Thursday, April 26, 2012
Economic Ideas Forum. My opinion on what's been discussed!
The main topic and reason for the forum was of course economic. Ways to deal with the current economic crisis, what reforms are necessary and in what best way to implement them. With a lot of the things I have heard I agree and I have embraced. It is no lie that Europe needs to reform, it needs to sort the mess that it got itself and its citizens into, with decades of going in circles on the name of protectionism, the interests of the markets and the banks and the so called "national interests".
Well how national are some of those interests is another matter; but once you create something like what we have created in Europe, a sort of a political and economic block, you are going to have to continuously reform it and modernize it, to keep up with the new challenges that the changes in the world are bringing. And in our case, the case of the EU , the more states join, the more ties we develop with each other, the more we harmonize our economies and policies, then the more we are exposed to each other.
And now that a crisis is engulfing all our continent the solution must be found collectively. So I totally agree with Mr Tajani that Europe needs a new industrial revolution. We have outsourced a lot of our industries in China and other countries, so we left Europe exposed in many ways and our citizens with less opportunities. I also agree about the full fiscal union, since we have launched the euro and we have one currency and one market, we only have two choices; either go back or forward. Now we are somewhere in the middle of things and the weaknesses of the eurozone are easy to expose and be exploited by the Markets.
Besides we really need to be prepared for the future; as this forum concluded, the world is changing and in the future Europe will not be one of the two major players on this planet. We are entering a multi-polar world and that is good. But it also comes with many challenges. The best way to deal with it is to keep reforming and modernizing; the problem is how!!
In my opinion austerity and salary reductions are not the way. At some point during the discussion the Baltic states were praised for taking this road during the '90s, in order to reform and join the EU. They brought them as an example for the countries that are forced to go down this road now days, like Greece, Portugal, Ireland, Spain and Italy. Well I have to strongly disagree. I have visited Estonia recently and while the economic growth and development are obvious, the nation's salaries are very low.
A reason to invest in the country one would think, but talking with the locals they told me that "every one who can leave Estonia, leaves." Because of such low salaries, the Estonians are preferring to leave the country and go and work to Finland, Sweden, Germany, Denmark, Ireland and the UK. So while the ship is plain sailing according to the economists, the sailors are abandoning the ship. Is that what they want to achieve in other countries as well? Mass emigration? There are already talks in Greece that their salaries will be reduced to the level of Bulgaria (of course that is just theories at the moment, but people are afraid indeed).
And how about the idea of of tax and salary harmonization that were also mentioned? How are they going to harmonize the salaries? Will they bring half of Europe's salaries down to the level of Bulgaria while keeping the high salaries of the rich countries, creating an unequal Europe? Or perhaps are they going to bring all countries' salaries down, because I would love to see how are they going to convince a German, Dutch, Luxembourgian or Swedish to accept similar salary cuts that the Greeks had to endure recently. But maybe they mean that eventually the salaries of the rich countries will go down a bit and the ones of the poorer countries up a bit so they can come to the same levels eventually. That would be the fairest option but how will the citizens of the rich countries be prepared for some changes in their pockets?
As for the taxation harmonization, though it maybe the right thing to do to complete the process of the fiscal union, some countries are heavily relying on their lower taxes; like Ireland. In order to persuade it to get rid of its lower taxes and harmonize them with the rest of Europe, then what kind of compensation will the other countries give Ireland for example for doing so? Because once Ireland accept the suggestions by France and Germany, it will willingly lose a lot of revenue and jobs for their people; will the Germans and French then come and create jobs, build factories in Ireland to compensate them for the jobs lost from American multinationals that will definitely move out from Ireland? If yes, then I am all for it.
There were many other good ideas though suggested, notably by Mr. John Bruton; for example the common banking market, more control of the banks, a stronger ECB and EU Commission, pan-European elections for an EU President, more democracy and transparency in EU, the importance of education and its reforms, the reforms on the banking system and investments in new technologies. All these sounded like music to my ears, as long as they are implemented and do not stay on paper only.
