Blog Post

Politics doesn’t have to remain in suspended animation

In all the troubled European countries, traditional political parties have been incapable of structuring a debate on how to respond to the crisis. In Greece, politics has been parked while vital financial negotiations take place with creditors and the Troika. In Italy, Mario Monti and his government of technocrats have replaced a voiceless Left as […]

By: Date: January 25, 2012 Topic: European Macroeconomics & Governance

In all the troubled European countries, traditional political parties have been incapable of structuring a debate on how to respond to the crisis. In Greece, politics has been parked while vital financial negotiations take place with creditors and the Troika. In Italy, Mario Monti and his government of technocrats have replaced a voiceless Left as an alternative to Silvio Berlusconi. In Spain, the Right led by Mario Rajoy has scored a brilliant victory by carefully avoiding being specific about policy. In Portugal, Passos Coelho won by promising to implement the same measures as the Socialists of Socrates, only with more conviction. Everywhere party politics seems to be in suspended animation, as if the times were too tough for it.
This phenomenon is not universal. In the US and the UK, the traditional battle-lines are as relevant as ever, especially on the role of government. But in the Eurozone doubts are widespread: are both Right and Left still capable of offering a choice?     

Let us begin with the subjects which are not within government’s powers to decide and where, being unable to differentiate themselves, ruling parties are condemned to suffer buffeting from hostile forces: monetary policy, the rules governing public finances, trade policy, competition, financial regulation, to mention only the main ones. These are no trifles. In the knowledge that they are powerless to influence these factors, politicians are tempted by posturing – which only weakens their credibility. Rather, what is needed is a structured political debate at EU level. It is high time that politicians realise that maintaining European parties in an ectoplasmic state is not in their own interest. This argument applies particularly to the responses to the Eurozone crisis. Crucial choices lie ahead as regards the fiscal compact, the next EU budget and Eurobonds, which would deserve to be addressed in the open.           

Next comes the area of constrained choices, starting with national budgetary policy. Under the pressure of markets and with the tougher European rules, any incoming government must aim to eliminate the deficit over the next parliamentary term. This does not imply, however, that the policies to achieve this must be identical: there is a margin for differentiation on the speed and modalities of budgetary retrenchment, on the balance between increasing taxes and cutting spending, and on the choice of spending items to cut and taxes to rise. It is up to the politicians make sense of these choices and offer the voters a alternative between two versions of identically rigorous policies.    

This same largely applies to another traditional dividing-line, that between capital and labour. In all countries whose competitiveness has deteriorated the return on investment in the domestic traded-goods sector is currently too low to trigger a recovery in exports and manufacturing jobs.

Governments therefore need to take measures to make business profitable again. That, however, leaves the choice of tools – tax policy or wage policy, targeted or across-the-board measures, incentives to move up the quality ladder or to preserve low-skilled jobs. As long as politicians do not stick to outdated arguments, there is genuine room for debate here.    

Finally, there is still a ‘freestyle’ policy area. Against a backdrop of global widening of inequalities between the upper one percent and the other ninety-nine, the most prominent is certainly personal taxation. It is becoming an issue everywhere and should help taxation take centre-stage in the coming elections. There is however a whole range of other issues for differentiation, such as the labour market, education or energy, to name just a few.                 

The next country where candidates will have to test the attractiveness of their proposals is France. There is widespread perception in the country that François Hollande, on the Left, and Nicolas Sarkozy, on the Right, both represent variants of the same system, and a large fraction of the voters is tempted by anti-system candidates. But it is up to the two main candidates to offer voters a choice between two different analyses of the situation, and two sets of solutions. The real risk for democracy is not that the situation is narrowing the scope for political choice. It is that politicians are loath to speak out clearly for fear of stirring dissent in their own ranks. If tactics do cause ambiguity to prevail, then one will indeed be right to say that politics will have been in suspended animation during the elections. Democracy deserves better.   

This post is based on the column La politique en berne published also in Le Monde


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

Read article
 

Blog Post

Will European Union recovery spending be enough to fill digital investment gaps?

The recovery facility will boost digital transformation, but questions remain whether it will be sufficient to achieve Europe’s digital ambitions.

By: Zsolt Darvas, J. Scott Marcus and Alkiviadis Tzaras Topic: European Macroeconomics & Governance, Innovation & Competition Policy Date: July 20, 2021
Read article Download PDF
 

Policy Contribution

A new direction for the European Union’s half-hearted semiconductor strategy

The EU needs a more targeted strategy to increase its presence in this strategic and thriving sector, building on its existing strengths, while accommodating its relatively low domestic needs.

