Thoughts on the economic crisis in Europe: Federalism or failure? Maria rosaria Iorio – Political Analyst

Has democracy still a meaning in Europe?
Following the collapse of the Soviet Union in the late 1980s, the dominant liberal political philosophy all over Europe resulted in the withdrawal of the State from its role of social catalyst, while giving the markets a role as social developer and economic re-distributor. The State has consequently given up its role of service provider in Europe. The current crisis is also the consequence of the political choices that let the financial markets take over the real economy. This trend is the logical consequence of what began in the 1980s.
Lack of State and of proactive social policies, the weakening of public services and individualism have resulted in an atomized society where the motto sauve qui peut applies –– “everyone for himself”. These national political choices have affected Europe as a whole.
When the financial crisis started I wondered why the media mostly focused on the private sector as the ones who had to “make a gesture”, i.e. to give up their money! Finally, I understood that government debt was money that had been borrowed from the private banking system! I must admit that this surprised me –– while inspiring me. “So, for many years governments had been borrowing on the financial markets without either consulting or informing their citizens. This explains why markets seem to have the power of deciding which government policy is more appropriate so that they can recuperate their funds” – I thought.
Then, I asked myself what is the role of democracy under the current circumstances? My feeling is that in the current context democracy is on hold as it is actually the financial markets who are managing Europe in a sort of co-management scheme in partnership with governments. The evidence suggests that there cannot be any national democratic control over government decisions relating to economic and financial policies, particularly when such decisions are interlinked with global and European policy-making. Therefore, a higher level of regional integration is needed, as well as a stronger role for the European Central Bank in the economic and financial spheres. Europe has to work more to achieve integration of its financial and economic policy.
It is, indeed, disheartening to hear debates about countries thinking of going back to their national currencies, establishing controls at European frontiers and revising the Schengen Agreements. Such debates make me think that Europe has reached the limit of the extent to which national democracies can create innovative debates: instead of looking at the future some politicians want to go back to the past in a demagogic and even dangerous way. The issue is not the danger that the free movement of people can create! The danger comes rather from inadequate balance between European public policies and markets, as well as from the lack of innovation and employment creation policies in Europe.
National choices or more European integration?
Can countries move toward a better future alone? The answer is no! Has any country alone found a solution to the crisis? The answer is again no! That is why, finally, the crisis has brought to the top of the agenda the issue of European federalism and integration, and that is at least one positive effect of the crisis. European politicians have frequently agreed to find common solutions to the short-term and long-term crises. Surely, this situation is not over. While steps are being taken towards a long-term solution, for many years we have seen the same narrow nationalistic approach and the pursuit of national political interests impeding European political integration. This concerns particularly taxation and foreign policies.
We are all aware that the issue of national sovereignty has always been the main obstacle to progress on European integration. The Greek crisis has shown that individual State failure affects regional European success and therefore points towards a joint collective response. But, the Italian example is also interesting as for many months the Italian Prime Minister’s credibility had been weakened by a series of incidents, without having any concrete impact on national democratic games.
A crisis was reached and, more specifically, the markets decided that “enough was enough”. Mr Berlusconi was replaced. In forty-eight hours a substantial change took place: first a government of technicians replaced the so-called “democratic” government and a number of new measures were taken in a very short period of time. The question of how citizens choose their politicians in Europe remains open. I always thought that the “personality” of Berlusconi reflected the values –– or lack thereof –– that underpin Italian society. We are talking about competition based on “whom who know” rather than merit –– making easy money through your network and connections. His was indeed the prototype of a society that lives via the media and refuses to examine its values and its societal rules. He had been re-elected several times despite his inconsistency, both from a political and a personal point of view.
In fact, the values that he transmitted fascinated a number of people –– particularly men –– and relate to the super powerful man who commands not because of his ideas and his achievements, but simply because he has money and a dominating attitude. However, the markets no longer trusted him. Even so, had elections taken place at that time Berlusconi would have won!
The Italian example raises the question of the accountability of national decision-making in the contemporary European setting. People are worried about their daily lives to the extent that they do not have time to think about the rest of the world. European public opinion is more and more short-sighted and media-dependent. For example, the system of national democratic voting has proved to be inefficient in an economically globalized world. National political representation might, as in the case of Italy, be completely out of step with international reality and carry the country towards marginalization and economic disaster. That is the direction in which Italy was going. At this stage, only a federal Europe can tackle all these challenges. The European population should be made aware that the continent is entering a new era and that it cannot continue functioning as it did in the last century.
The price of refusing to change would be, and has been, too high, resulting in even more massive unemployment and deeper social hurdles.
