'Single currency experiment has been a disaster' admits economist Stiglitz
telegraph.co.uk
telegraph.co.uk
The second part of this quote means something quite different from what the headline implies. He isn't advocating an end to the single currency, he wants stronger institutions, which the Eurosceptics have undermined at every opportunity.
"Elected prime ministers of Italy and Greece were toppled in Brussels-backed coups. Eurocrats were brought in to head what were, in effect, civilian juntas, whose purpose was to pursue a series of economic policies that would have been rejected at the ballot box. Or consider the EU’s response whenever a referendum goes against closer integration, as in Denmark, France, Ireland or the Netherlands. Public opinion is treated as an obstacle to overcome, not a reason to change direction."
A more serious response is that democracy can only be justified by its outcomes, and isn't a good thing in itself. A racist democracy that votes to harm minorities is worse than a dictatorship that upholds human rights and prevents the majority harming the rest. With the rise of explicitly anti-immigrant and anti-Muslim parties in Europe, this is not a theoretical consideration.
All proposed alternatives will give us more elected politicians adhering to party lines. None of the alternatives will give us better government.
Lords are pretty good at being difficult in the face of bad legislation - yet every time a notable instance takes place there are more calls to abolish the place. Their party allegiance mellows as they age - so you get Tory peers ridiculing some aspect of the current Tory government. Last there are enough independents (usually with long non-political careers) to bring domain knowledge and independent thought to the place.
Most instances of Lords reform have been as a result of them doing their job well, inconveniencing or embarrassing the elected government of the day.
It's not democratic, but it works.
The EU on the other hand has a so-called "Parliament" which cannot propose legislation, cannot amend legislation and cannot repeal legislation. It has neither "Government" nor "Opposition", being essentially a rubber-stamping body for the unelected EU Commission.
You seem to prefer this to the idea of allowing people a democratic choice simply because a minority of those people are voting for parties of whom you do not approve.
However what happens when that unelected group (which is lacking in democratic restraints) starts to act in ways even more harmful than its current actions?
You might not like Democracy, but at least it allows the possibility of correcting its mistakes.
It's worth pointing out that most of the people saying this about May are having a bit of fun. The Torys and right wing papers made a huge deal out of Gordon Brown being "unelected", but for some reason are silent when the same situation arrises with a Tory PM.
>(2) The Queen is the Head of State but does not control our Democracy - she doesn't even have a vote
She does have the power to veto laws though, and she has done so[1].
[1] https://www.theguardian.com/uk/2013/jan/14/secret-papers-roy...
Britain's PM is technically a Royal appointment, nobody ever gets "elected to be PM". By convention, the party leader winning at the last election is nominated, hence bringing some democratic legitimacy to the role. However, whenever someone else gets the job in unorthodox ways, like May or Brown did through changing equilibria in their parties, such legitimacy is clearly lacking. The only way we have to express that situation is by saying that the current PM is "unelected", and the PM is supposed to rectify this state by calling for a general election where he or she will obtain popular legitimacy.
Anyone following UK politics for more than 10 minutes knows perfectly well how this works, and trying to fight the definition through pedantry is, by itself, a partisan statement.
> The EU on the other hand has a so-called "Parliament" which cannot propose legislation
But it can veto it, blocking anything they want.
> cannot amend legislation
In practice it does, through the various committees "helping" the Commission.
> cannot repeal legislation
That is a problem, but it's not terrible in itself; a Parliament who'd want a certain directive dropped would express a popular will that the Council would likely share; which in turn would make the Commission prepare a superseding directive.
> It has neither "Government" nor "Opposition"
In practice it does. The Commission President is the candidate of the party winning the largest amount of seats, and the Parliament President is the candidate of the runner-up party. The most popular party will naturally be in government in most countries, hence dictating the agenda in Commission and Council. The Parliament can try blocking legislation, much like a national opposition would do.
