Tuesday, November 28, 2017

Bill Mitchell — The EMU reform ruse – Part 1

On October 31, 2017, my blog – Europhile Left deluded if it thinks reform process will produce functional outcomes – countered some of the nonsense coming out of Europe (from the so-called progressive side) that the Eurozone hadn’t failed when judged by it bias towards mass unemployment and increasing precariousness of its citizens. I particularly noted the terrible record in terms of youth unemployment and NEETs. Yesterday’s blog – Massive Eurozone infrastructure deficit requires urgent redress – documented how much damage the austerity bias of the Eurozone has caused to essential productive infrastructure – human and physical and the ridiculous underinvestment by governments locked into mindless Stability and Growth Pact (and its recent derivatives) rules. Unphased, the Europhiles keep telling me that reform processes are underway and that we need to be patient. That the glorious vision outlined in the October 1990 European Commission Report – One Market, One Money Report, which, apparently outlined a vision of domestic-demand driven convergence bliss for the Economic and Monetary Union. I analysed that Report in detail in my 2015 book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale – and have to say that anyone who holds it out as a plan for the future must have been reading a different report or affected by heavy drugs. Today, I am considering recent reform proposals put forward by German academic Fritz Sharpf, who considers the neoliberal Eurozone experiment has failed but can be resurrected without abandoning the essential mechanics of the monetary union. Tomorrow, I will conclude. It will not surprise regular readers to know that I disagree with Sharpf’s reform agenda....
I appears to me that the problem in the EZ is not so much neoliberalism, which is chiefly Anglo-American, as it is German ordoliberalism.

Neoliberalism reflects the pragmatic nature of the Anglo-American world.

Ordoliberalism reflects the German preference for a rules-based system in which rules are strictly adhered to regardless of outcomes. This choice is based on the assumption that sticking to the rules will eventually produce the desired result. So far, Germany has been unbending on sticking to the rules (except when it suits Germany).

Bill Mitchell – billy blog
The EMU reform ruse – Part 1
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

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