Progressives and conservatives feel uncomfortable or paralyzed when populists and other extremists adopt what looks like popular and necessary policies.
It does not need to be so.
When in the 1930s Hitler managed an economic recovery in Germany, through what we would call Keynesian policies of public investment, and in 1940 his finance minister Funk published a plan for a New Economic Order for Europe, John Maynard Keynes was invited by the British Ministry of Information to make a broadcast for American and Dominion audiences to discredit it. Keynes replied that the plan was “excellent and just what we ourselves ought to be thinking of doing. If it is to be attacked, the way to do it would be to cast doubt and suspicion on its bona fides.” For instance, “Funk´s talk of a rational division of labour was merely a cloak for concentrating industry in Germany and pastoralising the rest of Europe.”
Today, progressives face a similar problem in relation to some populist policies. Let me illustrate with three examples.
(1) The migrants’ caravan, which started in the Honduras and reached the Mexico/USA border today is a good example. Whoever started and facilitated the caravan, and it could be anyone from local village demagogues, criminal gangs, left-wing activists, religious idealists, Putin or Trump himself, is irrelevant.
Nobody can accept that a crowd, claiming poverty or whatever, organized in a country, decides to try to invade another country in search of settlement there.
However, how to stop them is a different matter. During the Roman times the army had to fight the armed invaders. But Trump’s decision to deploy the army in the border with an order to shoot unarmed civilians, seems out of proportion and risks causing a slaughter.
There are obviously more humane and efficient ways to stop the invaders and punish the organizers. For instance, by moving them into a refugee camp where the children and sick will be fed and treated prior being repatriated with a little bit of pocket money to help them settle back in their country of origin. Meanwhile, while in the camp, they need to be taught a lesson to dissuade further incursions. For instance, the leaders and organizers could be separated and taken into custody where they would remain until earning the money necessary to reimburse their deportation costs, while the remaining could be registered into a DNA database to prevent them from applying legally for residence in the USA during the next 10 years.
(2) The USA-China trade conflict is another example where the populist approach is wrong. Again, there is no doubt that China has often misbehaved in international trade, namely in relation to intellectual property.
However, Trump’s policy of imposing selective import tariffs and trying to negotiate some “deal” with Xi Ping is not only chimerical but also risks to backfire. For starters, it is an unprecedented reversal of roles, the USA has become the protectionist and China the free trader.
Yet, there are better solutions to lead China into behaving in accordance with international trade rules. For instance, the Trans Pacific Agreement, abandoned by Trump, had an important role in this regard. Likewise, encouraging China to join the OECD and follow its rules in terms of international competition and transparency is a better way. In the end, having China as part of the current liberal international order is better than driving them into trying to create a rival alternative.
(3) Finally, Bolsonaro’s decision to stop the use of Cuban medical slaves in Brazil is another example. Shamefully, for many years western countries (including Portugal) have tolerated the hiring of medical staff to the Cuban government, while ignoring that the doctors were forced to leave their families in Cuba as hostages and received only a pittance of the fees contracted with the Cuban government. So, Bolsonaro’s intention is laudable, but is it the best solution?
Of course, no. There are better ways to achieve the same result, without repatriation.
For instance, renegotiating the contracts to force Cuba to allow the doctors’ families to join them in Brazil would preserve their jobs and benefit their patients. Likewise, paying directly to the doctors. The slave doctors ended up being the victims of two extremists.
These examples and many others show why progressives and conservatives cannot be complacent with the populists. More than ever, they need to show the shortcomings of such policies and how they can do better. They must show that there are humane, liberal and civilized ways of dealing with such problems and the anxiety and fear associated with them.
Showing posts with label populism. Show all posts
Showing posts with label populism. Show all posts
Sunday, 25 November 2018
Friday, 24 March 2017
The 60th anniversary of the EU does not need to mean decadence
My personal contribution to commemorate the EU 60th anniversary was to publish a second edition of my 1987 book on Economic Integration and Growth, to which I added a second part dealing with enlargement and the risk of disintegration following Brexit. A link for the book is found on the left and next I reproduce its concluding chapter.
How to Rebuild a Collapsing Castle
As in relation to historical buildings, common sense dictates that the restoration of a collapsing integrated union cannot be done by demolishing first to build after. Instead, it needs some education about the value of preserving past achievements. Here lies the difficulty, but not at the technical and legal level. This is so because the required political will to preserve economic freedom is not only wavering, it risks being reversed by rising political populism in America and Europe.
This book provides plenty of theoretical and empirical evidence about the economic superiority of free trade over protectionism. However, integration is not just about economic gains and losses; it is also about institutional and political arrangements that are efficient and fair to mobilise all members regardless of their specificities. As said in chapter 10, there is no point in being a member if a country wishes to be part of other integration process or believes that an atomised world of independent states is a better road to achieve global liberalisation.
