European politicians have been going out of their ways to find the antidote for the virus consuming the other countries of the Old Continent since the advent of the second “state” wave of the current crisis. A diagnosis does not arouse a controversy, though. The balloon of the social promises made to the citizens has grown so big that pumping it even more gets everybody closer to a deafening “POP”. Besides, the walls of this bubble are nothing but thin, so the protection against the outside world, which they are supposed to provide, brings no comfort to anyone.
However, giving just a diagnosis is not the consensus we are hoping for. Roughly speaking, the political elites agree about the therapy – the countries should be unlearned the habit of running into debts continuously. The difference between the public sector and market players is not as significant as the Europeans have been told for decades. There is no perfect recipe that would allow the public sector to be in the red and maintain the financial growth on credit. We may have reached the point that John Maynard Keynes, one of the most influential economists of the last century, defined as a “long run”. Keynes, as he had predicted, did not live to this point. But we did, and we would like to survive it.
The European consensus stopped working when it came to choosing a doctor. The disease afflicted patients’ nervous systems so severely that they took leave of their senses and do not know now what is good for them. The democratic decision-makers cannot be trusted. Admittedly, they controlled themselves for a while when they had to face the epidemic, but their hunger for power will, beyond the shadow of a doubt, make them give empty promises to their bewildered voters as soon as the disease has gone. Thus the virus will spread airborne again during impassioned speeches in the election campaigns. What is important, a relapse of the disease is far too dangerous for weaker and weaker Europe.
Therefore, let us address doctors-technocrats in Brussels, who seem to be insensitive to European societies’ moan. It is them, who are expected to rise to the challenge. They have supplies of better medicines brought in a “six pack” and of more invasive, but more efficient, life-saving equipment in the form of treaty amendments. However, the moot point is the invasiveness in question. The British decided to work out their own methods of dealing with the “indebted” virus. More importantly, they were one of the first to start the therapy and did not waste their time waiting for Brussels physicians’ recommendations and prescriptions. Although I am a federalist and a democrat, I cannot help but think that the solitary British people were right rejecting the euro-therapy. They used the method that had been working well in their country. Separation from the public opinion and commitment to ineffective solutions (so-called Maastricht convergence criteria) by the implementation of additional bureaucratic procedures, which will supposedly require a consent of particular states (EU Council), do not make the hope for improvement flare up… Unfortunately, the principle of 3% budget deficit and 60% national debt, as we can see in our example, is not working. It is simply impractical: during the prosperity the ruling party has a strong argument that their fiscal policy is sound as it stands just slightly below the fatal threshold of 3%. Yet in bad times “objective conditions” make it necessary to turn a blind eye to the stringent limits and run into debt even more. This threshold does not “scare away” the debt until it is really critical. Suffice it to say that we are still below this limit. We have been living in a free country for 20 years but we still could not develop a balanced plan of income and public expenditure.
Are the Europeans fighting a losing battle? It is highly likely that the answer should be “yes”. Nevertheless, one of the solutions to this problem might be employing Judeo-Christian tradition. The question about the healthy management of public finances always reminds me of the Old Testament story of Joseph. He was Pharaoh’s prisoner who later started to rule the Kingdom of Pharaoh and led it to the prosperity. It all happened after he explained to the king of Egypt the nightmares that had been tormenting him. The bad dreams were about lean and fat cows, and empty and full ears. The local tribes used to come to Egypt and were eager to be in Joseph’s care. The key to the success lay in the fact that Joseph told to store the grains in the granaries and food in the storehouses in the prosperity times, but for the following seven years of drought he ordered to sell those goods with adequate profit or to give them in exchange for the recognition of sovereignty. Simple, isn’t it? Quite surprisingly, our present path to development relies on constantly incurring debts, which the future generations will have to pay off.
Nowadays, we do not need any kings and their spiritual dreams to know that in the economy there always come lean years after fat years, and vice versa. What we are missing here is the method Joseph presented to the Pharaoh. It does not seem difficult to devise, though. All you have to do is to replace the budget deficit limit of 3%, add up this index to the expected GDP growth rate of a given country and set a limit of approximately 3,5%-4%. Thus, the government would have to balance the budget during the economic growth exceeding 3% and generate a surplus – while exceeding 4%. The country would have greater budgetary flexibility to influence economic processes in case of slowdown or recession. Therefore, this solution could be adopted especially now.
We strived hard for the EU law a few years ago so the reference to the Judeo-Christian tradition in it takes on a new meaning in this context. The disappointing thing is that all we wanted was the ideological identification, which, in fact, not every European resident is content with. I wish we had referred to the meaning of the Old Testament story of Joseph. The story taken from the Bible could turn into a mathematical formula in our treaties; the one that would help us avoid at least some of the difficulties that the crisis brings about.
Translation: Adam Intrys