There's more than enough money to pay for it, if the grillionaires who've been allowed to amass obscene fortunes are finally taxed properly instead of subsidized further with interest on loans.
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eusebio manuel Jan 29, 2017

It the UE is considered a company hand as some important problems but it is probably salvable look at what does not work change is not possible to scrap it and build what works For many continental Europeans the central objective goes significantly beyond the market Freee the common values enshrined in the charter of human rights social environmental standards are essencial because a supranational budget is absolutely true
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Chris Parry-Davies Jan 29, 2017

Generally an insightful, trenchant article. Given, however, some of the proposed solutions are either impractical or highly unlikely to ever come to fruition, three things need adding in if the tide of nationalism is to be stopped. Firstly, some slowing or phasing in (NOT abandonment) of the free movement pf labour/immigration into EU member countries. Whether the befitting middle to upper classes like or not, present immigration is providing fertile ground for resurgent nationalism, while allowing companies to mainline on pushing down labour costs rather than investing and innovating. Secondly, greater harmonisation of company taxes; putting an end to the present tit-for-tat raiding of each others economies between member states (with Ireland and Luxembourg merely the most blatant examples). Thirdly, reforming the Euro. At present, this gives countries like Germany a massive hidden currency advantage - the real source of say Germany's sccess over recent years - while locking the less advanced southern Euopean economies into a contractionary trap from which they can't compete or escape. My personal solution would be to split the Euro into two currencies annually pegged to each other. But there also other ways of achieving the same end, provided they put an end to growth in the most advanced economies being bought directly at the expense of the less advanced ones.
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B Wilds Jan 26, 2017

You can't spend your way out of debt and creating more money won't solve the problems we face. A read of the pdf file of the 2009 bestselling book titled, "This Time Is Different" did little to convince me that this time is different.

It chronicles eight centuries of financial follies in which financial meltdowns have typically followed real-estate bubbles, rising indebtedness, and gaping deficits. More on why many of us see a strong similarity between what is happening today and prior financial meltdowns that have resulted in crisis can be found below.

http://brucewilds.blogspot.com/2016/12/thoughts-on-this-time-is-different.html
- Patrick Newman Jan 29, 2017
  
  Oh yes you can if there is unemployment and underemployment unless you worship at the3 altar of Micawber moneynomics!
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B Wilds Jan 26, 2017

The Euro-zone has entered the post-Brexit referendum stage that is certain to hold great challenges and increased risk. In my opinion, many people have greatly discounted the test awaiting governments faced with growing opposition to expanding the control of those in Brussels. To make matters worse the recent coup attempt in Turkey has created even more problems for the troubled union.

The growing anti-globalization movement which has gained support in developed countries across the world is very strong in areas of high unemployment and many people would like the option of voting against more political power flowing to a growing power grabbing bureaucracy in Brussels. The article below delves into some of the problems the Euro-zone currently faces.

http://brucewilds.blogspot.com/2016/07/euro-zone-post-brexit-is-bit-of-snake.html
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vivek iyer Jan 24, 2017

