The EU is neoliberal to its core and captured by corporate interests

The aptly named – Corporate Europe Observatory (CEO) – “is a research and campaign group working to expose and challenge the privileged access and influence enjoyed by corporations and their lobby groups in EU policy making”. It is relentless in exposing the corporate scams that result in European Union laws being biased towards corporations at the expense of the well-being of the broader population. The research results they publish are diametrically opposed to the claims by the Europhile Left, especially those from Britain, that posit that the EU is the exemplar of global organisation, defending workers’ rights and all manner of good things, and with just a few reforms here and there is the hope for a progressive future. CEO’s most recent report (February 6, 2019) – Captured states: when EU governments are a channel for corporate interests – allow us to see how the EU machinery has turned the Member States into a “channel for corporate interests” – “middlemen for corporate interests”. My position is that CEO has it right and the Europhiles a dreaming.

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A progressive European superstate will never come to pass

The increasing uprising against Modern Monetary Theory (MMT) in the media is salutory because it means our ideas are now considered to be a threat to the mainstream economics (for example, Paul Krugman now buying into the carping) and to the heterodox tradition (for example, the British economists who self-identify with that tradition). The high profile debate around the Green New Deal has been associated with MMT and this has brought all sort of crazy attacks on MMT from those who think they are ‘green’ but haven’t traversed out of ‘Monetarist-type’ economics thinking. And then I note that apparently the Green New Deal is being expropriated by Europhiles to wedge those who consider Lexit and Brexit to be the only way to re-establish progressive society and politics. Apparently, the Europhiles are arguing that you cannot be both Lexit/Brexit and support the Green New Deal. Curious logic. And, of course, a desperate attempt by the Europhiles to grasp at anything to discredit both Brexit and MMT, given that there is a high proportion of MMTers who prefer Britain leave the EU and that the EU disappears in its current form. And so it goes. Wolfgang Streek recently published an interesting academic article that bears on this discussion. That is what this blog post is about.

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The EU’s democratic deficit is intrinsic and unfixable without dissolution

Transparency International EU, is part of TIs “anti-corruption movement” focused on happenings in the European Union. It gets around 40 per cent of its funding from the European Commission, itself, although they claim this does not compromise their “institutional integrity and independence”. Let’s hope not! They have just released a report – Vanishing Act: The Eurogroup’s Accountability (February 5, 2019) – which confirms, in case one wasn’t already aware (looking at the Europhile Left here) that the core decision-making body in the European Union – the so-called Eurogroup – (the Finance Ministers of the Eurozone), which “exercises political control over the currency and … the Stability and Growth Pact” – is inherently shady and anti-democratic. The Report finds that the EU’s democratic deficit is intrinsic to its design and resistance to any effective reform. While the Report proposes some changes to the structure and operations of the Eurogroup it maintains the line that the growing lack of democratic oversight in key EU decision-making can be improved. I disagree. The problems are endemic. The DNA of the Eurozone architecture is neoliberal to the core. That ideology has permeated all the major EU institutions and has left the EU citizens without an effective voice in the decision-making process. To resolve that alienation, people are donning yellow vests and taking to the streets. Progressives should encourage these anti-EU protests and support those who desire to abandon these neoliberal institutions. The reformers cannot seem to grasp that the basic structure is the problem. Any steps in the right direction require that basic structure (the Single Market, SGP, etc) to be abandoned. And doing that means the whole house of cards falls down. And it cannot come quickly enough.

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The conflicting concepts of cosmopolitan within Europe – Part 2

In the blog post earlier this week – The conflicting concepts of cosmopolitan within Europe – Part 1 (January 29, 2019) – I juxtaposed two concepts of ‘cosmopolitanism’ which appeared to be part of the early moves to achieve European integration. On the one hand, there was a Kantian-style desire to create, through cooperation between previously warring states, a peaceful and prosperous future for a ‘one’ Europe. This construct would be welcoming to outsiders, progressive, and celebrate ethnic and cultural diversity. It was a rights-based conception of citizenship and democracy, which closely aligned with the growing popularity of the social democratic polity. On the other hand, the early moves to overcome the resistance to creating a supranational entity that would increasingly compromise national sovereignty – the so-called “functionalist” approach of Jean Monnet and Robert Schuman, created a pragmatic, free market-based cosmopolitanism, which set the Member States against each other as competitors. As I demonstrated, over time, the economic cosmopolitanism channeled the burgeoning neoliberalism of the 1980s and compromised the rights-based, political cosmopolitanism, to the end that we now talk about democratic deficits as the European Commission and its unelected allies such as the IMF trample over the rights of citizens across the geographic spread of Europe. Europhile progressives hanker for the first conception of European cosmopolitanism and proffer various reform proposals, which they claim will tame the economic dimensions and restore the ‘European Project’ as a progressive force in the world. In this second part of the series I will argue that from the outset the cosmopolitanism embedded in the ‘Project’ was deeply flawed and it is no surprise that democracy is now compromised in the European Union. I argue that reform is not possible such is the extent of the failures.