Thanks to the present economic crisis, Europe can start dealing with serious issues that have remained neglected for more than thirty years. Political accountability and the adequacy of economic structures to deal with the international context are being discussed as a result of a potential collapse of the euro and the implosion of the European economic system. The issue is that reforms will go in the direction of liberalism rather than toward increased social protection. For example, in Italy the Monti government has decided to tackle the rigidity of the labour market by liberalizing certain sectors, i.e. taxi licenses and Article 18 of the Constitution –– thereby facilitating dismissal. It appears to me that there is a sort of push to the bottom as it concerns social development. The present measures send the message that there is only one way to solve the crisis: to disengage the State even more and to provide more manoeuvrability for the private sector so that it can be more competitive on the international markets. The liberal philosophy has advanced even further to solve a crisis that results from liberal thinking. It is puzzling. What about creating the conditions for a more dynamic labour market? What about thinking about measures to encourage merit over client networking? What about having a youth policy that sustains the creation of innovative businesses? These questions remain unanswered.
Looking towards the future or going back to the past?
I am not sure that European societies are going in the direction of encouraging effort and merit as references for the future. In fact, my feeling is that such values are disappearing from the social and political spectrum, while the quick money principle remains fascinating. A fact that is now acknowledged is that there is a European brain-drain. It has become a region where innovation is seen as subversive and where people are unable to imagine the future –– and even create a future. Does this have anything to do with meritocracy? It does. Societies that are stuck in the present cannot imagine the future and therefore do not encourage youth to create and innovate.
Recently, I saw a programme about Italy. It stated that Italy is not a country made for young people … parents and grand-parents provide a home for young people who are unable to move on in life on their own because they cannot find a job. Actually, unofficially young people are filling badly paid jobs where you work long hours for small salaries with no social benefits. An amazing situation! In Italy, some people say that when retirees die the system will collapse, because they are the ones sustaining the Italian economy! And where are the qualified young? They take on a multitude of small jobs or leave the country. This situation brings me to my next point.
Some European politicians want to reduce migration flows in Europe and even revise the Schengen Agreement. It is as if Europeans have never migrated or moved around the world. It can only be short-term political interest that makes European politicians make such populist speeches. Speeches like that do not bring any new political ideas to the table, while giving their national constituencies the wrong idea about world politics.
The truth is that if European economies were growing, Europeans would not fear migration. Someone might say: “nothing new under the sun.” The reality is that European economies are neither creating nor producing new ideas and products. This is the situation that results in a “back to the past” approach. The free movement of people remains a major European achievement. Such an achievement is not questioned. Therefore, it is only demagogy that motivates such questioning. Europeans need concrete solutions to concrete problems, including employment and income generation through innovation and value-added production. This means initiating a virtual circle rising towards the top instead of continuing to sink towards the bottom, being guided by hope and confidence rather than by fear and mistrust in the future. This takes more energy and effort, but it is the only way to build a new Europe in the long term.
Turning towards the past rather than projecting and planning for the future will only isolate the continent without solving its structural challenges. Short-term and short-sighted policies resulting from a pragmatic approach have shown their limits. Long-term planning is necessary to formulate appropriate strategies and give hope to European societies. The increasing inequalities and the “des-integration” of the social structure have also consequences on security and the relationship with the world. I believe that the social link is the key to fighting against insecurity and extremisms of all sorts.
While acknowledging that no system is perfect, I think that there is a certain level of imperfection that a system can tolerate before it collapses. We know that the perception of imperfection is different according to the angle from which it is viewed and depends on the stage of economic development and political stability of countries. My reading of the current European system is that such a system has reached a level of saturation and stagnation that encourages self-destruction. A sort of social stagnation and fear are embedded in contemporary European societies. There are nuances and differences among countries but there is a common line of thought: fear of the future! Fear about the future of our children, fear of being less rich in the future, fear for energy and oil supplies, and so on and so forth.
Europe seems to be stuck in fear, while having few ideas for change and innovation.
Our children will have a future inasmuch as we leave values and hope for them! This is not the case at the moment as materialism has taken over all the underpinning values that brought us to the present level of economic development: faith in the value of political and social progress!
Europeans are losing hope about a factor that has inspired the continent for centuries: progress! We are now afraid of losing what we have obtained, and are neither developing ideas nor creating economic growth.
Fear is an obstacle to innovation.
We must find again that hope that inspires entrepreneurship in the sense that goes beyond making money and reaches the sphere of creation and projection towards a future with an optimistic vision. Of course, international competition is a reality. But what motivates our competitors?
The hope that has motivated the European continent for centuries: the hope that the lives of our descendants would improve as a result of the development and creation of wealth by the present generations. It seems that Europeans have lost such a motivation. Our comfort has become our prison. Nevertheless, there is space for hope and improvement that should encourage optimism.