Varoufakis does not mention fears re. migration from outside the EU. Yet, it is a big factor.
Varoufakis also conveniently forgets that there was supposed to be a 'Growth and Stability' pact which would create a minimum income floor and welfare safety net. Greece refused to embrace this minimum for its poor.
Let us now look at Varoufakis's 5 proposals-
1) Green investment- since the bureaucracies he mentions are bad at spotting viable investment opportunities, this is money down the drain- or rather an opportunity for corrupt rent-seeking. Tax payers won't stand for it. Financial markets will have no confidence in the supposed 'assets' created by it.
2) Employment guarantee scheme- either this is 'workfare'- i.e. a method of penalising the unemployed- and wasteful or it is just wasteful. If Governments had the ability to create jobs which pay for themselves- i.e. which are fiscally neutral- they can do it anyway. If not, how is the fiscal deficit supposed to be financed? Either the currency has to be debauched or the Govt. runs out of money and shuts the banks and cuts wages and benefits as happened in Greece.
3) Bulgaria is poorer than Greece. Will the Greek tax payer be happy to provide a minimum income to Bulgarians? What about Kosovans?
4) Some countries have more capital than others. Varoufakis thinks they will happily tax that capital and redistribute it on the basis of need. Why would they want to do that? Any why stop within the borders of Europe? Why not include the poor people of Bangladesh or Mozambique in this bounty?
5) Anti-eviction legislation- wonderful! Either the 'fair rent' is lower than what you pay or the measure is meaningless. But, if the 'fair rent' i smeaningful, why pay more? You can't be evicted. Let the landlord take a capitalized loss. Let Banks have yet more toxic assets which require a bailout and more austerity on the Greek example. Let the housing market freeze up and housing stock start to deteriorate. If Banks can't evict people, Gangsters can. Within ten years Athens will look like Aleppo.
Why?
Well, Varoufakis's grand scheme depends on debauching the currency. But who is to say that only his own bunch of nutters will do the debauching? Why shouldn't every bunch of nutters or sociopaths take a hand?
Seigniorage arises because the Lord can force you take his scrip. Gangsters gain more seigniorage than bien pensant dreamers.
Varoufakis's tax-based 'electronic public clearing system' suffers an obvious flaw- more especially in countries like Greece with corrupt and ineffective tax departments. In essence, it allows 'black money' to tax 'white money'- it transfers wealth from people who pay their taxes to those who don't. Vide http://socioproctology.blogspot.co.uk/2016/02/varoufakis-as-mathematician.html

Varoufakis type silliness is not a solution to, it is a symptom of, European disintegration.
- Curtis Carpenter Jan 25, 2017
  
  Finally!
  
  I've copied your thoughts here, and will read them more carefully in the morning. Since this article is probably going to go away soon, I'll also repost them the next time there is an article on the future of Europe. Perhaps you can get some constructive and informed feedback on your ideas!
  
  I would ask one question here tonight. Do you have any thoughts on the conditions under which EU member states would be willing to adopt your Independent Border Agency with the authority you propose? I'd be interested in reading what you have to say on taking the concept to the next level of detail.
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- vivek iyer Jan 25, 2017
  
  What wold my solution be?
  1) An independent Border Agency for the Schengen zone able to call upon the armed forces and navies of member states. This depoliticises the issue, prevents grandstanding.
  2) No more universal rights or jurisdictions or supremacy of European law. Instead I'd like to see a lot of diverse 'Tiebout models' - fiscal mixes and rule sets- like the Cantons of Switzerland. Each determines the degree to which European Law is supreme. No fiscal entitlement to arise without an underlying incentive compatible vinculum juris. In other words, what people get from the state is related to what they put into it and there is hysteresis bias in favour of autochthones. This type of subsidiarity is self sustaining unlike the artificial sort which is just bureaucratic buck passing or political rent seeking.
  3) Monetary competition and variegated asset markets. This is technical stuff and there isn't really an off the peg Econ model for it. Essentially, I think more uncertainty, asset heterogeneity and poorer linkages are a good thing in European financial markets. Few would agree.
  
  If Europe simply blunders on blindly some of what I describe will happen by default anyway but on a lower secular trajectory than need arise.
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- Curtis Carpenter Jan 25, 2017
  
  OK, but vivek -- you have once again told me what has NOT been done, with no commitment to what you -- an obviously intelligent and informed person -- think SHOULD BE DONE NOW. And that, it seems to me, is the issue.
  
  Are you afraid to commit yourself to anything except a harsh critique of the ideas of others?
  
  Yanis Varoufakis has provided a point of view. That takes a certain amount of patience, if not courage, since there will always be people like you who will set themselves up as critics and judges without offering any alternative points of view.
  
  What are YOUR ideas going forward -- that's all that's being asked. Share your _constructive_ thoughts with us. That's how progress is achieved -- not by dismissing others with the courage of their convictions as lunatics.
  
  Should the idea of a united Europe simply be ditched? Or should an effort be made to save it? In either case, what do you think needs to be done now?
  
