Let's Spend Our Way Out Of It
Last week a group of European heads of state jointly proposed to focus more on growth, after having been solely concerned with austerity and government debt. This is the first attempt of liberal-conservatives to create economic growth since the financial crisis started. However, their proposal stems from the ‘90s and will not foster economic growth.
The group of 12 leaders represent the UK, the Netherlands, Italy, Finland, Ireland, Czech Republic, Spain, Sweden, Poland, Estonia, Slovakia and Latvia. What binds them is their believe that austerity is necessary in times of crisis and a strong conviction that the free market is single handily going to pull us out of this crisis. What also binds them is a complete lack of vision on the future of the EU. They therefore prefer to look back for the answers.
One wonders to whom the letter is addressed. The addressees are Baroso and Van Rompuy, but prime ministers do not communicate with the notorious duo by post. Maybe the letter is aimed at France and Germany, the main and exhausted engine of the Council. Maybe it is intended to reach the baffled and insecure European citizens that do not understand why after 4 years the economy is still not growing.
Whatever the rationale behind the initiative, it looks like an act of desperation. Economic liberalism has not shown the promised sustainable path for growth and consequently needs thorough reshaping. A model based on austerity during times of crisis has not proven to be sustainable policy making. Recession has really started to kick in and will worsen as a result of austerity measures.
Let's look into the new "Plan for Growth in Europe" to find out the core areas for change.
According to the heads of state, the single market needs to be brought to its next stage of development by strengthening governance and raising implementation standards. Efforts must be made to create a truly digital single market by 2015. A genuine, effective and efficient internal market in energy must be build by 2014. Commitments to innovation by establishing the European Research Area must be doubled. Decisive action is needed to deliver open global markets. Economic integration with the US, China and Russia needs to be deepened. National competences (i.e. the labour market) need to be respected and a robust, dynamic and competitive financial services sector must be build.
Besides the meaningless wording in the paper, there is no single reference to investment or to spending taxpayers’ money. As the representatives of companies, conservative liberals should understand better than anyone that growth can only be achieved through some sort of investment. The Growth Paper fails to mention the responsibility of the state in times when companies and consumers are scared to create and consume. It simply ignores this.
The paper also fails to mention why the plan for growth has been presented only now and not last year or the year before? For the trained eye, the paper of 12 is almost an identical copy of the Monti report of May 2010. Most likely there is a causal relationship between the technocratic instalment of Monti in Italy and the resurrection of his 2010 research. It would not surprise me, since Monti is the only politician with a concrete vision on the future of the EU. However, the problem with Monti is that he comes from a different generation. He is the personification of the Maastricht Treaty breakthrough. Those were the days where the focus was entirely on negative integration and competition. Regulation needed to be trimmed down in order to leave space to companies. Labour regulation and workers’ rights were seen as a obstacle to economic growth.
We are living in 2012 now. A financial crisis has threatened to bring down our modern civilization and world hegemony. Anti-European statements are more and more acceptable in the national debate and citizens feel more distance between themselves and “Europe” than ever before. Austerity is costing people their jobs, confidence and future perspective. Greece is on the edge of default and Spain’s youth is collectively unemployed. Maybe someone should tell the 12 leaders that we need a hell of a lot more than their 8 proposals on the creation of new internal markets. This is not a growth programme, but a cheap attempt to disguise the fact that they have not idea where we are going. Clearly the liberals have run out of steam...
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