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Europe is supported by one pillar only…

Published on June 19, 2012 by: in: Economy

Not only in Europe but also elsewhere, people are commenting on the possible Greek’s exit from the eurozone. I am not going to dwell on that utopian socialist lamentation. When you read in a newspaper that a strong Europe says to Greece ‘you’ve done that yourself so don’t expect us to be merciful’ you can only shrug your shoulders at blindness and deafness of our Polish pseudo-humanistic far left politicians. Have they not read about the multi-million euro bailouts for Greece? A part of that money is used to pay off (already depreciated) debts but also to pay civil servant’s salaries. It is worth noting that Greece hires five times more civil servants than Great Britain in relation to its population. Beside that, where is this so called ‘strong Europe’ for Christ’s sake?

Neither Greece nor Europe wants to accept the simple truth that all the problems come from the one source – the unleashed European welfare state model. Basically, the growing number of welfare subsidies are burdening capitalism and slowly killing it. That is the cause of financial crisis and the reason why national governments have to borrow more and more money.

The crisis in the eurozone is a result of the problems caused by the bad institutional design behind the monetary union. However, the fact that the most of eurozone member-countries did not keep the rules of the Stability and Growth Pact from the really beginning and adopted budget deficits and public debt policy puts once again emphasis on the excessive welfare burden, overwhelming European countries (not only the eurozone members!)

Moreover, we should take into account ambitions of some European countries which used to be top players on the world political arena and now they are diminishing greatly in importance.  ‘The great Europe’ appeals to their dreams of the past or fading greatness.  As a result, they use ‘the great Europe project’ slogans in order to justify bad (containing high-risk) solutions to the eurozone crisis. And here the risky solutions meet with refusal to accept reality which means the need to return to the welfare state against those who cannot help themselves.  Additionally, this desire to keep welfare state model is the reason for the other harmful solutions such as the European bonds.

picture: infraredhorsebite

‘European bonds’ sounds proudly. However, we should understand that they are just as the other similar solutions comprised under only one pillar. This pillar is of course German strong financial structure and high credibility. I can understand German fear of the concept of “collectivising” eurozone debt for benefits of the Greeks and other fare dodgers. One should  ask oneself a question: ’What will happen if this one pillar collapses due to too much joint burden put on it?

It also lies in our interest – we should care that Germany doesn’t get overloaded under growing international pressure. The reason behind this is that the perspectives of next generations in Europe as well as in Poland will depend on this decision and its results. Hysterical and short-sighted rescue operations may cause economic downfall not only in Germany…

Translation: Katarzyna Toruńska

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About Jan Winiecki

Economist, professor of Aalborg University and European University Viadrina in Frankfurt, co-founder and president of the foundation of Adam Smith Center, former member of the EBRD board, co-founder and former president of the Polish Economic Society, laureate of Kisiel Prize.

Fredrich Naumann Foundation For The Freedom
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