> being essentially a rubber-stamping body
That's unfair. Directives can change quite dramatically when going through committees; in some cases, the final result is almost the opposite of what was first introduced, to the horror of commissioners who then drop them. The stats about votes don't reflect the fact that, since veto powers were introduced in 2009, directives without Parliament support simply don't come up for a vote, because every vote against the Commission weakens it. Much like a government would do...
> the unelected EU Commission.
The Commission President is an elected MEP who is nominated as candidate by the party before the election; and the Commissioners are nominated by elected governments through the Council.
> what happens when that unelected group [...] starts to act in ways even more harmful
You leave. Any member state can leave at any time by triggering the famous art. 50. The EU has no army to stop you from doing that.
Of course, if your own national elites don't really want to do it, that's a problem; but that's a problem with your national elite, not with "European tyrants".
Article 50 isn't a serious thing. The guy who wrote it admitted he assumed it'd never be used and he didn't put any thought into it, as it was only put in there to shut up the Brits. The EU has never seriously considered the possibility any country would actually leave and the constitutional possibility of doing so was only added recently, in a half-arsed way.
Parliament gets exactly what it wants, or no one gets anything. That's an awesome power in my book!
> Article 50 isn't a serious thing.
Well it's on the books, it's law, so it's as serious as they come. Should Brexit ever come to pass, it will be thanks to that article. As an euroskeptic, you should love it!
> The guy who wrote it [...] didn't put any thought into it
That's a feature shared by a lot of laws at all levels, I'm afraid. They are still laws. We don't pick and choose what we obey depending on our opinion of whether the legislator put in enough effort. When laws are unclear or badly written, there are ways to correct them. There is even a procedure to correct that article, it just requires agreement with the other member countries. But tbh, if you want to leave sooner than what art.50 states, I don't think anyone will stop you -- indeed nobody can, because, again, no army.
> The EU has never seriously considered the possibility any country would actually leave
It wouldn't matter anyway, because "the EU" is all about consensus among member states, which really are the ones dictating the agenda at all times. Without army or police, there is nothing stopping countries to leave at any moment. Despite that, 27 countries are still in there and more are applying, so "the EU" must be doing something right -- unless you believe in lizard people or "mass brainwashing"...
"The guy" is Giuliano Amato, former PM of Italy. If you care to read the interview he gave on this topic, he never said he did not put any thought into it. Just that it was designed to be a difficult procedure.
Part of the purpose of the EU and its instruments, such as the euro, is normalisation of European economies into a single framework, with the ultimate goal of parity, which would not only bring about a more efficient and frictionless market (I.e. Simple cross-border trade for services and products), but also ultimately elevate the standard of living for all citizens.
This is why some states which are less developed are currently net beneficiaries of European funds, and others are net donors. Currently. Wealthier nations beget wealth in their neighbours.
To look at monetary policy in a vacuum is a mistake, as it ignores the substantial eu development funds which Italy and Spain are beneficiaries of.
If you look at things in the short term, then poor Britain is being ripped off, the Spaniards are starving, the Greeks are broke - but if you take a longer term view, you'll take into consideration that all normalisation processes inevitably have over and undershoots, which can result in an imperfect present - but only define the future if you choose to let them do so.
But you would have to have a working culture that is similar, which is not the case in the EU. People in Spain don't work like people in France or Germany, their government are different and wanting to have a single fiscal policy is doomed to fail.
Also, the 1 to 5 salary for entry level workers is killing entry level workers in Western Europe, and that's one of the reasons behind so much euroskepticism
Again, it's a question of looking at the bigger picture rather than the immediate situation.
That said, many are voting with their feet - those reviled eastern states are havens for mobile youth, particularly those versed in technology.
I also don't think 30 years is the timescale. It's more like ten, given the already accelerating pace of growth in previously impoverished states. Do look at gdp per cap graphs for, say, Latvia. It's impressive. The financial crash hurt, but they're already back on a healthy sigmoid upramp.
https://www.google.co.uk/search?q=latvia+gdp+per+capita&rlz=...
