Tag Archives: social democracy

Thomas Piketty: A plan for a working and democratic eurozone (translation)

Thomas Piketty is France’s version of Paul Krugman: a renowned economist and a member of the moderate and reality-based left. (How many French progressives would title their book Vive la gauche américaine !?) But he’s also pushing through his frequent media appearances and popular writings for concrete action on one of the big causes of our day: the fight against the rising tide of inequality since the 1980s.

The endless refrain of the current management of the eurozone crisis is Margaret Thatcher’s old line: “There Is No Alternative” (TINA) to cuts, privatization, a stronger European Central bank, etc. But there are alternatives, one of which was described by Piketty last July in an interesting article in Libération. It both concedes the risks of eurozone federalism (that it would destroy hard-won social rights and standards of living at national level) and proposes how a functional and democratic eurozone might actually work. He argues against Europeanizing welfare and instead for combining joint eurozone debt with a “budget chamber,” composed of national elected members of parliament, which would debate and vote common and binding debt ceilings. This, or a scheme like it, seems the only way for the eurozone’s to be democratized, as opposed to antidemocratic measures such as simply banning all future parliamentary majorities from engaging in deficit spending and Keynesian policies (the aim of the Fiskalpakt). Continue reading →

Draghi: Balanced budgets to be achieved through spending cuts alone

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Because I care.

Mario Draghi, president of the European Central Bank, has been called “The world’s most important boring man”. Indeed, in this context of financial-fiscal fiscal crisis, there is perhaps no more powerful institution in Europe than that which he heads. Its refusal to buy Italian bonds, despite the country then-having the fastest-shrinking debt in Europe, effectively led to the fall of Silvio Berlusconi and the rise of Mario Monti with his election-free reform agenda. It alone decided to lend almost €500 billion to European banks in low-interest three-year loans last December to calm the financial markets.

These may or may not be good things, but there is no official-legal-democratic way of influencing these incredibly important decisions, which can prop up or topple a government, prevent or cause recession, and effectively give mind-bogglingly massive amounts of free cash to the banks (but not governments). These decisions are the lone preserve of the “independent” ECB’s governing council, made up of assorted Frankfurt bureaucrats and Goldman Sachs alumni, answerable only to its conscience.

As such, the ideological preferences, prejudices and words of Draghi and other ECB high officials are intensely important, even if most Europeans even within the eurozone are completely ignorant of them. Investors and financial publications, in contrast, listen on every oracular pronouncement.

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World Economic Forum: “Socialism Is Competitive”

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OK, so they didn’t say that. It would be like The Economist conceding that the French economy, dirigisme and all, performs about the same (or better) as any other major European economy with the exception of Germany. However, I was struck that the WEF has published its annual “Global Competitiveness Report” where economic success is completely independent of the degree of Statism/welfarism. This is significant because the WEF is supposed to be the sort of ultracapitalist/neoliberal institution that leads assorted hippies, leftists and other “altermundializers” to organize counter-summits.

The report includes a ranking which features in its top-10 Switzerland, the United States of America and Singapore. Otherwise, the top-10 is dominated by the most Social-Democratic states in the world including Sweden, Finland, and Denmark, as well as Germany, the Netherlands and Canada. The varieties and varying degrees of welfarism, Statism and egalitarianism in these countries are no contradiction to what the report defines as “competitiveness,” or “the set of institutions, policies, and factors that determine the level of productivity of a country.” The “six pillars” include: institutions, infrastructure, health, primary and higher education, the macroeconomic environment and market efficiency.

I don’t have much hope that even a capitalist authority like the WEF will be able to give the lie to the usual neoliberal suspects – The Economist, The Wall Street Journal, self-proclaimed conservatives generally – that there is no automatic trade-off between social democracy and economic success. No number of foreign counter-examples ever really registers.

Rather, if the economy is to prosper, taxes (preferably on rich people) must be lowered, education and health (and everything else) must be privatized, welfare and pensions must be cut and, more generally, even things quite essential to daily life should only go to those defined as “deserving” (e.g. rationed by wealth). These ideas, however simple, resonate and formed the basis of the electoral success of Nicolas Sarkozy and a number of Nativist/anti-tax/independence movements in Europe including Belgium’s Vlaams Belang and Italy’s Lega Nord. I don’t think we’ve seen the end of it..

Fine print: I am generally skeptical of these crude rankings, especially when it involves reducing to a single variable something as complex/nebulous as “Freedom,” a university’s goodness or indeed “competitiveness”. While they give you some information, it is often merely a matter of giving an aura of authoritativeness to pseudo-scientific measurements. Sometimes they are politically driven.

Very fine print: Also, the report was apparently elaborated by a Spanish man in fluorescent green suit, whom I think we can all agree is obviously untrustworthy.