  I gather you would "seal the borders." OK -- but is that it? Is that the whole plan? And even if so -- how would you go about it? Start killing people in their boats as they stuggle to cross the Mediterranean? Bomb North Africa (more a U.S. than a European approach I know...)
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- vivek iyer Jan 24, 2017
  
  I think you have misunderstood me Curtis. I am not suggesting that we travel back in time to scold Roosevelt. What I'm saying is that Europe did not seal its borders and thus imperilled Shengen. They also did not implement the 'Social Minimum' part of the 'Growth & Stability' pact, which let to genuine distress and the electoral rise of lunatics like Varoufakis. Still, it has learned its lesson and- after a lurch to the right- will probably come back on an even keel.
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- Curtis Carpenter Jan 24, 2017
  
  With respect vivek iyer, there is again nothing constructive here to build on. You've only extended your critique to Roosevelt's New Deal as you understand it, and that comes a little late.
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- vivek iyer Jan 24, 2017
  
  The Growth & Stability pact made sense. Shengen made sense. Neither was enforced in an incentive compatible manner. Consequently the European Project has lost credibility and will probably go forward with some controls on the movement of factors of production and with more fractured asset markets.
  That's fine. Once the stupid dreamers have been shaken out the system can reset. Clearly, no State or Super State can afford to have open borders. Europe will go back to strict immigration controls. Indeed, that is already happening. 'Universal' Rights are likely to be scrapped as will the concept of Universal jurisdiction. Within, 'Fortress Europe' there will be more subsidiarity and hence 'Tiebout sorting'- i.e. fiscal harmonization is off the table.
  Yes, older people like me will take more of a haircut than we'd hoped- our living standards in retirement will be lower but, sooner or later, the excess burden on the young will lift and, long term, that is the quintessential precondition for our own tranquil retirement.
  
  Varoufakis writes as though Europe is suffering a monetary shock like that occasioned by the Bank Failures that succeeded the Wall St. Crash. He thinks a 'New Deal' is needed. But the New Deal involved forbidding Americans to hold gold. It meant that the return on fungible assets went low or negative. Consequently, 'pump priming' didn't work. The New Deal failed. Living standards fell for many, rose only modestly for most but one effect, reinforced by the war, was the destruction of the rentier class and the transfer of power to a bureaucratic/managerial elite.
  If you are in your fifties or sixties, it is likely that an increasing amount of your income is of a 'rentier' sort. You may think it a good thing if your living standard is lowered so that plausible young rogues with worthless MBAs play ducks and drakes with capital which would otherwise have accrued to you. If so- cool. Give ear to every charlatan who comes along with a cockeyed proposal for a 'New Deal' to prevent some imaginary disaster befalling your country. That's what the Greeks did when they voted for Varoufakis. They've suffered for it.
  But that suffering won't go on for ever. Sooner of later crazy fools like Varoufakis are shaken out of politics.
  Economics is ergodic or it is nothing. It's not about getting high on Saturday night but making do and mending till payday.
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- Curtis Carpenter Jan 24, 2017
  
  Criticism comes cheap. Constructive ideas come dear. What are your own constructive ideas to "save Europe?" Or alternatively, if that is your interest, to dismantle it?
  
  Or if not your own ideas, who's would you recommend?
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François Dupont Jan 24, 2017

"Why is the european idea dying ?" writes Yanis Varoufakis.
Much because it's not an idea than a fight for leadership between the two historical leaders, France and Germany than any other reason.
To be more precise, the two civil societies aren't at all one against the other but scared and manipulated by classical parties and their servant local medias. But they both know that their destiny is to join to go on to live in peace after three "continental civil wars" of 1870, 1914 and 1939.
But since Maastricht both french and german elites have just one idea in mind : not at all to apply the correct Werner's plan to use euro to compete with dollar and renmimbi, huge macroeconomical weapons in hands of true well equiped federal States. They simply declare "now the European Cup for Champions States is opened !"... and inside Eurozone, each year, ther's one winner and 18 losers !
Sense of political responsibilities deserted the governmental staffs, now completely unable to cooperate as they did from 1950 to 1992. Since the Merkel-Sarkozy clash, they don't care at all if Greeks, Portugueses, Irishs, Spanishs, Italians die...because their populations just incriminate their local governments, certainly responsible too of lacks and risky behaviours, but not of the stupid fight to death between two deers with interdependant woods, condamned to die together one after the other.
Emmanuel Macron perhaps looks timid, but a citizen wave accept the way he is alone to draw : in what Germans are right, the next french presidence can agree, in what they are wrong, no. They are wrong with austerity, they are right that french powers need a deep reform to be less arrogant and responsible in the future.
- Henk Crop Jan 24, 2017
  
