Social Europe Journal debating progressive politics in Europe and beyond Mon, 29 Sep 2014 11:39:41 +0000 hourly 1 "If You Look At One Graph About Inequality Look At This!" by Henning Meyer Mon, 29 Sep 2014 11:39:41 +0000 Henning Meyer
Henning Meyer

Henning Meyer

You might have heard about recent reports stating that global inequality is decreasing. This is a nice example of constructing the comparison according to the result you would like to see. Yes, inequality between countries has declined but the most important comparison is what is happening to inequality within countries as this tells you how the distribution system, that is under direct political control, works. And if you look at this you can only shake your head in disbelief.

Pavlina Tcherneva tweeted two graphs from her research that were also picked up by The graphs answer a simple question: Who actually got what share of growing national income in different periods of time? Here is the answer for the US:


Is there any question that there is something fundamentally wrong with this distribution? And if you think this is only the case in the US look at the equivalent graph for Sweden:


Something is going seriously wrong here! If you look at one graph that tells you all you need to know about income inequality look at who actually takes home the gains of economic growth.

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]]> 1 Henning Meyer Henning Meyer p1 p2
"Europe’s Austerity Disaster" by Joseph Stiglitz Mon, 29 Sep 2014 08:00:30 +0000 Joseph Stiglitz
Joseph Stiglitz, Austerity Disaster

Joseph Stiglitz

“If the facts don’t fit the theory, change the theory,” goes the old adage. But too often it is easier to keep the theory and change the facts – or so German Chancellor Angela Merkel and other pro-austerity European leaders appear to believe. Though facts keep staring them in the face, they continue to deny reality.

Austerity has failed. But its defenders are willing to claim victory on the basis of the weakest possible evidence: the economy is no longer collapsing, so austerity must be working! But if that is the benchmark, we could say that jumping off a cliff is the best way to get down from a mountain; after all, the descent has been stopped.

But every downturn comes to an end. Success should not be measured by the fact that recovery eventually occurs, but by how quickly it takes hold and how extensive the damage caused by the slump.

Viewed in these terms, austerity has been an utter and unmitigated disaster, which has become increasingly apparent as European Union economies once again face stagnation, if not a triple-dip recession, with unemployment persisting at record highs and per capita real (inflation-adjusted) GDP in many countries remaining below pre-recession levels. In even the best-performing economies, such as Germany, growth since the 2008 crisis has been so slow that, in any other circumstance, it would be rated as dismal.

Austerity has been an utter and unmitigated disaster, which has become increasingly apparent as European Union economies once again face stagnation.

The most afflicted countries are in a depression. There is no other word to describe an economy like that of Spain or Greece, where nearly one in four people – and more than 50% of young people – cannot find work. To say that the medicine is working because the unemployment rate has decreased by a couple of percentage points, or because one can see a glimmer of meager growth, is akin to a medieval barber saying that a bloodletting is working, because the patient has not died yet.

Extrapolating Europe’s modest growth from 1980 onwards, my calculations show that output in the eurozone today is more than 15% below where it would have been had the 2008 financial crisis not occurred, implying a loss of some $1.6 trillion this year alone, and a cumulative loss of more than $6.5 trillion. Even more disturbing, the gap is widening, not closing (as one would expect following a downturn, when growth is typically faster than normal as the economy makes up lost ground).

Simply put, the long recession is lowering Europe’s potential growth. Young people who should be accumulating skills are not. There is overwhelming evidence that they face the prospect of significantly lower lifetime income than if they had come of age in a period of full employment.

The European economy is still in major trouble and the policy course over recent years is making matters worse, according to Joseph Stiglitz.

The European economy is still in major trouble and the policy direction is making matters worse, according to Joseph Stiglitz.

Meanwhile, Germany is forcing other countries to follow policies that are weakening their economies – and their democracies. When citizens repeatedly vote for a change of policy – and few policies matter more to citizens than those that affect their standard of living – but are told that these matters are determined elsewhere or that they have no choice, both democracy and faith in the European project suffer.

France voted to change course three years ago. Instead, voters have been given another dose of pro-business austerity. One of the longest-standing propositions in economics is the balanced-budget multiplier – increasing taxes and expenditures in tandem stimulates the economy. And if taxes target the rich, and spending targets the poor, the multiplier can be especially high. But France’s so-called socialist government is lowering corporate taxes and cutting expenditures – a recipe almost guaranteed to weaken the economy, but one that wins accolades from Germany.

The hope is that lower corporate taxes will stimulate investment. This is sheer nonsense. What is holding back investment (both in the United States and Europe) is lack of demand, not high taxes. Indeed, given that most investment is financed by debt, and that interest payments are tax-deductible, the level of corporate taxation has little effect on investment.

The hope is that lower corporate taxes will stimulate investment. This is sheer nonsense. What is holding back investment (both in the United States and Europe) is lack of demand, not high taxes.

Likewise, Italy is being encouraged to accelerate privatization. But Prime Minister Matteo Renzi has the good sense to recognize that selling national assets at fire-sale prices makes little sense. Long-run considerations, not short-run financial exigencies, should determine which activities occur in the private sector. The decision should be based on where activities are carried out most efficiently, serving the interests of most citizens the best.

Privatization of pensions, for example, has proved costly in those countries that have tried the experiment. America’s mostly private health-care system is the least efficient in the world. These are hard questions, but it is easy to show that selling state-owned assets at low prices is not a good way to improve long-run financial strength.

