On Saturday 20th October 2012, the Academy of Ideas presented a debate on the economic crisis in Europe.
About the debate:
The economic crisis in Europe has become the new normality, a continual backdrop to daily life. Every attempt at stabilisation seems to break down, every austerity measure seems to simply shrink GDP and boost unemployment, every firewall is raced through by capital in flight and every demand for more integration is met with calls for customs borders and protectionist tariffs. So, why does the Euro, let alone the EU, continue to exist? Given the continuing rise of China, India and the rest of the developing world, does Europe even have an economic future except as a tourist destination? Or, just as the global financial crisis morphed into a series of sovereign debt crises, might Europe’s woes engulf states worldwide?
Despite fears that Europe as a whole would unravel in the case of a Greek exit, attitudes in Brussels and Germany changed quickly as that prospect became more and more likely. Could redefining Europe around a northern, German-dominated model work? Is there a distinction to be made between fiscally prudent countries and their irresponsible and profligate neighbours? Was it right to expect Greece to be more “realistic” and be more like Bulgaria? And why is there such hostility to the idea that countries like Greece, Spain, Portugal or Ireland might be better off with devalued currencies to increase their competitiveness? Closer economic integration seems the only game in town, but surely there is a basic democratic right to decide how our wealth should be distributed: one that is ignored when money goes to bail out Ireland or Spain. There is also a danger, now bailouts have firmly enshrined moral hazard into the banking system, that national economies are being damaged by being kept afloat rather than allowed to fail. The extent of this distortion can be seen in the fact that investors are prepared to take negative returns on German bonds: security is the overriding concern.
Certainly Germany – with its exports, low inflation and unemployment – could be seen to be getting something right. However, not every country can be export-led. Nor does every country have the same productivity and low wages as Germany – a reality that myths about lazy southern workers express in a crude form. Would the amount of restructuring required to boost productivity and competitiveness at the national level break the structures of the EU? Would the human cost be acceptable? Or could it be achieved across Europe by supranational action? By the ECB forcing through fiscal and political union on top of monetary? When it comes to the prospects for the European economy, just what is myth and what is reality?
Participants:
Speakers:
Declan Ganley
Chairman and CEO, Rivada Networks; Founder and Chairman, Libertas Institute
Alexander Horn
Economics Editor, NovoArgumente; Consultant (logistics, production and organisation), German automotive industry
Philippe Legrain
Adviser to José Manuel Barroso, President of the European Commission (speaking in a personal capacity); Author of Aftershock: Reshaping the World Economy after the Crisis
Phil Mullan
Economist; Business Transformation Director, Easynet Global Services; Author, The Imaginary Time Bomb
Matina Stevis
Economics Reporter, Dow Jones Newswires and the Wall Street Journal
Chair:
Angus Kennedy
Head of External Relations, Academy of Ideas; Chair, IoI Economy Forum; Convenor, The Academy
Produced by:
Angus Kennedy
Head of External Relations, Academy of Ideas; Chair, IoI Economy Forum; Convenor, The Academy
Video by:
WORLDbytes