In my low-middle class family there has been noticeable cases of factories or offices moving to Eastern Europe (Poland notably), and it is fueling extreme right wing parties, for good reasons.
You can talk about "mobile youth", but learning French when you're a low class Czech person is not something that's easy: the mobility in the EU is very restricted for that reason.
A few potentially interesting links after a quick googling:
https://www.theguardian.com/world/2015/oct/02/german-reunifi...
http://fortune.com/2014/11/09/germany-east-west-economy/
http://www.economist.com/blogs/graphicdetail/2015/10/daily-c...
And for Italy:
http://www.citymetric.com/business/italys-north-south-divide...
http://www.reuters.com/article/us-poland-airports-specialrep...
I can believe the EU is slightly more competent than, say, Greece. I can believe it's not exactly corrupt. But that doesn't mean it's progress.
But those were basically the days of EEC. Then came EU with its dogmatic liberalisation and the inclusion of all Eastern Europe countries. The combination of these factors broke the balance between the European countries, creating competition between these countries that cannot compete fairly, for the level difference is too huge and the Eastern Countries only advantage is engaging a race to the bottom. Salaries can be more then 5 times lower in East than in West! and they even wanted at some point Ukraine to join without any preparation, Ukraine which has 10 to 12 times lower salaries!! They have removed all barriers and regulations that could soften transitions and imbalances. Meanwhile, countries are stuck with Euro and cannot opt for different economic models to adapt to this internal unfair competition. And transfers do not work any more, because it is not in the interest of Eastern countries to reach the level of Western ones, because they would lose their only advantage. This even annihilates the past benefits of EEC time transfers, disrupting the Southern countries.
Wages are lower, yes, but so is the cost of goods and services. Now that they have functioning service economies, wage inflation is happening, in lockstep with price inflation. Parity happens quickly once you get the basics (infrastructure etc.) in place, which has been much of where investment has sat over the last decades.
Investment is the key word here - it's a rash investor who wants his return on a venture before it reaches fruition.
Also - would you rather they were getting cozy with Russia?
> Passionately written, this important book will rock the smug, often detached eurozone policymaking elite. [...] Stiglitz deserves credit for breaking a taboo among respectable mainstream economists and finally admitting that the single currency is doomed.
> This is a book, then, that will unnerve millions of British centre-Left progressives – those who backed British EU membership unquestioningly and now complain bitterly about Brexit. Many such voters, after all, view Stiglitz as their favourite economist.
Sometimes the informal tone in British journalism really highlights the writer's (and publication's) bias.
My feeling is most of the brexit campaigners didn't like the EU because they saw it as left leaning, this is why the opposition mainly came from the right.
The Eurosceptics don't want a political union for good reasons. It would devolve into a soviet style dictatorship. People that different just can't live under the same government. Europe is not USA. The Eurosceptics are the ones that are grounded in reality here, the other camp is trying to push an utopia that already had horrible consequences.
2) ....?
3) Soviet union!
There's a gap somewhere in your logic.
Europe is far more likely to end up a set of Soviet vassal states if it disintegrates, as that big hegemonic power called Russia is still very much a thing.
This is already true at the national level and even more true at the supra-national level in EU. I don't want to give more power to corrupt bureaucrates that are completely disconnected from national concerns.
The EU tries to prevent countries breaking away from its dictats using economic war as a threat (i.e. you obey us or we stop trading with you), rather than "hot war" - at present. But elements of the EU are pushing to get its own army, and the EU already has a system in place to effectively eliminate or take over governments that are deemed to not be reflecting EU "values":
http://www.breitbart.com/london/2016/05/24/eu-vows-use-new-p...
Fast forward 20 years and you get zealots like Juncker who already want to "punish" countries where voters disagree with him, put them in charge of their own army with a puppet parliament, and presto - the USSR is back.
