Political idealism and economic realism: A forced marriage to preserve the Eurozone
(2012) , 12 pages
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- Authors
- Abstract
- Political idealism has prevailed over economic realism in the EU decision process. As a result, today’s Eurozone is a puzzle with too many missing pieces. Given the severity of the crisis, policymakers would be well advised to take both structural and pragmatic measures to preserve the Eurozone, as proposed in the paper. Policymakers should also stop using the self-destructive rhetoric of blaming finance for the problems they have contributed to create. Of course, finance may be blamed for failing to internalize the negative externalities it generates on the economy, but until investors believe that they are being taken seriously by the Eurozone, they will easily find other places to invest their funds. Although the discussion about the right balance between fiscal rectitude and support for demand is useful, the fundamental challenge for Europe is to rethink the ‘welfare state’ model that has prevailed over the past 50 years or so. Political idealism can no longer ignore the significant intergenerational economic constraints that Europe faces today in a world in which it can no longer dictate the terms of exchange. What Europe desperately needs is a new and realistic vision for the 21st century.
- Affiliations
Louvain School of Management Accounting & Finance FUCaM Sciences de gestion
Citations
Petitjean, M. (2012). Political idealism and economic realism: A forced marriage to preserve the Eurozone. https://hdl.handle.net/2078.5/250559