"This Can Still Be Europe's Century"

Karl Aiginger

August 2016

Abstract

We live in a world of black and white, with referenda in the yes/no style, politics in 100-second video clips and headline chasing. All of this leads to over-simplification and, in the end, to a seeming reduc- tion of options. We see this all too well in the case of the European Union: one is either for or against it. In this cacophony of dichotomous beliefs and one-sided or even false information we tend to oversee the most important question: do we really want to leave behind what we have achieved in seven decades of a great European project? We still have a narrow window of opportunity to introduce reforms, but time is running out. With Euro-scepticism on the rise it becomes harder each day to tell a convincing and impassioned European story. 

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Scientific Board Member Comment - Kenneth J. Arrow:

Your essay on policy for the future of Europe is eye-opening and excellent. On the points I have thought about I am in full agreement, and I am persuaded by the many items I have not thought about.

I do miss some discussion on the financial system and macroeconomic policy. While I think the Greeks have done a good deal to create their own problems and are still doing less than what they could to meet them, the inability of European institutions to recognize a bankruptcy and meet it by letting Greece repudiate part of its debt is an institutional failure on the part of Europe. Continual refinancing, with a crisis each time and micromanagement of the Greek economy is an evasion, not a solution. More generally, arbitrary restrictions on government debt levels and deficits (which are not enforced) hardly constitutes the kind of macro policy which a united economy should face.

But, again, congratulations on the breath and depth of your policy implications of the last four years’ research.
— Kenneth J. Arrow