All of the suffering in Europe – inflicted in the service of a man-made artifice, the euro – is even more tragic for being unnecessary. Though the evidence that austerity is not working continues to mount, Germany and the other hawks have doubled down on it, betting Europe’s future on a long-discredited theory. Why provide economists with more facts to prove the point?

© Project Syndicate

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]]> 1 stiglitz Joseph Stiglitz european economy The European economy is still in major trouble and the policy course over recent years is making matters worse, according to Joseph Stiglitz.
"Where Now After The Scottish Referendum?" by Simon Hix Sun, 28 Sep 2014 20:56:55 +0000 Simon Hix

Professor Simon Hix discusses the results of the Scottish independence referendum and the future of both Scotland and the rest of the UK.

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]]> 0 Simon Hix: Where Now After The Scottish Referendum? Professor Simon Hix discusses the results of the Scottish independence referendum and the future of both Scotland and the rest of the UK. Scottish Referendum,Scottish Referendum
"What Labour Policy For Europe?" by Denis McShane Fri, 26 Sep 2014 08:02:59 +0000 Denis McShane
Denis McShane, Labour Policy For Europe

Denis McShane

Labour already has its most important policy in place on Europe. In an act of remarkable political courage Ed Miliband has rejected a copy-cat plebiscite to match David Cameron’s Brexit referendum of 2017.

It is important not to underestimate the importance of this decision. As with his calling time on Rupert Murdoch in 2011, or his decision not to endorse bombing Syria on behalf of jihadis last year, Ed Miliband has taken lonely brave decisions that cut against the grain of conventional political wisdom – namely always crawl to Rupert, never say No to Washington (the limited raids on Isis in Iraq already being undertaken by France are a different matter) and when in doubt offer a referendum on Europe.

That is what Tony Blair did when he promised plebiscites on the Euro before 1997 and then again on the EU constitution treaty in 2004. It bought time and silenced the off-shore owned press but at the cost of further marginalising the UK as a major EU player and further feeding the appetite of anti-EU isolationism. It is a mark of Ed Miliband’s bravery and political leadership that the decision to reject Cameron’s Brexit plebiscite is being attacked by major trade unions and even briefed against by some of his shadow cabinet. Any decision by a left leader that commands universal support is by definition a bad decision.

So at the next election the voters will have a clear choice. Do they want a re-run of the horrors of the Scottish plebiscite which so nearly resulted in the destruction of Europe’s longest surviving major democracy or will they say No to the Tory-UKIP vision of a Britain disuniting from its European partners in an act of self-marginalisation not seen since the United States quit Europe in 1919?

A Labour led Britain needs Europe and Europe needs a new policy of positive engagement from Britain that has moved on from the half-hearted membership in which Europe was seen as a headache and a problem.

In the event of Cameron staying as prime minister, pro-Europeans should have no illusions about winning a plebiscite in 2017 to stay in Europe. With the aftermath of the political Fukushima experience in Scotland still contaminating the Westminster atmosphere for years to come, the notion that Britain can have a swift repatriation of powers and a comprehensive renegotiation sufficient to persuade the Tory-UKIP half of the country, plus the off-shore owned press, plus the many big and small businesses who have been fed anti-EU lies and propaganda for fifteen years that all is now in place for a positive Yes vote to the EU is a fiction.

There is tremendous support in Brussels and in most EU national governments to do anything to help the UK stay in the EU. But that support cannot extend to the wholescale re-writing of the Treaties or giving the UK a special à la carte status. Nor can the EU do anything about the new front the anti-Europeans have opened, namely the clamour to pull out of the European Convention on Human Rights and the Council of Europe. Given the EU is signing the ECHR to tear up that treaty obligation means also tearing up EU membership. However, saying No to Mr Cameron’s In-Out Brexit plebiscite is not enough. Labour needs to think now about what it would do about Europe when back in power.

The new First Vice President of the European Commission Frans Timmermans. (photo: CC BY 2.0 PvdA)

The new First Vice President of the European Commission Frans Timmermans. (photo: CC BY 2.0 PvdA)

A Labour led Britain needs Europe and Europe needs a new policy of positive engagement from Britain that has moved on from the half-hearted membership in which Europe was seen as a headache and a problem in the 3rd Labour administration after 2005 or the downright negative anti-EU line of Cameron since 2010. All of Europe is seeing the rise of populist, xenophobic politics whatever line is taken on free movement of people in the EU. To blame just that factor is to make half of the UKIP case before a debate starts.

As long as the UK had a booming economy as it did between 1997 and 2007 it attracted foreign workers as happens in every economy in the world. After 2008 crash this went into reverse but to blame European workers because Labour did not build enough social housing and Labour refused EU social rules which helped defuse some of these problem elsewhere is scapegoating of the worst sort. Those preparing for power and for what policies to adopt on Europe should focus on the future with a positive European vision.

There is now the most talented generation of Labour MEPs ever sent from Britain to the European Parliament since the first direct elections in 1979. Their talents and networks and experience must be harnessed and used. Labour should try and understand the revolution in the way the European Commission is now organised. It is now grouped in seven major clusters instead of 28 little baronies. More important, the Commission President, Jean-Claude Juncker, has named a deputy president, Frans Timmermans. He is a Labour Party – PvDA – Dutch thinker first and politician second who speaks better English than most British politicians. Any policy proposal or proposed directive that Timmermans doesn’t like goes no further.

