Our manifesto for Europe (Piketty)

[n2doc]

by
Thomas Piketty and 14 others

The European Union is experiencing an existential crisis, as the European elections will soon brutally remind us. This mainly involves the eurozone countries, which are mired in a climate of distrust and a debt crisis that is very far from over: unemployment persists and deflation threatens. Nothing could be further from the truth than imagining that the worst is behind us.

This is why we welcome with great interest the proposals made at the end of 2013 by our German friends from the Glienicke group for strengthening the political and fiscal union of the eurozone countries. Alone, our two countries will soon not weigh much in the world economy. If we do not unite in time to bring our model of society into the process of globalisation, then the temptation to retreat into our national borders will eventually prevail and give rise to tensions that will make the difficulties of union pale in comparison. In some ways, the European debate is much more advanced in Germany than in France. As economists, political scientists, journalists and, above all, citizens of France and Europe, we do not accept the sense of resignation that is paralysing our country. Through this manifesto, we would like to contribute to the debate on the democratic future of Europe and take the proposals of the Glienicke group still further.

It is time to recognise that Europe's existing institutions are dysfunctional and need to be rebuilt. The central issue is simple: democracy and the public authorities must be enabled to regain control of and effectively regulate 21st century globalised financial capitalism. A single currency with 18 different public debts on which the markets can freely speculate, and 18 tax and benefit systems in unbridled rivalry with each other, is not working, and will never work. The eurozone countries have chosen to share their monetary sovereignty, and hence to give up the weapon of unilateral devaluation, but without developing new common economic, fiscal and budgetary instruments. This no man's land is the worst of all worlds.

The point is not to pool all our taxes and government spending. All too often today's Europe has proved to be stupidly intrusive on secondary issues (such as the VAT rate on hairdressers and equestrian clubs) and pathetically impotent on important ones (such as tax havens and financial regulation). We must reverse the order of priorities, with less Europe on issues on which member countries do very well on their own, and more Europe when union is essential.

more

http://www.theguardian.com/commentisfree/2014/may/02/manifesto-europe-radical-financial-democratic

[RainDog]

1. k&r n/t

[LuvNewcastle]

2. I think those are wonderful ideas.

I thought this paragraph was particularly interesting:

Debate over Europe's political institutions has all too often been pushed aside as technical or secondary. But refusing to discuss the organisation of democracy ultimately means accepting the omnipotence of market forces and competition and abandoning all hope that democracy can regain control of 21st century capitalism.

I wish that Americans could finally agree that capitalism is in its death throes, and it's going to take us down with it if we don't do something now to avoid it. Capitalism has completely polluted our government, and it's getting to the point that I think that maybe it should be dissolved and rebuilt.

I think we're on our way to a dictatorship in America if something isn't done to save our democracy. Dictatorships arise when times are very hard and the people have no faith in the elected leaders, usually because they've become so corrupt. Our system is broken; they can't agree on infrastructure bills, for heaven's sake. If someone comes along and tells the people he can keep things running, the people can be swayed to support him.

[JDPriestly]

6. The problem is that we don't really have capitalism.

We have corporatism. The owners hide behind the corporate veil and take no personal responsibility for the deeds, munificent or evil as they may be, of the corporation to which they owe no loyalty and in which they "invest" their money merely for the moment, just waiting for the stock price to rise or fall, at which time they sell.

Basically, corporations are not owned by the shareholders in the sense that ownership used to involve responsibility and a sense of pride of possession. Rather, corporations today are owned by their managers who also take no responsibility for the conduct or ethics of the corporation and just suck as much money out of their corporate employer as they possibly can.

I have observed over the years that the concepts of responsibility and loyalty in the workplace at least as they apply to the management and direction of the companies exists only in very small corporations (if at all). I think that the legal recognition of the corporate veil and the lack of liability and social responsibility of the shareholders and often of the managers of large corporations needs to be reconsidered.

The lack of responsibility and loyalty is harming our society as a whole. And a lot of that lack comes from our business community. It has managed to spread to almost every area of our community life.

I should add that corporatism is exceptionally lacking in compassion or human qualities. A corporation is like a big giant block of reinforced cement.

[2banon]

9. I agree with you and JdPreistly

Very interesting article, would like to see more and more of that level of discussion, born out of the realization that these systems are broken based on fatally flawed theories.

[octoberlib]

16. The chance of another big stock market crash worries me. The conditions will be ripe for it.

There's a show on the SyFy channel called Continuum that takes place in the 2070's and the US and Canada have merged to form the North American Union and are run by a board of directors instead of elected representatives.