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The conflicting concepts of cosmopolitan within Europe – Part 1

In the past week, the UK Guardian readers were confronted with the on-going scandal of wealthy British politicians and ‘peers’ receiving massive European Union subsidies under the Common Agricultural Policy (CAP). The article (January 27, 2019) – Peers and MPs receiving millions in EU farm subsidies – recounted the familiar tale –
“Dozens of MPs and peers, including some with vast inherited wealth, own or manage farms that collectively have received millions of pounds in European Union subsidies”. The story is not new and this scandal is just a reflection of the way in which the development of the European Union has contradicted the idealism that the Europhile Left associate with ‘Europe’. As an aside, it would be telling, one imagines to map the EU payments (and well-paid job holdings) with Brexit support – one would conjecture a strong negative correlation. This is a two-or-three part mini-series on the evolution of concepts of ‘cosmopolitanism’ in the European context. It is part of work I am doing for the next book Thomas Fazi and I hope to publish by the end of the year. In this blog post, I introduce the conflict that is inherent in the European Union, and the way the Europhile Left has been seduced by a concept of cosmopolitanism that bears not relevance in the reality of modern Europe.

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EU deliberately subjugates prosperity to maintain its neoliberal ideology

While the Brexit shambles wound on in London, with the Prime Minister being walloped one day by her own party, and then the next given a victory, courtesy of some Labour Party bungling (the no-confidence motion), across the Channel things have been turning markedly sour. While the Europhile Left hold Europe dear to their hearts, the reality is that their dreamworld is falling apart. This is not only because of the incompetence of its polity but also because of the deliberate strategies of the polity to privilege ideology over economic reality. But if the Europeans continue down their ideological path, there mightn’t be much to exit from for the British. Late last week (January 14, 2019), Eurostat published their latest output data – Industrial production down by 1.7% in euro area – which as the title indicates is not good. Once again, the fiscally-starved Eurozone is trailing behind a sinking EU28. Over the 12 months to November 2018, industrial production in the Eurozone fell by 3.3 per cent and by 2.2 per cent in the EU28. The declines are across all product categories – capital goods, energy, durable consumer goods, intermediate goods and non-durable consumer goods. What we understand from this is that the policy makers in the European Union deliberately choose to subjugate economic prosperity and the well-being of people (jobs, incomes, savings, etc) to maintain an adherence to an ideology that purposely redistributes real resources and incomes to the top end of the distribution and provides lucrative paths for European Commission executives to move between these ‘political’ roles into highly paid banking and related jobs. It is neoliberal central, in other words, and is beyond reform.

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Must be Brexit – UK GDP growth now outstrips major EU economies

I suppose Brexit is to blame for the fact that Britain is now growing faster than the major European economies. The latest ‘monthly’ GDP figures show that the British economy grew by 0.3 per cent in the three months to November 2018 and will probably sustain that rate of growth for the entire final quarter of 2018. This is in contradistinction to major European economies such as Germany (which will probably record a technical recession – two consecutive quarters of negative growth) with France and Italy probably following in Germany’s wake. I have made the point before that the growth trajectory of the British economy (inasmuch as there is one) is very unbalanced and reliant on households and firms maintaining expenditure by running down savings and accessing credit – which means ever increasing private debt burdens. With private credit growth weakening as the debt levels become excessive and the rundown of saving balances being finite, Britain will face recession unless the fiscal austerity is reversed. Earlier in 2018, the Guardian Brexit Watch ‘experts’ were continually pointing out that Britain’s growth rate was at the bottom of the G7 as evidence that Brexit was causing so much damage. So now European G7 nations are starting to lag behind, these commentators will have to find another ruse to pin their anti-Brexit narrative on. We also consider in this blog post some more Brexit-related arguments – pro and con – which reinforce my conclusion that a No Deal Brexit will not cause the skies to fall in.

