Sorry, this entry is only available in Français.
This chart uses very simple assumptions. It takes the OECD economic outlook data on headline and underlying primary public budget imbalances and look at the impact on GDP if these were brought to zero, assuming a fiscal multiplier of 1.3 (the median of Olivier Blanchard’s range of 0.9-1.7).
The question is: Are the Baltic states, especially Lithuania and Latvia which both have currencies pegged to the euro, proof that austerity can work? Are they “successes” as described by IMF Chief Christine Lagarde and some American conservatives? Most analyses of these have tended to focus on GDP. I will focus on employment.
This post covers Paul Krugman’s views on France between 1990 and 2010 as expressed in his public, non-academic writings. Knowing the champion of American liberalism’s past views helps place his current criticism of the euro crisis in context and highlights similarities and differences with European progressives.
These views can be summarized:
- Criticism of the French project of abandoning the franc in favor of European Economic and Monetary Union (EMU, which created the euro).
- Despair at the excessively symbolic, factually-challenged nature of French economic debate, in particular willful denial on the causes of high unemployment (in his view, overregulated labor markets and the dysfunctions of EMU).
- A strong belief in the power of the French State to act meaningfully in a globalized world.
- Praise for specific regulatory achievements of the French State in areas such as Internet access and healthcare.
- Praise for the “French way of life” as a more balanced, secure and healthy form of economic life.
There is a clear shift in Krugman’s writings. In the 1990s, his writing features his trademark biting analysis and humor, but he is more dispassionate. He sees mainly irrationality: The French are going against their interests in creating the euro, are doing nothing to tackle unemployment, and are in denial as to their own State’s ability (without “Europe”) to manage challenges in a “globalized” world. In the 2000s, with Bush in the White House, his writing is more polemical. Krugman the American liberal can can only look longingly across the Atlantic: France embodies the rational State, managing capitalism in the public interest, while his own country is ruined by an incoherent federal government beholden to business oligopolies and a corrupted pseudo-free market ideology.
This post was prompted by an exchange on Twitter with Libération correspondent in Brussels and prominent Euro-Federalist Jean Quatremer. Whereas Quatremer likes to write and tweet that the euro crisis is “over,” an attitude I find incomprehensible given the persistence (and worsening) of Depression-like levels of unemployment in certain countries. (In this Quatremer is in line with similar statements by Barroso, Van Rompuy and Hollande.) Quatremer and I recently had the following exchange:
Translation: “@craigjwilly the unemployment rate was the same in 1996 in Spain. The country is paying the price of corruption and the property bubble.”
This kind of information provided during Twitter debate is exactly why I love the service. So I decided to explore the data: Is the euro crisis then nothing exceptional? Just a “return to normalcy” for the peripheral countries which, in the cases of Italy, Ireland, Spain, Portugal and Greece, are all traditionally famous for economic failure and emigration? Or are things fundamentally worse than before?
Here is Eurostat data back to 1990:
Nestled in a humble footnote in Raymond Aron’s Les étapes de la pensée sociologique, I came across this magnificent passage from the famed Florentine philosopher-statesman Niccolò Machiavelli, in his Discourses on Livy. I’ve never seen so beautifully and succinctly expressed why the messy politics of Republics also produce what free men value most:
I affirm that those who condemn these dissensions between the nobles and the commons, condemn what was the prime cause of Rome becoming free; and give more heed to the tumult and uproar wherewith these dissensions were attended, than to the good results which followed from them; not reflecting that while in every republic there are two conflicting factions, that of the people and that of the nobles, it is in this conflict that all laws favorable to freedom have their origin, as may readily be seen to have been the case in Rome.
I’ve recently become interested in “vetocracy” as a problem undermining different polities and in particular “absolute vetocracy” as it exists in the European Union. I mean here those areas in which the European Treaties ban any national policy, but where at the same time European level decisions remain subject to unanimity.