And if we could get our politicians to stop fucking up for a couple of years, expanding the union further would be the most viable angle of attack I can think of. But that requires the european economy to be doing much better than it currently is to be viable, so step one would be to deprogram our political class of their love affair with austerity…
EU expansion doesn’t rely on a successful European economy. Croatia’s accession to the EU took place entirely post-GFC.
The real reason the EU won’t expand significantly is because there’s nowhere for it to expand to. Norway, Switzerland and Iceland don’t want to join. Turkey and the Ukraine aren’t wanted. Some of the remaining Balkan countries will join eventually, but they total only 18 million people, and none are great accession candidates; it’s now recognised that Bulgaria was probably a mistake, and there’s no wish to repeat that. I’d say there’s more chance that the UK leaves the EU than it undertakes a significant expansion in the next, say, 20 years.
And if we could get our politicians to stop fucking up for a couple of years
Ah, well, I wouldn’t advise you to hold your breath… X-)
But that requires the european economy to be doing much better
The most pressing problem at the moment for that expansion east is that Mr.Putin doesn’t seem to like it. And if you are thinking about expanding south, the voters don’t seem to like that.
The voters are reasoning beings—if we could get the economy created by the last expansion round to work well, they would have more of an appetite for further rounds. Nothing much is viable as long as we are collectively shooting ourselves in one foot, reloading and switching to the other, however. It hurts my head that our political class doesnt seem to be updating on evidence at all. Austerity makes things worse. Try something else. ANYTHING ELSE, Wage hikes in Germany. A monster project to build a low-pressure intercity subway between every city in europe with more than 100000 inhabitants. I’m not picky, as long as it’s less idiotic than “If we remove money from the economy it’s sure to grow!”
Are they now? They persistently elect those politicians who make you despair. And I’m not sure at all that the anti-immigrant moods can be assuaged by throwing money at the voters.
Austerity makes things worse.
There is no austerity in Western Europe (with the possible exception of Greece). Take a look at the government budgets—did they significantly contract? Take a look at the ECB balance sheet and the current interest rates as well.
ANYTHING ELSE
Sure. How about you deregulate the economy and let capitalism do what it does best?
From a Keynesian point of view the impression is more important than the reality. There may not be austerity, but people think there is, and they’re saving rather than consuming as a result, and that slows the economy.
They don’t always. Even if they do, investment doesn’t help if it doesn’t have anywhere to go. Right now the economy is not investment-limited, it’s demand-limited (as you can tell by e.g. low returns on investment).
a) there’s a persistent market distortion because investment profits are undertaxed
b) savers are often not terribly price-sensitive; a lot of people will “save as much as they can” at any interest rate. Also interest can’t go below nominal zero (many bank accounts are very close to this).
That too, but conventionally long-term interest rates are 10-years and up. In the US the term structure usually goes out to 30 years, in other countries sometimes more.
And if we could get our politicians to stop fucking up for a couple of years, expanding the union further would be the most viable angle of attack I can think of. But that requires the european economy to be doing much better than it currently is to be viable, so step one would be to deprogram our political class of their love affair with austerity…
EU expansion doesn’t rely on a successful European economy. Croatia’s accession to the EU took place entirely post-GFC.
The real reason the EU won’t expand significantly is because there’s nowhere for it to expand to. Norway, Switzerland and Iceland don’t want to join. Turkey and the Ukraine aren’t wanted. Some of the remaining Balkan countries will join eventually, but they total only 18 million people, and none are great accession candidates; it’s now recognised that Bulgaria was probably a mistake, and there’s no wish to repeat that. I’d say there’s more chance that the UK leaves the EU than it undertakes a significant expansion in the next, say, 20 years.
Ah, well, I wouldn’t advise you to hold your breath… X-)
The most pressing problem at the moment for that expansion east is that Mr.Putin doesn’t seem to like it. And if you are thinking about expanding south, the voters don’t seem to like that.
The voters are reasoning beings—if we could get the economy created by the last expansion round to work well, they would have more of an appetite for further rounds. Nothing much is viable as long as we are collectively shooting ourselves in one foot, reloading and switching to the other, however. It hurts my head that our political class doesnt seem to be updating on evidence at all. Austerity makes things worse. Try something else. ANYTHING ELSE, Wage hikes in Germany. A monster project to build a low-pressure intercity subway between every city in europe with more than 100000 inhabitants. I’m not picky, as long as it’s less idiotic than “If we remove money from the economy it’s sure to grow!”
Are they now? They persistently elect those politicians who make you despair. And I’m not sure at all that the anti-immigrant moods can be assuaged by throwing money at the voters.
There is no austerity in Western Europe (with the possible exception of Greece). Take a look at the government budgets—did they significantly contract? Take a look at the ECB balance sheet and the current interest rates as well.
Sure. How about you deregulate the economy and let capitalism do what it does best?
From a Keynesian point of view the impression is more important than the reality. There may not be austerity, but people think there is, and they’re saving rather than consuming as a result, and that slows the economy.
Why? If savings come out the other end as investment.
They don’t always. Even if they do, investment doesn’t help if it doesn’t have anywhere to go. Right now the economy is not investment-limited, it’s demand-limited (as you can tell by e.g. low returns on investment).
Why doesn’t the market for capital equalize the discrepancy between supply and demand by adjusting the price (the interest rate)?
a) there’s a persistent market distortion because investment profits are undertaxed
b) savers are often not terribly price-sensitive; a lot of people will “save as much as they can” at any interest rate. Also interest can’t go below nominal zero (many bank accounts are very close to this).
What do you mean? Corporate tax rates, at least in the US, are higher than personal tax rates.
Sure it can.
It does for long-term interest rates. Short-term interest rates are effectively determined by the government.
“And in the long run we’re all dead”? : )
That too, but conventionally long-term interest rates are 10-years and up. In the US the term structure usually goes out to 30 years, in other countries sometimes more.