The most important priority which cuts across party political lines for the EU is to get growth going again. Since 2009,  the US Federal Reserve has poured $2.5 trillon into the US economy through printing money under the euphemism of quantative easing. The Bank of Japan has done likewise injecting $2 trillion and the Bank of England has adopted a pure Keynesian policy of injecting $650 billion – a sum that the MPC member, economist Martin Wheale, reckons has added 3 per cent to the UK GDP – exactly the growth figures we are now seeing.

One of the great hypocrisies of the British right is the clamour for more and more EU single market but less and less Brussels and fewer EU directives.

A Labour Britain should be urging such Keynsian injection of money by the European Central Bank with debt rescheduling or write-offs for southern Europe before the economic despair there turns into political rejectionism.
Labour should also work in Europe for a massive re-connect between national parliaments and EU decision-making – a project close to Frans Timmermans’ thinking. Labour should welcome Jean-Claude Juncker’s declaration that there will be no enlargement of the European Union in the next 5 years and his view that this era is about consolidation. That clearly means that all the chatter about increasing the single market is on hold because without further massive transfers of national sovereignty to Brussels via rules that allow the Commission to dictate national policies on trade and competition no major increase in the single market is likely to happen.

One of the great hypocrisies of the British right is the clamour for more and more EU single market but less and less Brussels and fewer EU directives which is rather like calling for more and more sex at the same as demanding more and more virginity. There is a need for an EU energy union and a telecommunications union and to stop the US behemoths like Google crushing every start-up in the EU’s digital economy.

For ten years Labour has not known how to make the case for Europe. Europe needs to be neither over-idealised nor over-diabolised. The goal should be to make the EU like Nato – not perfect, always open to reform, but an indispensable element of the UK in the 21st century. Better Together with European nation-states than divorce and living apart.

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]]> 2 denis macshane Denis McShane Frans Timmermans The new First Vice President of the European Commission Frans Timmermans. (photo: CC BY 2.0 PvdA)
"One Nation – Labour’s Political Renewal" by Jon Cruddas Fri, 26 Sep 2014 07:43:59 +0000 Jon Cruddas
Jon Cruddas, One Nation

Jon Cruddas

The SPD in Germany are part of the Grand Coalition Government with 26 per cent of the vote. The Social Democrats in Sweden form a minority government with 31 per cent of the vote. In the 2010 General Election, after 13 years in Government, the British Labour Party suffered its lowest share of the vote since 1918 with 29 per cent.

Across Europe, social democracy faces a similar predicament. Once great ruling parties have become hollowed out and are in danger of shrinking into professionalised political elites. In government, these parties were often neither very social, nor very democratic. They tended to be top-down and state driven, compensating for the system, but not reforming it. It was politics that did things to and for people rather than with them. The old model of social democracy built in the industrial era has now come to the end of its useful life.

This was the starting point for the Labour Party’s Policy Review. Under a new leader, Ed Miliband, we would rethink what Labour stood for and begin to redefine its politics. The task of the Policy Review was to organise a political community to help build the One Nation political project. This week I’m publishing a short essay that sets out our radical new approach to politics.

One Nation England was the first country to have an industrial revolution in the 19th century and it has been the first to de-industrialise. We are now in the middle of a second industrial, or more accurately a post-industrial, revolution that is fragmenting the communities sustained by the old economy. New information and communication technologies are unseating whole industries and workforces.

These changes are a disorientating experience. The industrial class system which shaped the identities, prospects and ways of life for millions is being reshaped around new post-industrial models of production and consumption. In the last 30 years, the shift from an industrial to a service economy has caused dramatic changes in the nature of working life, from full-time work mainly done by men to increasingly decentralised and more flexible forms of employment. In little more than one generation, women have entered the workforce in dramatic numbers and millions of skilled jobs for men have gone.

The traditional class cultures that sustained Labour have changed or been devastated. The institutions and solidarities workers created out of long, historical struggles to defend their livelihood, homes and families against the power of capital have disappeared or become outdated and ineffective. There is a fear amongst millions that they are losing control over their lives and that government ignores the things that matter to them.

Like other social democratic parties, the Labour Party has been profoundly affected by these changes. Labour defined the dominant British political settlement of the 20th century. We built our welfare state. It was a great achievement, but too often we settled for that. Confronted by economic liberalism and a more individualistic society in the 1980s, we sometimes just defended institutions and ideas that were offering diminishing returns. We became institutional conservatives, defending the outdated.

Ed Miliband, One Nation

Ed Miliband launched Labour’s Policy Review (photo: CC BY 2.0 Ed Miliband)

A New Model Of Politics

Social democratic parties will not renew ourselves with our old politics of command and control. As in the age of steam and the age of the railways, our new digital age is radically changing society. Central government, big bureaucracies and corporations, faced with complexity and unpredictability, are all losing the power they once had to shape the world in their image.

Government over the last 30 years has often failed to meet the challenges of our time. The old mechanical model of top-down public administration will not work in a future of complex problems. People are losing confidence in the ability of our public institutions to serve the common good.

Winning office no longer means winning power. We will need to use the authority of government to create power and the capacity for change. It will mean building partnerships and networks, enabling people’s participation and generating momentum for reform. Instead of imposing change on communities, we will need to use their insights and experience of what works and what doesn’t. Reform will mean engaging with people’s behaviour and cultural attitudes, campaigning with people on the ground for social action and change. Politicians will be convenors, bringing people together to help them help themselves, finding solutions to their problems and improving their communities.

Government will be about giving people more control over their lives.

