Wie Stiglitz den Euro retten will

Die Eurokrise ist noch nicht überstanden. Dies hat die Panikattacke um eine Problem-Bank in Portugal gezeigt. Doch es geht nicht nur um Portugal, warnt US-Starökonom J.E. Stiglitz: Auch Deutschland ist auf falschem Kurs. Ohne tiefgreifende Reformen kann die Währungsunion nicht überleben.

Von Joseph E. Stiglitz

As we survey the damage from the years of crisis and recession in Europe that finally seems to be ebbing, there is a sigh of relief that the Eurozone has not fallen apart.

But the return to growth is a far cry from a return to prosperity. At the current pace of “recovery,” no return to normalcy can be expected until well into the next decade.

Even Germany, which is often touted as the most successful country, has grown by a miserly .63 percent over the past 5 years — a rate that in other circumstances would be called an utter failure.

The euro is not an end in itself. It was supposed to be the means to a more prosperous Europe, with higher living standards. For the Eurozone as a whole, incomes today are some 20% below what they would have been, had the growth trend that prevailed in the years before the euro continued.

Europeans have been asked to make continuing further sacrifices — lower wages, lower benefits, weakened systems of social protection — all in the name of saving the euro.

PROMOTING AN AMBITIOUS AGENDA

A much more ambitious, and different, agenda is needed: it is clear that, in its current form, the euro is failing the continent. And yet allowing the currency to dissolve would also be extremely costly.

What is needed, above all, is fundamental reform in the structure and policies of the Eurozone. By now, there is a fairly clear understanding of what is required:

  • A real banking union, with common supervision, common deposit insurance, and common resolution; without this, money will continue to flow from the weakest countries to the strongest.
  • Some form of debt mutualization, such as Eurobonds: with Europe’s debt/GDP ratio lower than that of the US, the Eurozone could borrow at negative real interest rates, as the US does.
  • Industrial policies to enable the laggard countries to catch up. Current strictures bar such policies as unacceptable interventions in free markets.
  • A central bank that focuses not only on inflation, but also on growth, employment, and financial stability.
  • Replacing anti-growth austerity policies with pro-growth policies focusing on investments in people, technology, and infrastructure.
  • A solidarity fund for stabilization—just as there has been a solidarity fund to help new entrants into the EU.

This article was first published in Queries, the European Progressive Magazine under the title “Saving a broken euro”. Repost with kind permission of the editors. Tomorrow in Part II: ERRONEOUS DOCTRINES – Die Fehler der Euro-Doktrin.