Thursday, December 23, 2010

"Coordination" without Loss of "Sovereignty"

Coordination: such a nice, unthreatening word. It may share a prefix with "coercion," but otherwise, nothing in common. So says Christine Lagarde:

"Je ne pense pas qu'il soit possible d'ôter aux Etats la souveraineté sur leurs budgets mais nous pourrions nous coordonner les uns avec les autres lorsque nous élaborons nos législations fiscales. C'est exactement ce que prévoient la France et l'Allemagne. De plus en plus, nous voulons nous coordonner lorsque nous préparons nos budgets pour les années à venir."

But surely Mme Lagarde is familiar with the Prisoner's Dilemma, that favorite chestnut of political scientists, which demonstrates the difficulty of maintaining coordination when defection from the coordinated strategy promises to profit the erstwhile coordinators. What the minister of finance probably has in mind is something closer to the Dictator Game, in which the big economies--France, Germany, perhaps the UK--"coordinate" in deciding what the smaller economies can and cannot do. As for coordinating the French and German economies, well, good luck. Modell Deutschland and le modèle social français have not always played well together in the past, but crisis does tend to concentrate the mind, so perhaps there is hope for a better tomorrow.

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