National Renewal

If Labour wins the 2015 general election the first task is to build an inclusive economy which is pro-worker, pro-business and pro-aspiration. An inclusive economy shares reward, risk and responsibility among all stakeholders: owners, managers, workers, consumers, suppliers and members of the local community. Sharing power and responsibility with workers will strengthen reciprocity in the system, and improve efficiency and productivity.

We will begin with the biggest devolution of power to our cities and county regions in 100 years bringing government closer to the people. It will establish regional banking, local powers over high streets,  people powered public services, affordable homes, and a top class system of  vocational education and training tailored for local need.

A strong economy needs social renewal. Britain, has experienced high levels of immigration and is now a diverse and multi ethnic society. Policy for building social integration is vital for an inclusive society. And at the heart of the relationships that bind society together is emotional life and family, in all its various shapes and sizes.

A priority in this time of severe fiscal constraint is to develop services and support forms of mutual self-help that use the power of relationships to build the capacity of men, women and children for resilience, love and care.

The challenges we face are formidable, the problems complex, and there is no money to spare. But the first step to change is simple. It is to make relationships, to connect with others and to organise together.

Social democratic parties need to reshape the relationship between citizens and the state by sharing power and responsibility, involving groups of citizens in the decisions that affect them. People need to be able to play an active role in representing their interests and solving their own problems.

Sharing power and responsibility with people is part of Labour’s history. Labour grew out of the popular movements of self-help and self-improvement. Our forebears understood that politics is a struggle for power and they organised people together to win a better future for themselves. The resources for the renewal of our politics lie in our traditions.

Download the full essay One Nation Labour’s Political Renewal here.

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]]> 2 Jon Cruddas Jon Cruddas Ed Miliband
"No Vote Makes Scottish Independence More Likely" by John Kay Wed, 24 Sep 2014 10:26:47 +0000 John Kay
John Kay, Scottish Independence

John Kay

The reaction in Westminster and the City of London to the No vote in the Scottish referendum on independence has been one of relief. This is a big mistake.

First, votes of 55 per cent to 45 per cent do not resolve issues for very long. The campaign has awakened public interest and strength of feeling unusual in modern politics. These are not characteristics of a debate that is settled.

Commitments by the UK’s main unionist parties to give extended powers to the Scottish government and parliament, free of detail and hurriedly advanced in the campaign’s late stages, are likely to be a bust. The division created in 1997 between devolved responsibilities and those reserved for the UK government was not arbitrary. The easily devolved powers were devolved. Others remained at Westminster because introducing separate regimes of, say, pension provision in a small island with a mobile population is horribly complicated. But independence would hand responsibility to a new government with strong incentives to find answers.

The UK Treasury, by contrast, will resist – and not without reason – ceding genuine control over tax policy or fiscal judgments. The result in practice is likely to be a package that decentralises a few peripheral aspects of welfare and tax policy, such as attendance allowance, and imposes yet another complex formula that appears to give the Scottish parliament greater control over income tax without really doing so.

This would matter more if demands for additional devolved powers represented a coherent request for new authority in specific areas. The claim that the UK government might undermine Scotland’s health service was central to the Yes campaign, heedless of the fact that health is already a devolved function and any decision to abolish the National Health Service in Scotland would be made in Edinburgh.

The No vote has not settled the issue of Scottish independence but has made it more likely, argues John Kay.

The No vote has not settled the issue of Scottish independence but has made it more likely, argues John Kay.

If you ask people in Scotland what tax and welfare policies they want, you find they do not want different policies. They want more generous ones. The Scottish government’s policy document on independence mostly consisted of a list of things it already has the power, but not the money, to do – and further devolution will not change that. The demand for more devolution is not an expression of desire for any specific administrative change but a cry of resentment against a political system perceived as remote and hostile from people who fear they are losing control of their lives.

Despite the efforts of David Cameron, the UK prime minister, to place his post-referendum devolution proposals in a context of overall constitutional reform, the debate is motivated by the special position of Scotland. This special position is hard to reconcile with the interests of the remainder of the UK.

The issue of why legislators from Scotland should have jurisdiction over English policy matters but English legislators no say over the same matters in Scotland, or the so-called West Lothian question, has no good answer.

The different complexion of Scottish politics from that of the UK as a whole gives urgency to the issue and fuels the resentment of English Conservative MPs. The current fiscal settlement, which favours Scotland, cannot survive the scrutiny and demand for transparency it will now receive.

The No side never grasped that the central argument of the Yes campaign is that Scotland is different. Every measure that respects the differences, far less emphasises or extends them, gives strength to those who favour independence. The creation of the Scottish parliament gave a platform to advocates of separatism; that is how the referendum came about in the first place.

The one certainty about the outcome was that any close result was a bad result. It is. Those who argued in 1997 that devolution was a slippery slope were right. Last week, Scottish nationalists lost a battle. But the outcome makes it very likely they have won their war.

This column was first published on John Kay’s Blog

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]]> 3 John Kay John Kay Edinburgh2 The No vote has not settled the issue of Scottish independence but has made it more likely, argues John Kay.
"The Secret Mission Of Frans Timmermans" by Rene Cuperus Wed, 24 Sep 2014 10:15:27 +0000 Rene Cuperus
Rene Cuperus, Frans Timmermans

Rene Cuperus

Frans Timmermans is now Juncker’s number two in the new European Commission. Formally in charge of ‘Better Regulation, Inter-Institutional Relations, the Rule of Law and the Charter of Fundamental Rights,’ his more difficult undertaking will likely be the informal task of keeping the UK in the EU.