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The so-called euro stability spawned banking system that caused havoc

In yesterday’s short blog post – Some Brexit dynamics while across the Channel Europe is in denial (January 2, 2019), I noted that various European Commission officials were boasting about how great the monetary union had been over the last 20 years. European Commission President Jean-Claude Juncker had the audacity (and delusion) to claim it had “delivered prosperity and protection to our citizens. it has become a symbol of unity, sovereignty and stability”. I think he was either drunk or in a parallel universe or both. I provided two graph (GDP growth and employment) to show how poorly performed the monetary union has been since its inception. Today, I want to bring to your attention a Bank of International Settlements (BIS) research report which categorically finds that the European banks during the pre-crisis period not only fuelled the massive boom in sub-prime loans and doomed-to-fail assets that were floating around at the time, but also “enabled the housing booms in Ireland and Spain”. Rather than the US banking system being primarily responsible for the pre-crash buildup of private debt, the European banks were also helping the “leveraging-up of US households”. The “European banks produced, not just invested in, US mortgage-backed securities”. This role is not well understood or recognised. And it was because the Single Market mentality of the neoliberal European Union which abandoned proper prudential oversight and regulation allowed it to happen. So much for “prosperity”, “protection” and “stability”.

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Some Brexit dynamics while across the Channel Europe is in denial

It is Wednesday and I am going to stick to my decision to ‘not publish a blog post’ on Wednesdays unless there is some new data (such as the quarterly release of the Australian National Accounts). I want to use this time to attend to other writing obligations. But a few snippets won’t hurt, will they? The first, looks at some extraordinary denial from the European Union bosses. The second, looks at evidence that the Brexit environment is already providing positive dynamics for British workers in low-wage areas of the labour market. And that is being presented by the Remainers as something negative! We move into 2019, just as we left 2018!

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More Brexit nonsense from the pro-European dreamers

What editorial control does the UK Guardian exercise on Op Ed pieces? Seemingly none if you read this article (December 24, 2018) – What Labour can learn about Brexit from California: think twice – written by some well-to-do American postgraduate working for DiEM25 in Athens. But when Thomas Fazi and I sought space to discuss our book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017) – or when I have sought space to provide some balance to the usual neoliberal, pro-Europe bias, the result has been no response (yay or nay). We never received a response to our solicitation. Even if we ignore the obvious imbalance in experience and qualifications (track record) of the respective ‘authors’, it seems that the UK Guardian only wants a particular view to be published even if the quality of that view would make the piece unpublishable in any respectable outlet. Go figure. Anyway, I now have read the worst article for 2018. And, I thought that the Remain debate had reached the depths of idiocy but there is obviously scope for more if this Guardian attempt at commentary is anything to go by. And I know the Guardian journalists read this blog – so why not allow Thomas and I to formally respond to all this Remain nonsense?

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IMF Euro hitman in denial of the reality that the monetary union has become

The IMF hitman in Europe, one Poul Thomsem recently published a European Money and Finance Forum (SUERF) Policy Note (October 2018) – A Financial Union for the Euro Area – where he basically told us that any changes that the IMF will allow to occur in the Eurozone architecture will be minimal and will not stop Member States “from being forced to undertake large pro-cyclical fiscal adjustments when the next shock or major downturn hits”. The term “large pro-cyclical fiscal adjustments” means harsh fiscal austerity at the same time as the non-government sector spending in those Member States is collapsing. Fiscal policy thus reinforces the non-government spending withdrawal and worsens the outcome for employment, growth, income generation etc. Why? Because “all member countries” must “respect the Stability and Growth Pact”. End of story. Welcome to the Eurozone dystopia – the world where governments must follow rules set by technocrats which are incapable of delivering sustained prosperity for all but clearly suit the top-end-of-town. He then waxed lyrical about a whole set of neoliberal financial market reforms that the IMF is proposing which will further diminish the capacity of the Member States. But, at that point, he just starts to dream. The Member States are already deeply suspicious of the financial reforms that have been introduced to date, ineffective as they are. They are not about to cede more power to Brussels and Frankfurt any time soon.