Then of course the subject moved to the Social Europe issue and its policies; policies that most of them agreed that need to be reformed or discarded, as Europe will not afford in the future to give generous pensions to its citizens and that Europeans must learn to live with less social welfare benefits. And lose security in their jobs, in order to make Europe more competitive. Here is an issue I totally disagree, or I am sceptical of how it is going to be implemented.
They spoke about not being able to pay our pensions in the future. But how can we pay our pensions since there is high youth unemployment in our countries; youth unemployment equals in inability of young people to start families and have kids. Which in result means less future workers, less tax payers in the future, thus less people contributing for the pensions of the elderly. What they want to do is either make us all pay for our own pensions, or we get no pensions at all. And of course increase immigration into Europe, to replenish the European population. But wouldn't it be better to give initiatives to young people to find labor stability early enough, start families and have children? They have admitted it themselves that is scandalous the high levels of youth unemployment in some countries, so why don't we create more jobs now, instead of talking about it?
And if we have to pay in the future for our pensions, then why contribute taxes for it out of our salaries all our working lives? Perhaps we should stop paying them, get higher salaries and invest these extra money in private pension schemes. But paying for social security for decades and then not getting any? That's absurd! Mr. Richard Bruton even said that those reforms must happen in a humane way; well I should hope so, because from what we have seen in Greece, the reforms took place in the most inhumane way thanx to the inability of the Greek political elite to reform when they should have.
Then other issues were discussed like Europe's relations with the USA. Here I did not participated much because I did not want to offend some of the speakers with my rhetoric. They did admit that the USA has delegates in Brussels that influence EU's policies by lobbying, but there were no European delegates in Washington to do the same. Well if we are talking about closer ties then this is essential for sure. Otherwise we will have an unequal partnership, or rather a "master and servant" situation. I am all for free trade between USA and EU, but only if it equal and it flows both ways. Will the Americans be happy to have goods from Eastern Europe flowing into their markets? Because I should hope that they did not mean that only American goods will enter European markets, or only Western European goods will be promoted in USA.
And how about movies, music and other cultural "goods?" Why do we have thousands of American artists, songs, movies, celebrities and actors dominating our cinemas, charts, and social life while we see hardly any European movies entering America? Why must American actors, directors and movie producers find always a job, have more success and earn more money than their European counterparts? And why must only American culture dominate the West?
Or how about the issue of free travel, with no hassle. Recently the European Parliament approved to hand out EU citizen's data that are visiting the USA, over to the US authorities. If I am being treated like a potential threat before I even set foot on their land, then why bother? Why not visit Budapest, Paris, Prague, London or Madrid instead of New York and Washington and spend my hard earned euros over this side of the Atlantic. And do it without the hassle, with the same currency in most cases and without the need to pass any personal information to anyone. If we are talking about free trade and strengthening European and American relations, then they better have a look at those issues too.
Otherwise I am all for more European integration, if it is done for the benefit of the people and with their best interests in mind; and of course their support, opinion and permission. When I questioned the panel how are they going to win back European support and trust in the EU and the eurozone that have been shaken with the recent crisis, I received the usual waffle from the panelists. They either did not understand my question or they avoided to answer directly. Or perhaps they have nothing included in the upcoming policies to show to the people why they must keep supporting the European project and what do they gain out of it. I think it would be crucial to do so, don't you think? It was even discussed why what is being discussed in the Council of the European Union meetings, is not being announced to the citizens so they know what is happening and why it must happen! But why aren't they?
I would love to see a lot of what they talked about implemented, others definitely not and some I am waiting to see the manner of their implementation. What I really want the result of all this to be, is to see Europe more united and wealthy in all corners again. But if that means a Europe of unequal salaries and prosperity, a Europe of the few and safeguarding the monopolies of the elites, then I won't go into the trouble to write pages of protest speeches; because they need to be careful of the rise of the far right that happens all over Europe. They are going to be their nemesis, the citizens are watching and punishing with their votes. I wish them the best of luck with their work.
I would like to thank CES (Center for European Studies) for their invitation and the opportunity to be part of that great event. The information, ideas and brain power was flowing and the privilege to be able to listen to those important men and women discussing the future of Europe was certainly my honor and in some cases inspiring. I thoroughly enjoyed it and I am looking forward to the next similar event.