By: Niclas Poitiers and Pauline Weil Topic: European Macroeconomics & Governance, Innovation & Competition Policy Date: July 15, 2021
Read article More by this author
 

Blog Post

Fit for 55 marks Europe’s climate moment of truth

With Fit for 55, Europe is the global first mover in turning a long-term net-zero goal into real-world policies, marking the entry of climate policy into the daily life of all citizens and businesses.

By: Simone Tagliapietra Topic: Energy & Climate, European Macroeconomics & Governance Date: July 14, 2021
Read article More on this topic
 

Blog Post

Fair vaccine access is a goal Europe cannot afford to miss – July update

European countries must do more to tackle the vaccine uptake gap. Vaccination data should be published at the maximum granularity level so researchers and local decision-makers can monitor progress.

By: Lionel Guetta-Jeanrenaud and Mario Mariniello Topic: European Macroeconomics & Governance Date: July 14, 2021
Read article More by this author
 

Blog Post

SPACs in the gap

Special-purpose acquisition vehicles could fill a gap in European equity markets and lure risk-averse investors off the sidelines.

By: Rebecca Christie Topic: European Macroeconomics & Governance, Finance & Financial Regulation Date: July 13, 2021
Read about event More on this topic
 

Upcoming Event

Sep
1
12:30

The EU recovery fund - state of play and outlook

Bruegel Annual Meetings, Day 1- In this session we will discuss the EU recovery fund, its state of play and outlook.

Speakers: Nadia Calviño, Karolina Ekholm and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read about event More on this topic
 

Upcoming Event

Sep
2
10:00

Conversation on the recovery programmes

Bruegel Annual Meetings, Day 2- In this session, we discuss the recovery programmes.

Speakers: Maria Demertzis, Mehreen Khan and Tadeusz Kościński Topic: European Macroeconomics & Governance Location: Palais des Academies, Rue Ducale 1
Read about event
 

Upcoming Event

Sep
2
13:00

European banks: under global competitive pressure?

Bruegel Annual Meetings, Day 2 - European banks have lost stature and remain generally low-profitability, low-valuation in comparison to their global peers. Is that a problem? If so, what can EU policymakers do to address it?

Speakers: José Antonio Álvarez Álvarez, Mairead McGuinness and Nicolas Véron Topic: European Macroeconomics & Governance, Finance & Financial Regulation Location: Palais des Academies, Rue Ducale 1
Read about event More on this topic
 

Upcoming Event

Sep
2
15:45

Blending physical and virtual: shaping the new workplace

Bruegel Annual Meetings, Day 2 - This panel will cover the changes the COVID-19 pandemic made to our workplaces, and what to expect in the near future.

Speakers: Nicholas Bloom, Michael Froman, Mario Mariniello, Sara Matthieu and Luca Visentini Topic: European Macroeconomics & Governance Location: Academy Palace
Read about event More on this topic
 

Upcoming Event

Sep
3
09:00

The role of the EU's trade strategy for an inclusive and sustainable recovery

Bruegel Annual Meetings, Day 3 - We are delighted to welcome Valdis Dombrovskis, Executive Vice President of the European Commission for An Economy that Works for People to talk about Europe's trade strategy.

Speakers: Valdis Dombrovskis and Alicia García-Herrero Topic: European Macroeconomics & Governance Location: Palais des Academies, Rue Ducale 1
Read about event More on this topic
 

Upcoming Event

Sep
3
10:15

Conference on the Future of Europe: envisioning EU citizens engagement

Bruegel Annual Meetings, Day 3 - Panellists will discuss different options and what they may entail while revisiting the debates on the future of Europe at national and EU-level that have been conducted thus far.

Speakers: Caroline de Gruyter, Kalypso Nicolaïdis, Niclas Poitiers and György Szapáry Topic: European Macroeconomics & Governance Location: Palais des Academies, Rue Ducale 1
Read article More on this topic
 

Blog Post

A breakdown of EU countries’ post-pandemic green spending plans

An analysis of European Union countries’ recovery plans shows widely differing green spending priorities.

By: Klaas Lenaerts and Simone Tagliapietra Topic: European Macroeconomics & Governance Date: July 8, 2021
Load more posts