  Francois Dupont,
  
  I agree that the history of Germany and France is a important basis for the EU.
  The EU of the six worked well.
  Since then many changes have taken place which threaten the EU.
  - Expansion to 28 members
  - An unmanageble 28 EU commisioners
  - Switch from a trade union to an all encompassing EU state
  - No European political leadership
  - Poor management of the EU
  So I think the EU organisation should be put on the drawing board again.
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- Curtis Carpenter Jan 24, 2017
  
  If, as you believe, "Europe" isn't an idea but a struggle between France and Germany, what would you suggest be done to restore it as an idea? I ask with sincere interest.
  
  With the U.S. likely out of the picture (or at least much attenuated) for the next four years, Europe is presented with an opportunity to reassert itself. But it will need to make up its mind, fairly quickly, on the future of the EU or it will miss its chance.
  
  What a shame if Europe fragments at the very moment when its unity could be put to its greatest use.
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Jose araujo Jan 24, 2017

Employment guarantee scheme , the right of a job, is something long due.

I still think something is missing, the aglomeration economies are too powerfull for peripheries to prosper, so there has to be a diferentiated tax for imported abd created value.

VAT is highly assymetrical and taxes in excess work and job creation industries while protecting import and export industries.

Until we can figure out why a can of Coke sold in Portugal is being botled in Denmark, we cannot make the EU work.
- M M Jan 24, 2017
  
  Jose, I am still trying to understand why did Yanis sign his appointment document with a German pen and aGerman ink when he accepted his appointment as Finance Minister of Greece!
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Michael Public Jan 24, 2017

I think most readers missed your most important point, that it will be financed with money creation and not with taxes. Money creation is the single most powerful lever in modern economics and using it to finance a new deal is maybe a little risky, but if it is done responsibly it will transform the economic landscape from one where banks/speculators can access new money (trillions) to one where individuals and businesses can access it. The difference to economic activity will be huge because instead of being used to consolidate control and stifle competition it will be used to advance it.
- M M Jan 24, 2017
  
  Mike, there is no such thing as Free Mone.yRegarding your $12, Mr Yes He Can, is enjoying it in the Sunshine now..
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Sarah Glass Jan 24, 2017

Some very good ideas from Yanis here. This New Deal needs to be taken seriously, because what has gone on for the last couple of decades can not continue without breaking the EU apart.

We pay for all this by the work we do, and the taxes we pay. We can do neither of these things and we take off the state if we are unemployed. Full employment is the number one issue and will create a backbone for the rest.
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Henk Crop Jan 24, 2017

Who is going to pay for all these nice ideas ?
To me it looks much like the communist systems we had in the past century. Everything planned by the Government. About 70 years ago about half of the countries in the world had such a system. It did not work and, except for Cuba and North Korea, they all switched to the market economy.
In the mean time the people in these countries had to live in poverty and under autocratic rule.
Furthermore I think that mr Schaubele is doing the right thing. Too much debt has already been built up in the EU. Debt that our children have to repay.
You say that countries at the periphy of the EU need to emigrate. However many countries in the periphy are doing reasonable well; Sweden, Finland, Ireland, Poland. Spain is improving. Why is Turkey doing so much better than Greece ? Perhaps there are other causes than geography or austerity ?
- Henk Crop Jan 24, 2017
  
