Friday, November 9, 2012

Risk Sharing: US and EU Compared

Over at VoxEU, Mathias Hoffmann has a very interesting piece comparing risk sharing among US states compared with risk sharing among member states of the EU. One recommendation that follows from his argument is that European integration could be furthered without complex and politically impossible treaty modifications by taking steps to encourage more cross-border equity ownership in Europe. Currently, European investment takes the form primarily of direct investment or bank borrowing by large firms. Trans-European stock ownership is feeble compared to the US. For Hoffmann, equity ownership is one channel via which asymmetrical shocks can be alleviated by transmission to other states. Worth reading.

The Jospin Report

The Jospin Commission has submitted its report, which recommends limiting but not banning le cumul des mandats, electing 58 of 577 deputies via proportional representation (which favors third parties and is backed by the FN, for instance), and requiring 150,000 citizen signatures rather than 500 signatures of elected officials for a presidential nomination.

No sooner was the report submitted than it was attacked in Mediapart by one of the commission members, the constitutionalist Dominique Rousseau, who submitted his own minority report. Rousseau faults the commission for lacking audacity, limiting its ambitions to what it knew in advance the political class would tolerate, and failing to recognize the degree to which the "bond" between citizens and representatives has frayed. In his view, much more sweeping changes are needed.