The Euro And The Battle Of Ideas
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“The Euro and the Battle of Ideas” written by Markus K. Brunnermeier, Harold James and Jean-Pierre Landau is premised on a very simple, but powerful, basis: that different historical experiences, hence ideologies of what constitutes governance, have led to different expectations of what Euro should be. Stripped from this book is the belief that governments in the European Union (EU) clash with one another due to their different political constituencies, political representations, regime types, and economic values.
Instead, the key trigger, invariably the independent variable, lies in different ideological lenses to which France, Germany, and other members see the actual function of the Euro. On “economic governance” France sees common policy, one by which members can constantly adjust towards the proverbial middle, as a sufficient basis to manage different fiscal responsibilities. To a large extent, this is due to France’s more centralized and presidential system of governance. Any entity that tries to operate in parallel with the system of government at the center is enough to suggest compliance.
Germany, starting from the basis of a federal structure of government, however, demands fiscal discipline, rigor, and compliance at all times. All member states should not merely move gradually to the center but take active steps to remain at the center. If fiscal discipline is the key operating principle, then all political and economic projects should be perpetually geared towards such aim. In other words, there can be no effort to relent. The key is discipline and a perpetual habit of compliance.
When France and German have different concepts of governance, which the authors insist they do, then due to the asymmetric nature of the rest of the member states viz France and Germany, there will be general lapses in institutional performance, integrity, and internal solidarity.
While the thesis of the book is compelling, there is no emphasis on global conditions that make for the weaknesses of the Euro too. Euro has been structurally weak for more than three decades, a condition known otherwise as Euro sclerosis. While the rest of the world has tried to adjust to globalization, the EU has looked inward to find that silver bullet. Due to decades of anemic growth, generations of Europeans are now left behind. Undeterred, the EU has also tried to embrace more members into his fold. Notwithstanding Brexit as yet, there are currently 27 members that formed the EU. To the degree that none of the 27 are adjusting to the global economic conditions, it is difficult to expect them to look to Europe for any aspect of reform when there hasn’t been far and few between in the EU.
This book is an excellent work of scholarship. One would hope that policymakers in the EU would take it more seriously. But at more than 30,000 European bureaucrats at work, perhaps their sole consideration is bureaucracy and institutional malaise, rather than ideological contradiction. It will take a long while yet before the EU can see eye to eye.