[malaise]

3. K & R

Well needed

[DFW]

4. The EU can't enforce its own rules--pre-programmed chaos

France and its overbearing bureaucracy and Belgium with its pervasive corruption, and these next door to Germany, who sorta tries to play by the rules, because they are in a position to do so where others (Italy e.g.) never will.

France only follows EU law when it's convenient and disregards it entirely when it doesn't. Big companies, like German car manufacturers, love the euro, because the southern European countries can't devalue their currencies any more to keep their own industries competitive. Romania loves "open borders" because it can let off some steam in the form of organized crime and poverty by sending it westward. Western and norther European companies love open borders because they can close factories where labor is expensive and reopen where it is cheap. Nokia of Finland closed its big factory in Bochum, Germany, throwing thousands of Germans out of work. They reopened in Romania where the labor was two thirds cheaper. Unfortunately, the quality of the workers' training was about two thirds less, too, and they had to replace so many defective phones that they closed Romania, too, and reopened in China. Of course, they could have done that directly, too, but China is not in the EU, and import tariffs apply to anything manufactured there. Not so Romania, whose inclusion in the EU did no one any good at all except for about twenty big German firms who suddenly had cheap labor, and the Romanian welfare offices, who suddenly had a lot less people to support.

It was a great idea, and in the beginning, it was done right--6 countries with a somewhat similar level of economic sophistication. Now, you have places like Sweden supposedly on a par with Bulgaria. Too soon, and they are suffering the consequences of their haste. You might as well suggest Chad for the 51st State instead of Puerto Rico.

Norway and Switzerland are notable exceptions of countries in Europe who passed on joining the EU. Guess which two economies in Western Europe are doing better than most?

[2banon]

10. Interesting synopsis on the state of EU chaos.. stunned me with Sweden on par with Bulgaria, Wow!

that's almost shocking and scary. How the fuck did that come to be, I wonder..

[DFW]

13. The original idea of an EU was a noble one

After the Second World War, Germany's Adenauer and France's DeGaulle got together (DeGaulle spoke good German) and figured out that it would be a good idea to devise a way to make it impossible for the two countries ever to get into a position where they would again fight a war against each other. Smart enough to realize that a political union would never work immediately, but it could come about if an economic union came first, the first step was the common market. They took baby steps, and despite the bureaucracy involved in setting it up, it achieved its primary goal--integrating France and Germany so closely that they couldn't possibly gain any advantage by ever fighting each other again. They included four other countries deeply affected by the War, and all bordering on them: Italy, Belgium, Luxembourg and the Netherlands.

Expansion and broadening of the concept proceeded at a snail's pace, which was as it should be. No other country really needed to be a part of this in the beginning. Great Britain's membership was opposed by plenty both in France and Britain itself, and even today, many in Britain ask themselves if they really get anything out of this. But including countries with stable economies, or at least ones that wouldn't totally drain the others was worked into the equation. Spain and Portugal did siphon off resources at first, but they also gained tariff-free imports into huge markets for their agricultural goods in the north. The north paid for new highways and airports, but got cheap fresh food in the bargain.

Eventually, though, noble ideas (open borders along with free movement of people, i.e. labor, capital and goods) gave way to greed. There is no way in the world that countries like Greece, Romania and Bulgaria were ready to join the EU. Economic basket cases all, and the added burden of Romania's and Bulgaria's massive organized crime and pervasive poverty made them candidates for assistance, not membership--not for the next 50 years, anyway. But there was MONEY in this deal. Not for the average citizen of the EU, of course. But for the huge international companies looking for cheap labor at the expense of their own domestic labor markets. If Nokia can produce the same phones in Romania for a third of the cost it took in Germany, well, what's the problem? The problem was, that if Romania was not a member of the EU, then import tariffs and local Romanian bureaucracy and corruption hindered their access. So? Open up the border, remove customs tariffs between Romania and the EU, and give Nokia free access to cheap Romanian labor, and voilà! Problem solved! Not for the four thousand+ suddenly jobless workers at the Nokia plant in Germany, of course, but huge savings for the short-sighted Nokia planners who forgot to take into consideration that much of Romania is about a century behind Germany in labor sophistication (I've been there, and that's no exaggeration), and the quality of their phones reflected it. So Bulgaria and Romania had no further incentive to clean up their acts before getting into the EU. Big money wanted them in, so they're in.

