N’empêche, si le jeanlucmelenchon fonctionne aussi bien pour la gauche française que l’oskarlafontaine marche pour la gauche allemande, les députés de droite peuvent se faire graver des ronds de serviette à la cantine de l’Assemblée nationale : ils y sont pour un sacré bout de temps. Je me demande même si Jean-Luc Mélenchon n’aurait pas mieux fait de s’en tenir à la doctrine Chevènement : “Allemand ? Méfiance.”
Wednesday, December 10, 2008
All this is quite true, but it does raise the question of how we get to the more representative Europe that Chris would like to see from where we are now. The institutional reforms embodied in the Lisbon Treaty are not likely to move things very far along, but neither is simple insistence that "the [Irish, Czech, Polish, French, or Dutch] people have spoken, now let's get on with real democratic reforms in lieu of this elite politicking," especially if getting on with it has to be done in a context of dismally unpromising institutions. The EU is caught in an impasse: without effective representative institutions, European elections and referenda become mere sounding boards for domestic discontent. Voters can discharge their wrath without serious consequences, because the "economic" EU will continue to function as before, while the embryonic "political" EU will continue its interminable gestation, awaiting the convulsion that will finally make its birth inevitable. Yet even with a convulsion of the requisite dimensions now looming ahead, is there any reason to believe that the obvious need for greater policy coordination will lead to democratic reform? What coordination there has been has been entirely intergovernmental, even interministerial, while at the political level the sauve qui peut instinct gives every sign of carrying the day.
Any appropriate approach to fiscal policies in the current situation must be based on a number of sound principles. It is essential that the public's confidence in the soundness of fiscal policies is preserved. This requires that fiscal sustainability is guaranteed. Equally important, the EU's rules-based fiscal framework must be fully applied and its integrity preserved.
In practical terms, we should recall that the automatic fiscal stabilizers in the euro area -- policies that dampen economic cycles without direct government intervention -- are large and amount to about 1% of GDP. As the tax burden diminishes with subdued economic activity and government expenditures increase, for example in the form of unemployment payments, public budgets provide a powerful source of fiscal support for a weakening economy. And this type of stimulus is automatically reversed when economic conditions improve.
Only a few countries have the scope to take additional action. Where such room for manoeuvre exists, additional budgetary measures have to comply with the "three T's" in order to be effective. In the current circumstances, we cannot, and should not, risk adding a fiscal crisis to the financial turmoil and economic downturn.
Stark is a member of the Executive Board of the ECB. He seems barely to notice that there is a crisis in progress, let alone acknowledge its dimensions. It is interesting to compare fiscal conservatives in America with this echt-European representative. Martin Feldstein favors a large government stimulus. So does Greg Mankiw, although he would prefer tax cuts as an instrument to increased government spending. In stark contrast, Stark wants to stand pat and allow "automatic stabilizers" to do their work, as if this were an ordinary recession. European monetarism is a stern and demanding creed.
ADDENDUM: In fairness to Stark, it should be noted that some European countries have more to worry about when it comes to debt than others. Spreads on sovereign debt have widened recently, with Greek bonds, for example, trading at a premium of 185 basis points. Investors clearly do not regard Euroland as an economic unit, and, as noted here previously, Feldstein worries that these disparities may eventually crack European unity (Barry Eichengreen disagrees, and I largely agree with Eichengreen, however). The question is one of emphasis and intention, and if Stark's intention is to justify German reluctance to stimulate, his statements assume a political coloration inappropriate for a central banker.
One wonders if Kouchner came to his conclusion about angélisme before or after he assumed his post?
"Youth, parity, and diversity" constitute the façade that the PS would like to put forward in the media, but this conceals the reality that the party remains firmly in the hands of elected officials who are veterans of its internecine warfare and political professionals who are reluctant to dilute their power within the party by opening it up to new members from outside their milieu, especially representatives of the private sector. The party's inability to find a voice in which to address le pays réel reflects its own composition, in which le pays réel is scarcely represented.
A brief note on real economic issues. Everyone here seems to be talking about two things: the fate of the auto industry, which is in almost as much trouble in Sweden as it is in the United States, and the German problem. At a time when expansionary policies are desperately needed, the leaders of Europe’s largest economy seem to have their heads in the sand. This is a huge problem: there are large spillovers in fiscal policy among EU nations — that is, a significant fraction of, say, French fiscal expansion ends up promoting employment in Germany or Italy rather than France. So there’s a crying need for a coordinated policy. But the Germans aren’t participating.