Last year, the Kings’s Speech (Speech from the Throne, ‘’Troonrede’’) by Dutch King William Alexander at the opening of the new parliamentary year, provoked a lot of reactions, both domestically and internationally. In the speech, it seemed as if the Dutch post-war welfare state was abolished, substituted by a so-called ‘’participation society’’ based on mutual individualism. This was only partly true. Indeed, the coalition of conservative liberals (VVD) and social-democrats (PvdA) did design and put into action an unprecedented decentralisation operation towards city councils and social organisations (care, employment), but in terms of rights, one cannot seriously argue that the Netherlands is getting rid of its welfare state.

More recently, the King’s Speech dealt more than ever with the outside world. That is to say: the threatening geopolitical situation at the borders of the affluent European welfare states. The war against IS in Iraq and Syria, the Gaza-war between Israel and Palestine, the tensions in Ukraine. The King mentioned the air crash of flight MH17, a huge national tragedy for the Netherlands. Nearly 200 fellow countrymen were shot down and killed in the airspace above the eastern parts of Ukraine, including Labour Party Senator, Willem Witteveen, who as a law professor was one of the finest connoisseurs and guardians of the Dutch rule of law (‘’Rechtstaat’’).  He was killed with his wife and student-daughter.

The King  pointed at tensions in Dutch society between groups of Muslim jihadis and extreme right groups, especially in the city of The Hague. ‘

The situations in northern Iraq, Syria and Gaza have generated tensions in the Netherlands, as well as feelings of powerlessness and insecurity. The hate that tears communities apart elsewhere in the world must not be allowed to spill over into our streets.

As an unforeseen side-effect of the tragic MH17-aircrash, Dutch Foreign Minister Frans Timmermans (PvdA) became very popular in the Netherlands. His powerful and moving speech at the UN Security Council touched a chord with the Dutch public, who is mourning the death of so many Dutchmen and is furious about the way the aftermath of the air crash disaster was handled by the Russian separatists in East Ukraine.

This popular Foreign Minister will now become ‘’the second man’’ of the new Juncker European Commission. It is unclear at this moment whether his portfolio in the Commission as ‘’First Vice-President, in charge of Better Regulation, Inter-Institutional Relations, the Rule of Law and the Charter of Fundamental Rights’’ is really a powerful job in the Berlaymont hierarchy. Some say that given his personality, language skills, and good connections with Juncker, as well as his huge European and international network, Timmermans will perform outside the boundaries of his formal functional profile, and will play an important role in international affairs and European foreign policy. He might even become one of the strongest figureheads for European Social Democracy in Brussels.

I myself argued – in an article written together with Adriaan Schout of Clingendael, the Dutch Chatham House – that the secret mission for Frans Timmermans might be helping to prevent ‘’Brexit’’ from happening.

Frans Timmermans

The new First Vice President of the European Commission Frans Timmermans. Does he have a special mission to keep the UK in the EU? (photo: CC BY 2.0 PvdA)

After the shock and awe of the Scottish referendum, the next panic will be produced by the UK elections, the renegotiation claims by Prime Minister David Cameron, might he get re-elected, and the consequential ‘’in-or-out-referendum’’. Frans Timmermans is well-placed as the new Brussels ‘’Subsidiarity Pope’’ for common sense and “better regulation”, to prepare the potential renegotiation settlements which could be put forward by the British. Is this his secret assignment?

More importantly, Frans Timmermans originates from the Netherlands. In this country exists a great historic sensibility for the balance of power in Europe. A balance of power between the big member states, between the North and the South and the East and the West. Brexit would definitely endanger the balance of power on the Continent. In Dutch political circles, fear is growing about the idea of an ‘’EU without the UK’’. The dynamics of the Scottish referendum might become the flow of the British referendum, when Farage will play the role of Salmond, and Brussels the role of Westminster.

The Dutch feel themselves in a hybrid position in-between Germany, Scandinavia and the Anglo-Saxon world. The Dutch economy is deeply integrated into the German economy, and the Dutch like to trade with Germans. Socially, however, the Dutch feel attached to Scandinavia, as one of the ‘’Nordic welfare states’’. Culturally, the Dutch are more directed to the UK and the US, in terms of sense of humour, way of doing business, and open market attitude. So it is not a coincidence that the Dutch fought against Charles de Gaulle to let the British into the EU. And no coincidence that they are nervous, now that the possibility of a Brexit is being seriously discussed.

Some say that in order to win back the hearts and minds of the general public for the EU, also in countries such as France, Germany or Denmark, we should listen more carefully to the euro-critical sentiments and attitudes of the British political class and public. These attitudes and sentiments are represented both at very high level and very low level – in high-brow ‘Oxbridge’ discussions in the FT and the Economist, but there is also the most vulgar Europe-bashing in the tabloids. The arguments that can win the hearts and minds of people for Europe in this troublesome British media landscape can win them everywhere. So keep a close eye on Britain.

Frans Timmermans might be the right man in the right spot for all this.

This column was first published by Policy Network

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]]> 0 Cuperus 1 (1) Rene Cuperus Frans Timmermans The new First Vice President of the European Commission Frans Timmermans. (photo: CC BY 2.0 PvdA)
"Finance For Innovation" by NewsWatch Tue, 23 Sep 2014 11:24:06 +0000 NewsWatch

How can the financial system be reformed so it engages less in doubtful or outright counterproductive activities but focuses much more on enabling innovation and other productive activities? This was the going question of a major conference organised by Mariana Mazzucato of Sussex University. The conference, which was held in London in July, brought together leading thinkers and practitioners to discuss this major political economy issue.

