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Yep, Europe has set itself up in a situation where sooner or later, it'll have to get a unified economic policy. But it doesn't look like a bad thing to me: *
by fab13n 17y ago
Yep, Europe has set itself up in a situation where sooner or later, it'll have to get a unified economic policy. But it doesn't look like a bad thing to me:
* European countries are too small to be meaningful in worldwide economic (or military) matters: our markets would be too atomized, we wouldn't have any negotiation power unless we "harmonize" our positions: I'd rather have the decisions be taken together, rather than harmonized as an afterthought.
* Granted, today Brussels doesn't work democratically and lacks real power, especially when it comes to monetary policy. Giving real power to that shapeless bureaucracy seems stupid at first sight. For European elections, most parties are attached to a single country, have "national" (i.e. totally off-topic and inapplicable) programs, aren't kept accountable for anything once elected; the vast majority of voters either don't have a clue what a Euro-MP's purpose is, or would bet that they have none.
But all of this would change quite rapidly, if Brussels was to get some real, strategic, intelligible power: real programs would become defensible during elections, the purpose of real pan-European parties would become clear, and if elected people ran on a real program, they could be held accountable of it (well, at least as much as in normal democraties anyway).
- eru 17y agoI agree somewhat with the sentiment that a stronger EU can be good. But I do not see why we should see harmonization as so important. Unilateral free trade is always possible. Also, Switzerland seems to be doing fine as a small and independent country.
- fab13n 17y agoWithout harmonisation: * We can't decide anything about inflation, interest rates, at monetary policies. * There's an incentive for fiscal dumping: you set your tax rates for mobile capital so low that you drain wealth from the 26 other countries; knowing that common market and currency makes more things mobile and therefore drainable Besides, free trade is a fairy tale: we practice free trade according the WTO rules, but the real business is the negotiation where WTO rules are decided. As Europe, you've got enough weight to have your word, as most businesses can't afford to forgo the whole European market. Most of them can forgo France, or Germany, or Spain.
- eru 17y agoThanks. > Besides, free trade is a fairy tale: [...] That's because politicians/diplomats are negotiating free-trade as if it was a prisoner's dilemma. But you can lower tariffs unilateral. And there are people who regard fiscal competition (or other regulatory competition) as a good thing. Could you please explain your argument about inflation? Couldn't each country decide on its own inflation, without harmonization nor a common currency?
- fab13n 17y ago> Could you please explain your argument about inflation? > Couldn't each country decide on its own inflation, without harmonization nor a common currency? Without a common currency you can handle your own inflation. But if there are many different moneys in a market, and they fluctuate relative to each other, it's much more difficult to make business. Moreover, when countries have independent monetary policies, they eventually indulge into protectionism (although they try to disguise it into something else). Therefore there's no more common market, with the corresponding economies of scale. Before the Euro, european countries already had a "monetary snake" system which limited money fluctuation and ability to indulge into protectionism, to favor business inside Europe. Finally, being known as unable to raise inflation has a positive effect: since lenders are confident that Euro can't be significantly devalued, they consider the loan as less risky, and therefore accept lower interest rates. Look at Greece: people are afraid that the country might go bankrupt, so they only lend at high interest rates, putting Greece into further trouble. Know, imagine that Greece was able to devalue its currency through inflation: lenders would anticipate massive inflation, and protect themselves with outrageous interest rates. The alternative for Greece would be to borrow into a stronger, foreign money, but then if their economy tanks, the debt would explode with soaring exchange rates, and the whole country would default. Given this high risk of default, interest rates would soar even if labelled in a strong currency. Being tied to a strong currency, with some rules which keep it strong, forces you to drive your economy responsibly. Unfortunately for Greece, the Euro rules weren't strong and enforceable enough to prevent their politicians from acting irresponsibly. Know they're going to pay...
- fab13n 17y ago
- patrickk 17y agoSwiterland is doing fine because it takes the attitude that it's fine to accept Nazi gold, loot from third world despots, corrupt politicians and business people etc.
- eru 17y agoAre you sure there are still worse than the rest of the world? Anyway, how about New Zealand instead?