A few big Swiss firms wanted the same deal as the ones in France and Germany, and pushed for EU membership, but enough of the population saw through the scheme, and voted against membership. Norway passed a long time ago. Most of their big firms are energy-intensive and local, big Norwegian business had no advantage from building factories in southern Europe in the first place, and they do quite well on their own without having the overbloated bureaucracy in Brussels telling them how to live their lives. The EU bureaucracy is so insane that they arbitrarily set the norms for every possible product imaginable. They even said that apples could only be called apples if they attained a certain size. Well, it turns out that Denmark has a local type of apple that is very popular, and is smaller than the norm dictated by Brussels. The EU told the Danes, after they joined, that they could no longer call their apples "apples." The Danes promptly set about to reverse their recent membership until someone in Brussels figured out that this was going too far, and the Danes were then henceforth allowed to call their apples "apples." But you see what I'm getting at. It was a good idea in the beginning (economic integration to prevent war), but its original goal has been perverted and weighted down by the worst combination possible: greed and bureaucratic inefficiency. EU bureaucrats enjoy huge taxpayer-subsidized privileges, and can make life miserable for millions if they are in a bad mood, and suffer no consequences if they fuck up.

It went too far too fast without braking controls installed to thwart inefficiency and corruption. The few good things (open borders, common currency) have been watered down, misused and manipulated so that as many bad people take advantage of it as good people. A real shame, and I don't know if the damage can be repaired at this point.

[2banon]

15. Very informative, insightful post..

Thank you for the time to bring light into a revealing slice of this history and how it's played out..

I don't see how it's possible to be repaired either. Apart from bureaucratic inefficiencies, the level of corruption alone seems to be so pervasive as to be for all practical purposes and in a certain sense, institutionalized (for a lack of better term).

[DFW]

17. That is, unfortunately, a fairly accurate assessment

I live here now, speak 9 European languages, am married to a European, and travel a LOT. I have friends who are (or have been) on welfare, are farmers, are members of law enforcement, and at least one president of a central bank. I get my observations from personal experience. Some are encouraging, too many are depressing.

[2banon]

18. Yes it would be depressing, but for just a sliver hope..

It was clear to me that your European economic insights and knowledge of the machinations of the corrupt systems and their "governance" structures were obtained through close or personal observations, as opposed to simply reading western press reports, intended for western business investors consumption, etc.

Refreshingly clear and informative.

I'd like to express some sliver of sincere optimism and hope for the future of western and european people, (for the sake of my grandchildren and their future if for no other purpose and reason). I'm not a political science scholar, but I intuitively know a fairly substantive paradigm shift in the political and economic "thinking" within the consciousness of our own citizenry is fundamental for a better future here and globally.

When enough people (especially here and the Party functionaries) understand the political machinations underpinning these corrupted systems are destroying our children's futures, recognizing that a fairly substantive paradigm shift in the political and economic "thinking" within the consciousness of own citizenry is necessary, could then be achieved.

Whether or not the status quo is weakening is difficult to assess through the noises of the electioneering circus clowns (intending to drown out the voices clamoring for change), I do hear more and more people demanding serious reform and that gives me some measure of hope.

[daleo]

14. Arkansas is on par with New York

Just saying.

[DFW]

19. Of course, but one minor difference

Arkansas has been part of the same country as New York since 1836. Bulgaria has been part of the EU for less than 10 years. Inviting Bulgaria into the EU was purely to make a couple of dozen multinational corporations and Bulgarian organized crime happy. (The politicians will also say it was to pull Bulgaria away from Russian influence, but that was a lame rationalization). I think Arkansas joining the USA happened independently of the urging of European pharmaceutical conglomerates.

Just saying.

[DeSwiss]

5. ''The central issue is simple:

...democracy and the public authorities must be enabled to regain control of and effectively regulate 21st century globalised financial capitalism.''

- Right. More patches and plasters for the Good Ship Lollipop (AKA: Capitalism). That'll do the trick. Pay no attention to the black hole on your screens. I repeat, pay no attention to the black holes on your screen. I repeat, pay no attention to the black holes on your screen. I repeat, pay no attention to the black holes on your screen. I repeat, pay no attention to the black holes on your screen. I repeat, pay no attention to the black holes on your screen.......

[WillyT]

7. K & R !!!

[Jackpine Radical]

8. That whole article is amazingly detailed and authoritative.

Why can't WE get commentary like that in this country?

K&R of course.

[2banon]

11. Yeah, that's what I'm asking!

It's all about the maintaining status quo right off the fucking cliff..

yeah! Vote for Hillary!

[moondust]

12. "21st century globalised financial capitalism"

Right there's your problem.