You can watch an overview video below but there is also an excellent conference website, on which you can find more videos, papers and other resources.

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]]> 1 Finance For Innovation - Social Europe Journal How can the financial system be reformed so it engages less in doubtful or outright counterproductive activities but focuses much more on enabling innovation and other productive activities? This was the going question of a major conference organised by Mariana Mazzucato of Sussex University. The co Finance For Innovation,Finance For Innovation
"An Interview With Stefan Löfven" by Matt Browne Tue, 23 Sep 2014 09:56:10 +0000 Matt Browne
Matt Browne, Stefan Löfven

Matt Browne

Last week, voters in Sweden chose to end eight years of conservative rule and replace the incumbent Prime Minister, Fredrik Reinfeldt, with the leader of the Social Democratic Party, Stefan Loefven. In an election with turnout of over 85 percent, the Social Democratic-led left-green group gathered 43.6 per cent of the vote, while the incumbent centre-right alliance garnered just 39.4 percent. In a shock to the Swedish democratic system, neither group won an absolute majority due to the unprecedented performance of the populist anti-immigration party, Sweden Democrats, who won 13 percent.

Loefven is a relative new comer to national politics, and will have to muster all of his newly homed skills in what promises to be difficult process of forming the government. A welder by trade, and former leader of IF Metal — the Swedish Metal Workers’ Union — Loefven became leader of the social democratic party just two short years ago. Since then, his ability to revive the social democratic brand and rebuild trust with Swedish voters has served both him and his party well.

Loefven has also actively engaged in dialogues with progressive leaders in Europe and North America, participating in the Center for American Progress’s Global Progress summits in Copenhagen and Amsterdam, as well as gatherings in DC. He is, then, part of a vanguard of new social democratic leaders — a group that includes Prime Ministers Matteo Renzi of Italy and Manuel Valls of France — who build on the pragmatism and professionalism of the third way politics of the 1990s, adapting this philosophy to the challenges of the 21st century.

Sweden’s next Prime Minister spoke with me via phone and email to share his views on the challenges facing his new government and his vision for how best to meet them. His answers have been edited for clarity and grammar.

The US and NATO are working together to build a broader partnership to respond to the recent aggression of Russia and Europe’s Eastern border and the threats to our security posed by the Islamic State. Prior to the election the Swedish government had suggested it was ready to collaborate more closely with NATO. Is this a policy you envisage continuing? If so, what role could Sweden play?

A good transatlantic cooperation is of utmost importance to increase security as well as creating more jobs. We support a stronger cooperation with NATO. It strengthens our defense capability and enhances our ability to give and receive military support. But Sweden will remain military non-aligned.

We have stressed that the increasingly aggressive Russian behavior towards its neighbors is unacceptable and the violation of the territory integrity of Ukraine must stop. We support the united position and restrictive actions that the European Union has taken. The EU must stay united and offer Ukraine a long term membership perspective.

The Islamic State must be stopped. We support the military actions and support given to stop IS. However, only the UN can give an international operation the legitimacy of the operations which is required. Sweden will continue to give humanitarian aid to the region too, and we are on of the biggest donors in the world.

Stefan Löfven has won the recent elections in Sweden. (photo: CC BY 2.0 Anna Loverus)

Stefan Löfven has won the recent elections in Sweden. (photo: CC BY 2.0 Anna Loverus)

For many outsiders, Sweden seemed to fare better than most European nations during the 2008 economic crisis, and to have recovered quicker too. Is this a fair analysis? How do you explain the desire for change on the part of the Swedish electorate?

Sweden has one of the world’s most rigorous public finances frameworks. It was put in place by the Social Democratic governments of the 1990s, so I believe voters shared credit for the fiscal stability with us and the government. Moreover, deficits have actually grown over the last two years, due to un-financed tax cuts, and unemployment is stuck at persistently high levels.

Overall, however, the desire for change was not rooted in economics; it sprung out of the insights that massive tax cuts had eroded the social model. PISA — the [Organization for Economic Cooperation and Development (OECD)] education study — showed that Swedish schools were dramatically underperforming. Health care was also falling in international comparisons, and a growing number of people started to work part time because they didn’t trust the elderly care. That was the root for change.

There has been much talk in the international media about a supposed crisis of the Scandinavian and Nordic social model. What do you regard as the most important challenges facing this model, and how do you plan to overcome them?

The Swedish voters sent a clear message that the dismantling of the Scandinavian model has already gone too far in Sweden. I think the model needs constant modernization, but as a model, it is more vital than ever. As globalization develops and concentration of resources increases, an efficient system to redistribute income, and more importantly to redistribute opportunity, will be both a moral imperative and increase efficiency in society.

We cannot afford not to empower every child with the knowledge, education and skills they will need in tomorrow’s labor market. We must ensure that all people, regardless of gender, background or class can use their full potential. Similarly, we have to make sure falling ill or losing your job — because of growing international competition — does not devastate your personal economy or life chances.

So, the crisis is in reality that right wing politicians have prioritized tax cuts rather than to provide sufficient resources for the essential public services people need to get ahead. Looking forward, the largest challenges in the short run are to ensure we incentivize work, balanced with high quality social insurance, and to make public services constantly more efficient. In the long run, the challenge is to finance the public sector despite the demographic development. Public services need constantly to become more efficient and more customer oriented.

