Joseph Stiglitz, who won the Nobel Prize
in 2001 for his work on how markets work inefficiently was once asked
about his opinion on austerity measures. “It reminds me of medieval medicine,” he said.
“It is like blood-letting, where you took blood out of a patient
because the theory was that there were bad tumours. And very often, when
you took the blood out, the patient got sicker. The response then was
more blood-letting until the patient very nearly died.” He drew the conclusion: “What is happening in Europe is a mutual suicide pact!”
Jospeh Stiglitz is right. The manner in
which the crisis is dealt with is likely to be of far-reaching
significance to Europe and to the rest of the world. Therefore, it’s
about the correct decision on the future direction: On the one hand a
Europe based on the logic of commerce and competition or on the other
hand a Social Europe that tackles the crisis in solidarity and does not
leave the young out in the rain when the going gets tough!
I believe that even the Germans do not
live on an isolated island of the blessed. We cannot remain indifferent
to how the people in those countries who are affected the most by the
crisis are suffering. In the long term, things will only go well for us
if they are going well for our neighbours too.
Undoubtedly, we do not need an
over-regulated EU which wants to ban the serving of olive oil in dipping
bowls or wants to regulate the physical appearance of fruit and
vegetables.
What we need are better regulated financial markets and we
need banks which serve the real economy and are useful for industry. We
do not need banks rewarding managers with substantial cash-bonuses for
short-term gains, filling up balloons with air and then letting it out
again – and getting the European taxpayer to pick up the bill.
Ten Eurozone countries have committed to
introducing the proposed European Union financial transaction tax (FTT)
by 2016. The FTT and the step towards the creation of a European
banking union are major developments for dealing with the current
problems. However, it’s not enough! We need further EU action on
combating tax avoidance and tax evasion. A competitive approach to
cutting company taxes we cannot and will no longer afford in Europe.
What worries me is that little
discussion appears to focus explicitly on the costs of economic crises
in terms of human lives. The crisis management strategy adopted by
politicians, comprising austerity mandates and cuts in wages, pensions
and welfare payments, has not only led to a downward spiral in economic
terms, but is also having a devastating impact on citizens. Social
risks are increasing and individuals and families are under constant
worry.
Unemployment – particularly among the young – is sky-high, living
standards are falling and signs of the crisis range from soup kitchens
in Athens to Portugal’s crowds protesting in the streets against
austerity.
If unemployment was a country it would
be, with 19,2 million inhabitants, the fifth biggest in the EU. In the
US, Greece, Italy, Spain, the UK and elsewhere in Europe there were more
than 10,000 additional suicides from 2007-2010, a figure that is over
and above historical trends, with the largest rises concentrated in the
worst performing economies.
Greece is in the middle of a public health
disaster: HIV, TB, and malaria epidemics will now cost more to control
than they would have been to prevent. An increase in infant and child
mortality was observed in Portugal. In Italy, the education system is
falling down. In about half of Italian school buildings, including
universities, pieces of plaster are falling off the ceiling, water
penetrates walls and floors are giving way. And the youth unemployment
rate in Spain has increased to over 50 percent.
The European election results clearly reveal that Europe is ill (to steal the title of an essay by Perry Anderson in the London Review of Books).
The symptoms of this illness are apparent – but what can we do to bring
Europe out of intensive care? To relief Europe from the consequences of
the neoliberal arbitrariness and lack of commitment?
Special weight must be given to German
politics. The coordinates in the new grand coalition have shifted from
centre-right to centre-left. This is an important change of direction.
The grand coalition is marginally more pro-European and less keen on
forcing austerity onto the Eurozone.
