EU: going for broke

The 2012 global economic results highlight the unique counterperformance of the European Union among its major trading partners. According to the end of year statistics published by The Economist, even countries like Japan and the United States have managed growth rates of 2 percent or above. The average growth rate for the ASEAN countries reaches 4.5 percent, whilst China enjoys a still robust 7.5 percent growth this year. In Latin America, the economies of Brazil, Venezuela, Argentina and Chile have grown on average by 4 percent in 2012, a trend set to continue next year as well.

Alas, no such performances for the European Union. Aggregate economic growth for the 27 members is stuck below zero, even if overall the Union has the lowest budget deficits (3.5 percent) and public debt in relation to aggregate GDP within the industrialised world (around 60 percent). Southern EU members such as Greece, Portugal, Spain and Italy experience various rates of negative growth and high unemployment not seen in Europe since the Great Depression, whereas Britain, France and Holland are mired in economic stagnation. The exceptions to the rule are some Nordic countries – notably Denmark, Sweden and Finland – led by Germany. The latter has pressured the other  European Union members into adopting unwise and harmful austerity policies, since its elites display a penchant for economic theories in vogue in the 18th century, when macroeconomics and econometrics had not yet been discovered and economic science was still only a branch of moral philosophy. If one adds to the obsession of the balanced budget – popular among US Republicans in the 1990’s – the pathological German fear of moderate inflation, one can more easily understand the reasons behind the current economic stagnation in Europe.

The IMF has recently tried to educate EU leaders to the effect that a 1 percent reduction in public spending lowers growth by at least 1.5 percent, and not, as originally thought, by 0.5 percent. The IMF’s recommendation was to ease up on austerity measures, since the savage budget cuts requested by Europe’s neoliberals have already done great harm to the continent’s economy. Fully engaged, however, in backing such misguided policies, most EU conservative leaders balk at the IMF’s lessons in econometrics.

The inescapable fact is that a majority of the best-performing industrialised countries in 2012 are led by left-leaning parties. Their leaders are more interested in promoting economic growth and, in Latin America especially, in constantly reducing social inequalities.

The ideologically induced stalemate that has stunted economic growth in Europe is set to continue in 2013 as well. Unfortunately, France’s and Denmark’s socialists are at present overwhelmed by the rest of the EU’s leaders, more at home with the theories of David Ricardo and reverend Malthus than with those of today’s Nobel prize-winning economists…

Leave a Reply »»

*
To prove you're a person (not a spam script), type the security word shown in the picture.
Anti-Spam Image

Spotlight on Geopolitics rss

by Florian Pantazi. Author's profile : more.



  • Tags

  • Posts since Feb 2009

    December 2012
    M T W T F S S
    « Nov   Feb »
     12
    3456789
    10111213141516
    17181920212223
    24252627282930
    31  
  • RSS Poverty in the Spotlight blog

    • Eugène Buret on Poverty October 22, 2014
      One hundred and eighty years ago (1834) , the newly-founded Academy for Moral and Political Sciences in Paris organized a competition for the best research paper on the causes and various manifestations of poverty in Europe.  The best research paper on the subject, which won its author  a 2,500 francs prize offered by baron Félix de Beaujour, was “De la Misè […]
      Florian Pantazi
    • Le pape François et "l'économie des retombées" May 18, 2014
      L'Eglise romano-catholique a toujours été concernée avec les aides pour les pauvres, leur éducation et leur bien-être. Les derniers trente ans, toutefois, la plus puissante église chrétienne du monde a pris congé de ce devoir millénaire, sous les pontificats des papes Jean Paul II et Benoît XVI. Pendant cette période, le problème de la pauvreté et les p […]
      Florian Pantazi
    • L'Europe à la traîne February 23, 2014
      Dans une enquête de 68 pages publiée récemment, la Croix Rouge Internationale révèle que, à la suite de la crise financière et en lien direct avec les politiques d'austérité, plus de 120 millions d'européens risquent de basculer dans la pauvreté et que 40 millions ne peuvent déjà pas manger à leur faim. La secrétaire générale de la Federation Inter […]
      Florian Pantazi

    Advertisement