The Swedish Democrats, like other right-wing populists across Europe, have done better than expected in recent elections, and seem increasingly popular with young voters. How do you explain the rise of populism, and how can it be tackled?

The rise comes hand-in-hand with increasing inequalities, decreasing school results, worsening quality of social services and increasing unemployment. So in essence, the increasing support of the Swedish Democrats is not a result of growing racism or even wide spread xenophobia, but rather a result of wider and wider gaps in society.

Today, there are enormous gaps between the haves and have nots, between rural areas and urban life, between old and young, between men and women. Simply put, these gaps are between one group of people that are well-off and equipped with the skills and self-esteem required to feel included and have hope, and on the other hand, a large group that increasingly feel left behind, excluded from the elites and powers that affect their lives.

In essence, a society can handle many and large inequalities. But when hope becomes the divider of groups, you will have problems. Then, anti-establishment sentiments grow, and the simple solutions become tempting for many. My government will work to provide hope and opportunity to all these groups.

This interview was first published on ThinkProgress

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]]> 1 Matt_Browne.JPG Matt Browne Stefan Löfven Stefan Löfven has won the recent elections in Sweden. (photo: CC BY 2.0 Anna Loverus)
"Why Merkel’s Foreign Policy For Eastern Europe Is Failing" by Steven Hill Tue, 23 Sep 2014 09:37:08 +0000 Steven Hill
Steven Hill

Steven Hill

The fragile cease-fire in eastern Ukraine provides an opportunity for political leaders to reflect on how we arrived at this dangerous place of Cold War-like tensions between Russia, Europe and the United States. From Washington DC to Berlin to Warsaw, western leaders are scrambling to figure out where to go from here.

Chancellor Angela Merkel’s foreign policy of engagement towards Russia and her personal relationship with President Vladimir Putin lie in tatters. Much like her failing “foreign policy” towards the euro zone, her approach toward Russia appears to indicate a doctrinaire mindset that sees doubling down on failed policies as a sign of strength and resoluteness. While all is quiet at the moment on the Eastern front, Chancellor Merkel does not appear to have a Plan B.

Mrs. Merkel’s policy of economic engagement with Russia as a vehicle for forging common bonds — which began under her Social Democratic predecessor Gerhard Schröder, who subsequently became cozy with Russian energy interests as chairman of the board of the Russian-German joint venture Nord Stream — has proven to have little influence over Vladimir Putin. German leaders on both the right and the left believed that if closer economic ties existed, then closer politics and values would result. But the signs that this would not be the case already had revealed themselves back in 2008 over Georgia, and then again in 2006 and 2009 when Russia manipulated its energy exports to blackmail Ukraine and eastern Europe. Yet Mrs. Merkel and most German leaders like Schröder chose to ignore the warning signs. One German leader who didn’t was former foreign minister Joschka Fischer, who has written:

Ever since his first term in office as Russian president, Putin’s strategic objective has been to rebuild Russia’s status as a global power… A soft approach will merely embolden the Kremlin.

Besides miscalculating the influence of economic engagement over Putin, the problems with Merkel’s foreign policy toward Ukraine have been threefold. First, Germany – as well as the rest of Europe – was ambivalent about Ukraine’s association with its neighbors to the west, and did not have clear outcomes. In the aftermath of the economic and eurozone crises (2008-2010), Merkel’s (as well as other European leaders’) reluctance towards more European enlargement in general, and its ambivalence towards Ukraine in particular since the days of the Orange Revolution in the mid-2000s, provided Russia with the opening that led to the current crisis.

For Germany and Europe, Ukraine was on a back-back burner until the Maidan uprising in December and January of last year, which suddenly shoved Ukraine’s plight directly into Europe’s lap.

For Germany and Europe, Ukraine was on a back-back burner until the Maidan uprising in December and January of last year, which suddenly shoved Ukraine’s plight directly into Europe’s lap. At that point, Merkel and other European leaders found their cautious ambivalence being overridden by European values and principles that demanded Europe support a nascent, market-based liberal democracy in their near-abroad that was asking for help after the ousting of Putin crony, President Viktor Yanukovych. So Europe was reluctantly sucked into the morass between east and west Ukraine, and between Ukraine and Russia, despite European leaders still not being clear about their outcome. Such geopolitical confusion has its costs.

Second, German policy in recent years was based on Mrs. Merkel’s personal relationship with  Vladimir Putin, and before her Chancellor Schröder’s chummy relationship with the Russian president. Sitting alongside Putin at the World Cup in Brazil, Merkel apparently believed that she could – like former US president George W. Bush – “look Putin in the eye/soul” and understand his values, policies and bottom lines. But like President Bush, she misunderstood Putin’s willingness to hide many of his cards in an increasingly high-stakes poker game.

Specifically, Chancellor Merkel badly underestimated what Putin was willing to do in order to keep Ukraine in Russia’s orbit. Putin has been much clearer than Merkel, President Barack Obama or other Western leaders in knowing where he draws his lines of Russia’s national self interest. Western leaders announced their unwillingness to match Putin’s use of military force – even as Putin’s military support for the rebels became increasingly evident – in the hope that such preemption would reassure Russia and cause Putin to respond in kind. But this policy assumed – wrongly — that Putin shares the same post-Cold War values about the rule of law, democracy, national self-determination and the inviolability of borders. It also assumed that Putin was eager for the carrot of economic development based on substantial investment from German businesses (the biggest foreign investor in Russia, by far). Instead, Putin has remained in the mindset of a Cold War tactician, calculating on the geopolitical chessboard about how to claw back some of Russia’s past geopolitical bloc.

