debating progressive politics in Europe and beyond
In trying to understand the pattern and timing of government interventions during a financial crisis, we should probably conclude that, to paraphrase the French philosopher Blaise Pascal, “politics have incentives that economics cannot understand.” From an economic point of view, the problem is simple. When a sovereign borrower’s solvency has deteriorated sufficiently, its survival [...]
European monetary union has always been haunted by a spectre. That spectre is the irresponsible member country with an uncompetitive economy and a large budget deficit, building up too much debt and having to be bailed out. This bogeyman had a strong hold on the imagination of policymakers from the start, especially in Germany. Hence [...]
In the official account of the unfolding Greek tragedy the villain is readily identified, the plot is clear, and the dénouement inevitable, tragic, but ultimately both just and morally uplifting. The villain of the piece is Greece itself: a bloated and inefficient public sector, rampant corruption, and decade-long fiscal incontinence partially shielded from public scrutiny [...]
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