Home > Uncategorized > A roadmap for an undemocratic future for Europe.

A roadmap for an undemocratic future for Europe.

Today, the presidents of five European Institutions presented a “Roadmap for the future of the Economic and Monetary Union“. According to Mario Draghi,

“The report describes how we can move from the current system of coordination by rules to joint decision-making within common institutions … We need a quantum leap in European integration. We need to address the fragilities of our economies; to ensure that divergence will become convergence again; and to safeguard the irreversibility of monetary union. Our report provides the roadmap for this.”

Some remarks:

* The ideas are not new. Look at this post from over three years ago.

* The ideas will lead to the de facto abolishment of independent nation states in the Euro area. A quote from a three year old speech from José Manuel González-Páramo, member of the board of the European Central Bank (emphasis added):

In other words, the euro area is responding to the crisis by creating a new and more comprehensive model of economic governance. This is aimed at preventing imbalances in all policy areas before they can trigger crises – and managing crises more effectively when they do arise. In many ways, this response is sui generis and departs from the template we associate with political federations. For example, the “two pack” gives the Commission the power to demand the kind of reforms that the U.S. federal government could not demand of a U.S. state. Moreover, the federal government would not be able to sanction a state if, for example, its tax code was leading to a local housing bubble. This is now not excluded in the euro area under the Macroeconomic Imbalances Procedure.

* The already existing democratic gap widens. The report is pretty explicit about this. As I read it it the ‘steer’ of the Eurogroup has to be increased. And there is nothing in the report about decisions which have to be ratified or which can be taken by the European parliament (although the parliament does have the right to talk about the decisions!). I therefore understand the word ‘steer’ as a verb, not as a noun:

verb: steer; 3rd person present: steers; past tense: steered; past participle: steered;  steering. Guide or control the movement of (a vehicle, vessel, or aircraft), for example by turning a wheel or operating a rudder. “he steered the boat slowly towards the busy quay”. synonyms: guide, conduct, direct, lead, take, usher, escort, shepherd, marshal, herd

noun: steer. the type of steering of a vehicle. “some cars boast four-wheel steer”. Informal
a piece of advice or information concerning the development of a situation. “the need for the NHS to be given a clear steer as to its future direction”

I’m of course aware that while the steersman steers a ship the captain orders him to follow a certain course  – the use of the word ‘steer’ in the document is somewhat cunning. It suggest that, somewhere, there is an (elected) captain. But there isn’t. Or it is at least not the European parliament. A ‘newspeak’ quote:

ƒƒ Strengthen parliamentary control as part of the European Semester
• Plenary debate at the European Parliament on the Annual Growth Survey both before and after it is issued by the Commission; followed by a plenary debate on the Country-Specific Recommendations;
• More systematic interactions between Commissioners and national Parliaments both on the Country-Specific Recommendations and on national budgets;
• More systematic consultation and involvement by governments of national Parliaments and social partners before the annual submission of National Reform and Stability Programmes.

There is nothing which gives the idea that either national parliaments or the European parliament have any kind of real power though “Member States should have a degree of freedom concerning the exact measures to be implemented.” Wow.

About the economics:

* the interesting thing is the idea that at present the Eurozone economy is a disequilibrium system: according to the document we need more integration to prevent crises as a currency Union consisting of independent nations will lead to disaster. See also this blogpost.

* remarkably and despite the results of the research of the ECB competitivety research network the institutions still define competitiveness as a 100% average wage level related variable. International value chains do not seem to exist, differences between average and sectoral wage developments and a whole lot of information which indicates that competitiveness is about capital much more than about labour there still is an extra-ordinary amount of attention for the central control of wages (emphasis added): “The creation by each euro area Member State of a national body in charge of tracking performance and policies in the field of competitiveness is recommended. This would help to prevent economic divergence and it would increase ownership of the necessary reforms at the national level. These Competitiveness Authorities should be independent entities with a mandate to assess whether wages are evolving in line with productivity and compare with developments in other euro area countries and in the main comparable trading partners”. 

* the document proposes a European Deposit Insurance Scheme as well as more active fiscal policies on a national as well as a European scale while, important, the document also acknowledges that current account surpluses and deficits as well as government surpluses and deficits are not just influenced by ‘competitiveness’ but also by the business cycle and private credit and money creation.

 

 

  1. June 22, 2015 at 5:34 pm

    I get your point, yet, if such a plan could actually be accomplished, it would be nice in the US if there was a semi-dictatorial benevolent board that nailed wages and pensions to at least the overall rise in productivity. Universal health insurance might be linked to that portion of productivity increase associated with good health, with a similar link for universal education at all ages and levels.

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