But even many of my European friends who favor these things seem to not agree that that's the inevitable vector that these institutions point to. I'm certainly not saying that the system will mirror the U.S. system, but it certainly will end being a system like this if Europe continues on the present unification course.
Is there some nuance of the direction that I don't understand? It seems like as every crisis comes to Europe, advocates of pro-Europe seem to continue to point to centralization and empowerment of a single over-arching European government.
The south didn't vote for Lincoln and attempted to secede with the US president initiating the war to overturn the local state's right to do so.
I think a lot of europe's problems would be fixed by making the office of the EU presidency a directly elected office in a similar fashion to the US presidency. The EU would still require further centralization to maintain the eurozone and to further deepen the EU single market. They are just required to maintain our current levels of wealth and to fix the banking crisis that has never really been solved in the EU.
A single individual with a policy platform that has gained legitimacy through campaigning in all EU member states would settle questions related to the future of the union and will be best placed to implement and direct policies that benefit the majority of the EU population.
If you consider that the US took 4 generations to unify and you consider that present-day it is hard to imagine a peaceful unification then you should also consider that the way you think about things is dramatically different then the way your grandchildrens' children will perceive things.
For example, currently a large part of the EU population speaks english as second language but it's hard to imagine that majority of voting-age EU population to not speak english as second language in 80 years from now.
Speaking a single language will probably clear the biggest hurdle for effective political union.
I think the point is that the existing large-scale federalist states are all conceived as top-down: a central authority makes (most of) the rules, and lower rings have to suck it up.
The European project is supposed to be a bottom-up, consensus-driven setup where each member-state brings its best contributions and persuades the others to "level up". That's how the best EU directives were born.
In a way, even the Euro was something like that, with Germany persuading others that a "common Deutschmark" was a superior setup for the common currency they had agreed to implement (in exchange for letting them re-annexe East Germany); and overall it was, at the time, when compared to weak inflation-ridden and debt-burdened currencies like the Franc, the Lira and so on. The problem is that circumstances change, and the German model turned out to be very inflexible for economies that significantly differ from the German one. So now a consensus is emerging that the setup needs changing. A similar situation in the US or Australia would be fixed with a few decrees and simple majorities; in the EU that would be unacceptable. Alliances and majorities have to be built from the ground up, and they have to conceive a compromise that will satisfy most member states.
But it was not eurosceptics who ignored Stiglitz and other economists and pushed forward with the implementation of a common currency anyway.
Case in point: The migrant crisis, caused by large numbers of refugees coming to Greece and Italy's wide open coasts. How did they get there? No unified European border or coast guard and no integrated defense, which Britain ensured would never happen.
No government should tolerate this kind of behavior, as it is a hostile action against the state, holding the population hostage. It should be treated as a form of criminal extortion or terrorism.
It was President Juncker who said he thought borders were the worst invention of politicians ever, not the Brits who we learned recently are rather fond of borders. Your argument is backwards.
Rejecting all borders is a tenable ethical claim - indeed it's hard to justify why states should exist in most ethical frameworks that value human equality - but Juncker didn't go there.
But yes, Britain sabotaged the EU, including its having a joined-up defense and border strategy. Indeed, you might expect the departure of the most Eurosceptic nation to strengthen the EU.
But hey, if you want to believe these people think differently to how they actually do, go ahead and believe that.
The lesson Europe seems to have failed to take from the US is that federalism is a Trojan horse. The U.S. federal government was billed as being sort of like what the EU government is pitched as today, but ultimately destroyed the sovereignty of the States and reduced them to administrative divisions that have to take orders not just from Congress, but unelected bureaucrats at random federal regulatory agencies. And it wasn't some slippery slope process, but necessity. States in a federal union have none of the tools of international relations. California can't embargo imports from Michigan that, e.g. don't meet its environmental standards. It can't threaten economic sanctions against Alabama for its treatment of minorities. It can't bomb anybody. The only way to avoid race to the bottom problems becomes pushing more authority up to the federal government.