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Franco-German ‘agreement’ is another European dead-end

The latest ‘reform’ proposals from Europe might be taken as a sick joke if the players were not serious. On Sunday, November 18, 2018, the French President gave a speech at the traditional commemorative ceremony in the German Bundestag to mark the Volkstrauertag (National Day of Mourning), which has been part of German life since 1922 (originally to mark those who died during World War 1). His speech (Jacques Chirac was the last French president to address the Bundestag on June 27, 2000). His speech was two days after the respective finance ministers signed an ‘agreement’ to establish a “Eurozone budget”, which the French finance minister hailed as being a “major political breakthrough”. While that summation is questionable, it certainly is not a major economic breakthrough. It is a dud. As dud as all the reform proposals that have come before it. Just like the fake window dressing in Eniskillen in preparation for the G8 Summit in June 2013. Macron might have felt he was a big player on the world stage but the Germans have his measure as they have had of all French Presidents over the last several decades. The French really were the drivers of the Eurozone and they thought they were destined to restore their prominence in Europe. The Germans knew otherwise. And so it goes with the latest ‘agreement’. There is nothing in it that will save the Eurozone from crisis or restore sustained prosperity. Another European dead end.

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Eurozone fiscal rules bias nations to stagnation – exit is the remedy

It is Wednesday and I am doing the final corrections to our Macroeconomics textbook manuscript before it goes off to the ‘printers’ for publication in March 2019. It has been a long haul and I can say that writing a textbook is much harder than writing a monograph not only because the latter are more exciting in the drafting phase. The attention to detail in a textbook that runs over 600 pages is quite taxing. Anyway, that is taking my attention today. I also plan to write some more about Brexit in the coming weeks and Japan (tomorrow). But today, I have updated some ECB data on household and corporate borrowing and the cost of borrowing to see what sort of recovery is going on. With nations such as Germany now recording negative growth in the third-quarter, it is clear that the Eurozone is stalling again. The explanation doesn’t require any rocket science. It is all there in the behaviour of the non-government sector (saving more overall) and fiscal rules that are too tight to offset that saving desire. The reliance on monetary policy is an ineffective tool to provide the offset in non-government saving overall. Fiscal policy has to be reinstated to the primary position and that means nations such as Italy must consider exiting the dysfunctional monetary union that biases nations to recession and stagnation.

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EU Services Notification Directive will undermine democracy within cities

In a blog post last week – Financial services agreements – the EU as a neoliberal, corporatist project (November 13, 2018) – I wrote about the way the EU compromised the capacity of elected Member State governments to advance the well-being of their nations by the way they negotiate trade arrangements in services, particularly with respect to the financial services sector. For all those Europhiles that regularly deny the core agenda of the EU is to compromise democratic outcomes in favour of capital, that analysis, alone, should be sufficient to discourage those thoughts. Of course, that isn’t the only manifestation of this neoliberal, corporatist bias in the way the EU has developed over the last decades. I mostly conduct my analysis at the macroeconomic level but I am also interested (as my publication record demonstrates) in urban and regional analysis. At the level of the European city, the EU is behaving in the exactly the same way – to curb that ability of city authorities to render their cities favourable environments for the residents who live there.

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EU forecasts are notoriously poor

I am travelling most of today to distant climes. And it is Wednesday, my alleged shorter blog day. Apart from some scintillating music suggestions today, I foreshadowed in Monday’s blog post, which analysed the British national accounts, that I would make some statements about the EU forecasts released in their latest – European Economic Forecast. Autumn 2018 – (published November 8, 2018). The forecasts posited that the UK would be among the two worst performers for 2019 in terms of Real GDP growth, accompanied by the waning Italy. And within seconds of the forecasts being published, social media was a light with those opposed to Brexit, using the forecasts to claim that Brexit would be a disaster – again! Brexit may still turn out to be a disaster. But these forecasts should be treated with a grain of salt – they are ideological in nature and the forecasting performance of the EU has not been good.