  It did not work in China. They became only succesfull after they quit the central control of their economy. Sweden did not have a centralized economy. The U.S. new deal was succesfull temporarely. It was the threat of the 2 nd World War that boosted the economy.
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- Michael Public Jan 24, 2017
  
  It worked in China. You forgot China. It worked in Scandinavian countries. You forgot those too. Maybe America is somehow exceptional and only winner-takes-all-can-work, like in 1930's in America, if your history book goes that far back. /s
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Wayne Davidson Jan 24, 2017

Before entering the European union all the member countries were independent Sovereign nations with the political authority to exercise independent control over their entire economies.
As members of the EU these countries are now subject to a set of laws that by definition define these members as "states" and all that implies.
States where the laws of trade, immigration, competition, agriculture and by default their very cultures are enforced by a European Parliament and a single currency that has immiserated their economies. "The constitution defines the Union as a democratic and open Union of equal citizens and equal states."
Democratic equality was never possible under the EU because
independent implies self governing and the day these countries entered the EU they gave away their independence. RWD 2017

"Definition of a state:
A territory built by conquest in which one culture, one set of ideals and one set of laws have been imposed by force or threat over diverse nations by a civilian and military bureaucracy. States are ephemeral and originate and disappear with the stroke of a pen (e.g. the end of the U.S.S.R., December 25, 1991)."
Nationsonline.org
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Petey Bee Jan 23, 2017

+0.99

This piece is talking about all the right things.

To me, what I read here is a much more appealing alternative than the selectively corporate-friendly reactionary nationalism, which is the politically real alternative to the status quo of ... austerity union / slowly changing into a weak central-bank mediated transfer union, which is readily gamed by privileged players.

As a practical matter, a formidable obstacle is the creditor/debtor power-relationship pattern in the EU/EMU. Mr. Varoufakis has been very good in shining a light on these over the past few years. What would motivate the most powerful stakeholders here?

Also, it's interesting to see that the plan outlined by Mr. Varoufakis explicitly addresses migration. Shaping the approach to this, with the goal of balancing the economic forces that motivate cross-border movement of people is a neat trick. It would be interesting to more deeply explore the implications of this...
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Peter Lintner Jan 23, 2017

All nice, Yanis, you just forgot to say who´s going to pay for your ideas. Because it´s going to cost whole lot of money. Nice try though.
- Michael Public Jan 24, 2017
  
  Actually, he did mention how it is financed, but you must have missed it.
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Jan Czaja Jan 23, 2017

I'm going to have to agree with M M's comment below and take a pessimistic view. Unless Germany's position changes, Mr. Varoufakis' vision will be just that: a vision. Furthermore, unless I'm mistaken, I see no reason for Germany's current approach to change. After all, they are the beneficiaries of the current imbalances. I believe they even had a budget surplus in 2016. Guess what, why would they try to change something that works for them just fine. Commentators will probably replay something along the lines of greater good of Europe, the pan-European ideal, etc. I say wake me up, when that happens. I believe the only way you can force Germany to change is by hitting them in their pocket book i.e. somehow negatively affecting their export levels so their surpluses turn into deficits and they realize how it feels to be on the receiving end. Even then, I feel Germany can find new export markets to replace the lower Eurozone demand. This is a tough issue, but the answer definitely lies in Berlin, rather than in Mr. Varoufakis' grandiose plans.
- M M Jan 24, 2017
  
  Peter, the German establishment will need to make a choice, between funding the refugees or funding their fellow EU citizens! With the demographics the way they are the odds should be pretty obvious, so damn if one does and damn if one does not!
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- Peter Schneider Jan 24, 2017
  
  Your comment shows the whole tragedy (or better travesty) of this so-called "European Union" where nations with completely different (if not incompatible) concepts of economic, monetary, financial, social and cultural policies are forced together in an artificial currency union. What would be the greater good if you have such fundamental disagreements? Maybe disintegration?
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M M Jan 23, 2017

Yanis, we seem to be going round and round in a vicious circle, unless Herr Schauble pulls the right strings nothing will work. Any proposal regarding the EU must come after the German elections, mind due the causes and root causes of the banking crisis are still in the system like cancer add to this the two TTs' with the IQ of a one year old, ...good luck with your efforts....reminds me of the one that once said"Yes We Can"...
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Curtis Carpenter Jan 23, 2017

Yanis Varoufakis has placed a first draft of a European New Deal on the table. That act requires no small measure of courage and dedication to the European idea.