Vladimir Putin (photo: CC BY-SA 2.0 Republic of Korea)

Vladimir Putin’s actions in Ukraine raise serious questions about the European Union’s foreign policy approach (photo: CC BY-SA 2.0 Republic of Korea)

Third, both Chancellor Merkel and President Obama have adopted a general foreign policy strategy of “do as little as possible.” Due to budgetary constraints as a result of the ongoing economic crisis – as well as qualities that reflect their own personalities – both leaders have adopted cautious approaches that can be best characterized by Obama’s phrase “Don’t do stupid stuff.” Of course, that makes sense, but when it’s the basis for your foreign policy, that becomes a formula for what NOT to do rather than what TO DO. By definition, this is a policy in which you sit back and watch while the world unfolds, reacting to events as they happen. That left Russia in the driver’s seat because Putin does not play by the same rules. The potency of “soft” power – including economic sanctions against offenders — has been called into question. China is surely watching closely.

These cautious stances by both Merkel and Obama have been supported by their domestic electorates’ own isolationist tendencies. Many Germans have been ambivalent at best in this standoff, with some leaning pro-Russia (particularly in the blowback over the NSA scandal which has sowed great distrust towards the U.S.). Wishing to see shades of gray in a situation that was becoming increasingly black and white, Germany’s historic post-World War II posture against war and aggression – certainly admirable, most of the time – in this case has resulted in blinders as to Putin’s true intent. Merkel has lost credibility, particularly among her Eastern European partners. Polish Foreign Minister Radoslaw Sikorski has pointedly stated that Merkel and other leaders that counseled mediation now need to explain “what their ideas (are) to stop President Putin and save Ukraine as she is.” Poland seems ready for a stronger response: recently it denied permission for Russia’s defense minister to fly over its air space after a trip to Slovakia.

Charges that the West bears responsibility for this latest Russian mauling because it has reneged on the 1997 NATO-Russia Founding Act – which established the ground rules and committed NATO to foregoing a significant presence in countries that hadn’t joined the alliance by 1999 – are thin. Following that agreement, if Russia had remade itself into a successful liberal democracy guided by prosperity and free markets, an alliance with Russia would have been an attractive option for eastern Europeans. Instead, Russia has relapsed into its historical character of authoritarian rule with a Putin twist, a petro-state with struggling economic prospects. Given that, eastern Europeans can be forgiven their lack of interest in abiding by an accord negotiated by the US and Russia 17 years ago. As nascent liberal democracies, they have their own aspirations for their future, and should not be consigned by outside powers – whether in Moscow or Washington DC – to vassal state status allied to a faltering former superpower.

As Sikorski and others are asking – demanding, more accurately — where do things need to go from here? Unless the West is willing to step up with military force and wrest control of disputed areas from Russia – not going to happen – then the lesson of recent events is that Ukraine’s future will have a strong Russian component. Assuming Russia does not decide to march to Kiev, the path forward for Ukraine lies either in some sort of federalized and greatly decentralized system, or at this point quite possibly a partition of Ukraine into east and west. Given how much blood has been shed, with thousands of civilians as well as combatants dead, as well as the radical separatist posture of most of the insurrectionary leadership, it may not be possible for west and east Ukraine to reunite, even under a decentralized system. While federalism may have been possible last December and January, that can may have been kicked too far down the road.

Partitioning was considered to be the worst of all possible scenarios back in January. Now, it may be the best of the worst scenarios. Some will call this appeasement, but others will see this as a final settling of a Cold War standoff, with each side gaining something.

Partitioning was considered to be the worst of all possible scenarios back in January. Now, it may be the best of the worst scenarios. Some will call this appeasement, but others will see this as a final settling of a Cold War standoff, with each side gaining something. Despite the potential landmines of that route, there are some upsides to partitioning. It would free western Ukraine to break from Russia, build stronger bonds with Europe, be admitted into NATO and possibly at some point the EU. Partitioning also would settle one of the remaining tensions of the Cold War and defuse one more flashpoint. An offer can be extended to those in eastern Ukraine who do not wish to live in a Putin-ized region:  last one out, turn out the lights.

The tug-of-war with Russia over Ukraine shows how important it is that Europe put itself on a course that is stable, prosperous – and unified. Putin is undeniably a “partner” in eastern Europe’s future, and he has masterfully exploited Europe’s disunion. Europe has formidable tools to deploy, including the sticks of more biting sanctions and a stronger NATO presence in eastern Europe, as well as a reduction of Europe’s dependency on Russian trade and energy. Those will have to be balanced with new carrots that Russia finds attractive. Europe needs both a short-term plan based on a more robust NATO that can deal with an uncooperative Russia, as well as long-term objectives that attempt to gradually pull Russia back into the European orbit.

Can such a disunited Europe pull that off? Time will tell. External threats tend to focus minds and spur domestic populations to renew the bonds of what they hold in common. The growling of the Russian bear already has reinvigorated NATO and the transatlantic alliance. Perhaps it will do the same for Europe’s fractious union. It is now clear, as Joschka Fischer has written, that the EU’s enlargement policy

is not merely some expensive, expendable annoyance; it is a vital component of the EU’s security and outward projection of power. Safety comes with a price tag.

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]]> 7 Steven Hill Steven Hill putin Vladimir Putin (photo: CC BY-SA 2.0 Republic of Korea)