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Financial services agreements – the EU as a neoliberal, corporatist project

I have been reading the new book by Costas Lapavitsas – ‘The Left Case Against the EU’ – which has been recently published. It is solid and clearly explains why the EU is not an institution or structure than anyone on the progressive Left should support or think is capable of reform any time soon. It has become a neoliberal, corporatist state and hierarchical in operation, with Germany at the apex bullying the weaker states into submission. Divergence in outcomes across the geographic spread is the norm. It is also the anathema of our concepts of democracy both in concept and operation. It is more like a cabal of elites who are unelected and, largely unaccountable. By giving their support to this monstrosity, the traditional Left political parties (social democrats, socialists etc) have been increasingly wiped out such is the anger of voters to what has become a massive coup by capital against labour. These are the themes that Thomas Fazi and I also explored in our recent book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017). I also just finished reading an interesting report – Financial Regulation challenged by European Trade Policy – published by the Veblen Institute and Finance Watch (October 2, 2018), which examines “the impact of European trade policy on financial regulation”. It is essential reading for those progressives who still think that Britain should remain in the EU. If they understand the research findings they would change their minds.

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Italy should lead the Member States out of the neoliberal Eurozone dystopia

The widely read German news site, Spiegel Online, published an amazing article last week (November 1, 2018) – Italy Doubles Down on Threat to Euro Stability – which confirms to me that very little progress has been within the Eurozone by way of cultural understandings since the GFC. That, in turn, tells me that the monetary union will not be able to get out of austerity gear and is now more exposed than ever to breakup when the next crisis comes. The current Italian situation is the European Commission’s worst nightmare. It could combine with the ECB and the IMF to bully Greece partly because of the size of the Greek economy but also because they had the measure of Tsipras and Syriza. They knew the polity would buckle and become agents for their neoliberal plans. But the politicians in Italy may turn out to be a different proposition – one hopes so. And Italy is a large economy and one of the original accessions to the Community. So the stakes are higher. But what the Commission is demanding of Italy in the present situation of zero economic growth and massive primary fiscal surpluses is totally irresponsible. It will not even achieve the stated Commission aims of reducing the public debt ratio. The likelihood is that the Commission’s strategy, if they succeed in bullying the Italian government into submission, will push the ratio up further. And meanwhile, Italy wallows in a sort of neoliberal dystopia. Italy should lead the other Member States out of this neoliberal disaster.

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Italy should prioritise an exit of the Eurozone madness

Last week, the Eurogroup met in Brussels and given all the Macron-Merkel buildup – see my blog post – The Meseberg Declaration – don’t hold your breath waiting (June 26, 2018) – the Europhiles were tweeting their heads off building themselves up into a ‘reform’ frenzy. If we were to believe half of it, then Germany was rolling over and about to agree to reforms that would put the Eurozone on a sound footing. Even progressive Europhile commentators held out hope of some big changes. Well not much happened did it. Like virtually nothing of any substance emerged from the meeting and matters were deferred (again) to December. Ho Hum! This is the European Union after all. At the same time, new voices encouraging an Italian exit appeared in the last week. Regular readers will know that in lieu of some unlikely turn of events in Europe where the elites about face and set in place effective reforms, I maintain that unilateral exit remains the superior option for an individual nation such as Greece or Italy. I am on the public record as arguing that given the size of the Italian economy in relation to the overall Eurozone economy, Italy should demonstrate leadership by finalising a negotiated exit with Brussels that minimises the damage for all parties. That would become the blueprint for other nations to regain their currency sovereignty and escape the Eurozone madness. Another voice joined that line in the last week.

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European-wide unemployment insurance proposals – more bunk!

The Europhiles have been tweeting their heads off in the last week or so thinking that the corner has been turned – by which they mean that Germany is about to get all cuddly with France and agree to fundamental shifts in thinking which will make the dysfunctional Economic and Monetary Union (EMU) finally workable, without the need for the ECB to break Treaty law by propping up the private bond markets. The most recent incarnation of the ‘saviour’ is a few words that the new German Finance Minister, Olaf ‘Wolfgang Schäuble'” Scholz said during an interview with Der Spiegel (June 8, 2018) – ‘Germany Has a Special Responsibility’ – about his support for a new unemployment insurance scheme for the Eurozone. It seems even the smallest things excite those who remain in denial about the long-term viability of the common currency. The proposal that Scholz was advancing has been out in the public debate for some years and is nothing like an effective solution to the terminal design flaws in the EMU. It is just an application of the same thinking that led to the creation of that flawed architecture in the first place and reinforces the conclusion that the main players in Eurozone policy setting have no intention of creating an effective federated monetary system. Just more of the same. Tomorrow, the tweets will be extolling the virtues of some other erroneous plan that some Europhile has come up with to save the system. And so it goes.

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