Isn't the key question now though whether the EU member nations can muster the courage and dedication to discuss this draft (and others, perhaps) in a constructive, open forum? It seems highly unlikely this year -- and possible that next year will be too late.
- Michael Public Jan 24, 2017
  
  Revolutionary ideas like these are a major threat to the current power status quo. There is no way they will even discuss them unless their constituents demand it en mass. And there is no way their constituents will demand it unless the press makes a repeat issue out of them. The press is the gatekeepers and they work for those who prefer the status quo.
  
  Not to say that one should give up, as history has shown that good ideas are very hard to keep down over longer period of time - see abolition of slavery, see democracy vs aristocracy, see science vs religion. Democratized economics is a similar such idea but it is going to meet *massive* resistance en route to its destination.
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Simon Barnard Jan 23, 2017

Will be interested to see the "European New Deal" in detail. And more so on how it will be funded and the logistics of setting up some of these complicated systems.
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Berdie S Jan 23, 2017

We must also shed light on what is being deceptively pushed as "strict fiscal responsibility" and to expose it as being anything but responsible.

In essence Schäuble and Co. are starving Governments from the ability to do safe investments themselves while in the same time suggesting that cramming that same capital in deregulated casino Banks would "safe the tax payer money". Yeah right. We the people still end up bailing them out, for they didn't invest it in roads, bridges, innovation, they invested in Derivatives and other speculative activities and not a sing of actual job creation, infrastructure etc.
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J W Jan 23, 2017

These proposals are in the right direction. Some might find them too socialist but that is what negotiations are for -- to strike the right balance. However consider the simplest of starting points -- an agreement in principle on the key goal of economic security within your home country. Even this is not being floated within the EU. This would be easy and non-binding yet it is not happening. This is direct evidence that European elites do not care.

There is no inter-governmental discussion occurring for the very reasons outlined -- the big economic winners are more interested in austerity and federation appeals to them only as a mechanism to impose it. This attitude reflects and fuels the North/South chauvinism that is driving the break-up and is why it is inevitable.
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Andrew (Andy) Crow Jan 23, 2017

If you are right mister Yanis, that the proposals you outline are the only way to hold the EU together then I think we can assume the EU will continue to disintegrate.
- Andrew Wright Jan 26, 2017
  
  .. and become a communisitic society, with absolutely no local or even trans-local democracy at all, from one end of Europe to the other. Have we not seen that fail already??
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Stefanos Ioannou Jan 23, 2017

ideas are good and most of what discussed have been out there for a while.. what is missing is the political power and will to implement them
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David M Jan 23, 2017

I agree with everything, exept the "universal basic dividend". In our current system, a monetary stipend for everyone will basically drive housing prices up, turning this stipend into a hidden subsidy of the housing speculators and increasing the magnitude of the financial world. Promoting social housing is more interesting, in my view.
- David M Jan 23, 2017
  
  @Paul Friesen, that´s a bit too much "monetarist" for my taste. It happened here in Spain, when the goverment tried a rental assistance. The only reason why the prices did not raise by the same amount was that the subsidy was not Universal. If the rental subsidy was universal, the landlords have all the power to raise prices and absorb the whole subsidy. And that would happen regardless of the method of the funding (taxing or debt). That´s why I think it´s not a good idea at all. UBI forces prices up, while providing social housing forces prices down.
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- Paul Friesen Jan 23, 2017
  
  I don't see why you think it would affect house prices. Any sort of basic income scheme must be paid for somehow, by some sort of tax. The tax will take money out of the system at the same time as the basic income is putting money in. It should not affect over-all demand. It might affect the distribution of demand between sectors, but I cannot see why housing would necessarily be in greater demand.
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