Thanks.
Your point is correct as to the Clean Air Act. But, e.g. One state can't threaten economic sanctions against another state if pollution from one drifts into the other, undermining that state's higher standards.
Another example is GMO labeling requirements. These are being challenged as violating the dormant commerce clause by placing an undue burden on interstate commerce.
Thank you for replying. Have an upvote.
But despite all that and the words in the treaty I am still not sure if the EU has expanded it's activities, has there been "more EU"?
Even the bureaucrats in Brussels knew about this. It was still pushed through because they wanted to accelerate the political union via the currency union, ignoring the financial costs. What they did not expect was the US subprime crisis to hit europe that hard and that early.
For example, I really liked this class: https://www.edx.org/course/principles-economics-calculus-cal...
The U.S. Dollar has a long and surprisingly complicated history as it worked its way up to becoming the official currency of the U.S., and at each stage, there was some reason for it to move forward to unification.
For example, the U.S. civil war was one of those reasons. Before the war, the U.S. had standardized coinage, but not paper money. After the war the U.S. ran, effectively, two different currencies that exchanged between each other (coins and bills). After dropping the gold standard, the exchange between the instruments was pegged at 1:1.
But before this, paper money was issued by local banks, exchangeable for some weight in silver (or other precious metal) coinage. Notes taken from one region to another devalued simply because of distance from the issuing bank. At one point there was thousands of different kinds of paper bills in circulation, and several kinds of coinage (Spanish, Mexican, U.S., etc.)
I think as Europe slowly gravitates towards some kind of unified system, it would have been far better for blocks of nearby or economically similar countries to each adopt locally unified currencies and controlled, as a block, exchange, duties, interest rates, etc. Thus we should have had a West Euro, Greater Pound, Romancis, New Rubles, Drachmas, New Thalers, etc. and then another couple steps of intermediate currencies and economic blocs.
Furthermore, the overlapping optional unification layers: EU, Eurozone, Shengen, NATO, etc. was also a mistake. Economic, political and other ties really need to be accepted all at once. Partial acceptance hasn't worked as well as might be expected, and has only introduced complexity and confusion over who gets say in what (these things are all deeply interconnected).
The unification experiments in Europe are noble, and are supposed to prevent future crises, but when met with real crises (both internal and external) has shown that the system put in place is overly fragile and not as normative as had been hoped.
The drive for the Euro has been motivated by politics not economics. The aim has been to link Germany and France so closely as to make a future European war impossible, and to set the stage for a federal United States of Europe. I believe that adoption of the Euro would have the opposite effect. It would exacerbate political tensions by converting divergent shocks that could have been readily accommodated by exchange rate changes into divisive political issues. Political unity can pave the way for monetary unity. Monetary unity imposed under unfavorable conditions will prove a barrier to the achievement of political unity.
If you are looking at it from a Brexit perspective, consider that shedding skeptic countries that never joined the Euro is a good thing in a federalist sense, since it makes it easier to achieve consensus in a smaller and more committed group.
In a way, losing Greece or Italy would have proven Friedman right, but the opposite happened: the Euro survived, Greece and Italy now are forced to drive their economy from a European perspective. De-facto political unity is happening, country by country.
Not saying this is necessarily good or bad in and of itself, but it is a thing that cannot be ignored in any of these discussions.
That said, I don't think the immigrant numbers are so high to have made that big of a difference. The UK population is >60M.
A fiscal union requires a true political union and it is very doable given the right political stimulus - the most successful recent major example being India which unified dozens of princely states (a couple of them merged forcefully) and provinces speaking dozens of languages and having wildly different cultures into a federal political union - the unifying political stimulus being throwing out the British :-)
There's no real driving factor today for political union today so it is likely Euro as it stands may not last our lifetime.