Category Archives: Eurozone

From Nations to Provinces: The Demographic Collapse of Southern and Eastern Europe

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Total fertility rates in Europe (children per woman), 2010. (Source: Eurostat)

My early political thought was in large part opposed to the “myth” of the demographic collapse of Europe, particularly as promoted by American neoconservatives and other Anglo-chauvinists, supposedly caused by spirit-killing effects of “liberalism” (welfarism-socialism), which, tied with Muslim immigration, would lead to “Eurabia.” These writers were taking a grain of truth, and as propagandists and vulgar polemicists are skilled at doing, turned this into an unadulterated fantasy pandering to the prejudices of their readers.

But there was a grain of truth. In whole swathes of Europe, entire nations, people have lost the will to reproduce themselves and/or are fleeing their country for prosperity elsewhere. This dramatic trend, which is affecting virtually all of Southern and Eastern Europe, will significantly change Europe’s internal balance of power and the continent’s relationship with the world. Italy, Portugal, Spain, Greece, Cyprus, Latvia, Lithuania, Hungary, Romania and virtually all of the Balkans are just some the “childless and jobless” countries which risk falling into econo-demographic death traps.

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After Austerity: How much poorer will Europe be?

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Eurozone GDP change

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).

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Baltic “Austerity Successes”: Or, how to easily reduce unemployment by exiling 10% of your population

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I write this post after debating with a friend the merits of Baltic austerity.  I add my piece to recent ones by Paul Krugman, Matt Yglesias and Mark Adomanis.

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.

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A Response to Leigh Phillips: National democracy and global change are two sides of the same coin

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I write this post to further a debate I’ve had with Leigh Phillips on his Austerityland blog and Twitter. It was supposed to be a mere summary of our debate. It’s grown into an opusculo developing the extent of my thought today on democracy in the Twenty-First Century. I add it is only an interpretation given my vantage point and others are possible.

In short, the question is: Do we really need to break up the euro? To which I answer, if one is attached to democratically accountable economic policymaking and moderately progressive, Keynesian economics, simply yes.

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On the suicide of ruling classes: Do EU leaders themselves know the euro is doomed?

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Emmanuel Todd

I am more and more optimistic these days. I say this even as, or especially because, of the ever-worse economic figures. Even as EU leaders are declaring the “end of crisis” and are hailed by the markets for  saying with apparent conviction they’ll “do whatever it takes,” we find out the eurozone’s recession accelerated at the end of last year shrinking -0.6% annually in Q4 and with ever-higher unemployment at 11.9% now spreading even to core countries like Austria and the Netherlands.

Why does this make me optimistic? Here is Emmanuel Todd (one of the few French intellectuals worth listening to):

The euro is not an economic problem but a psychological one. The right comparison is with the Algerian War. Like back then, the ruling classes knew they had failed. But it took four years for de Gaulle to get us out of there. Why can’t we grant the same credit to Hollande? He arrived saying: “I’m going to keep the euro.” Just like de Gaulle had said: “Algeria will stay French.” I have one reason to hope, the interest that Hollande has shown on questions of medical relentlessness [at] the end of life [e.g. not keeping the fatally ill alive beyond all reason]: the euro could be his warm-up!

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Paul Krugman on France (1990-2010): Long live the franc, long live the French State!

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Krugman in France

Paul Krugman, as he calls it, “vacationing with the enemy,” during a walking trip in France, undisclosed location, 2003.

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.

I have used the Unofficial Paul Kruman Archive, Krugman’s retro 1990s website, and his New York Times op-ed archive to write this post.

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Back to “Normal”?: European & GIIPS unemployment data since 1990

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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:

Unemployment in the EU and the GIIPS since 1990 (Eurostat).

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