So far, it is not yet clear which of these roads Britain wishes to follow. However, this is not really important for the remaining EU members. What they need to consider is whether they should use the Brexit opportunity to change their own organisation to deal with other “unsatisfied members” and future entries and exits.
The current situation, in relation to neighbouring countries, is depicted in the diagram shown above in page 207, which needs to completed by a list of six Western Balkan countries, of which four (Albania, Macedonia, Montenegro and Serbia) are already official candidates and two (Bosnia and Kosovo) are potential candidates. The Balkan problem can be resolved swiftly through a bold enlargement. Although the Balkan countries are problematic due to rampant criminality (Albania), ties to Russia (Serbia), and Islamic population (Bosnia and Kosovo), they should not be excluded.
Indeed, their membership would make more compelling the need to transform the European Union into an official multi-tier union, based on a variable geometry as discussed in chapter 10. The institutionalisation of a variable geometry would allow member countries to opt out or to be demoted from some policies without major political upheavals. For instance, temporarily, Greece could leave the euro until she has sorted out her foreign debt. Romania could be demoted from the free movement of people while the current members could repatriate professional beggars from that country. Likewise, countries like Hungary and Poland, which are diverging from the EU pattern of democracy, could be demoted to a lower level of integration.
The long-waiting candidacy of Turkey to join the European Union should be abandoned; it seems to have replaced its strategic membership of the EU by an attempt to become the leading Islamic power in the Middle East.
Indeed, the end of the American leadership in the free world brought about by the new Trump administration is likely to generate a new drive towards the creation of rival spheres of influence. In Europe, Britain, Russia and Turkey are likely to strive to create their own spheres of influence at the expense of the European Union.
This new XXI rivalry will differ from nineteenth-century imperialism. It will use modern weapons to impact on the policies pursued by the European Union. For instance, Erdogan’s Turkey might use migration and refugees to destabilise Europe; Putin’s Russia may use energy and its spies and corrupt oligarchs to trap neighbouring countries and discredit democratic EU institutions; while Theresa May’s Britain may be tempted to use tax competition to break the social security net in the European Union.
Although individually, each of these countries is too small to threaten the EU economically, when combined, their challenge cannot be ignored in the design of new EU policies to keep and foster the integration process.
To cope with this challenge, the EU needs to simultaneously launch new common policies whilst disengaging or scaling back some of the current, more divisive policies. Moreover, the new exclusive policies should have a significant budgetary value (e.g., raising its level from less than 2 percent to a value closer to 10 percent) to have a macroeconomic role. Moreover, they should not be of a sector nature and distort international competition.
At the top of the list should be a single policy on migration and refugees, inspired by the Canadian or Australian models. In second place should be a policy of common defence and security, including a nuclear deterrent, so that the EU becomes ready to lead NATO should the United States weaken its commitment to the alliance.
Next should be the financing of the high end of two fundamental public services—education and healthcare. Given the success of the Erasmus student mobility program and the rising costs and competition of research, higher education and hospital healthcare are two obvious candidates to be funded at the European level.
Looking forwards, a regionally differentiated basic-income policy for unemployed, destitute, and old people should also be considered.
Of course, a multi-tier Europe with new single policies can only work with proximity and the trust of the people. The model based in the centralisation of the European civil servants in Brussels is no longer efficient or acceptable to guarantee accountability and democracy.
The current institutions have not done enough to prove their accountability, and direct elections for the European Parliament have not contributed to create truly European parties where the electors feel represented. Moreover, the idea that the current institutions—commission, council, and parliament—may transform into a government, senate, and congress of a future federation or confederation is utopian.
The EU needs to create institutions that are adapted to its diversified country basis. One such solution would be to split the European Parliament into upper and lower houses, the first made of members elected by the national parliaments and the second by members elected directly in European lists.
To sum up, like the founding fathers had to select policies that were then crucial, any restoration of the European Union has to do the same. Back then, the challenge was to reconstruct a democratic Europe from destruction. The obvious industries were atomic, coal, steel, and farming. Now the challenge is to win the race for talent and technology and to do so with social stability and security, in a world threatened again by multi-polar power players.
How to Rebuild a Collapsing Castle
As in relation to historical buildings, common sense dictates that the restoration of a collapsing integrated union cannot be done by demolishing first to build after. Instead, it needs some education about the value of preserving past achievements. Here lies the difficulty, but not at the technical and legal level. This is so because the required political will to preserve economic freedom is not only wavering, it risks being reversed by rising political populism in America and Europe.
This book provides plenty of theoretical and empirical evidence about the economic superiority of free trade over protectionism. However, integration is not just about economic gains and losses; it is also about institutional and political arrangements that are efficient and fair to mobilise all members regardless of their specificities. As said in chapter 10, there is no point in being a member if a country wishes to be part of other integration process or believes that an atomised world of independent states is a better road to achieve global liberalisation.
So far, it is not yet clear which of these roads Britain wishes to follow. However, this is not really important for the remaining EU members. What they need to consider is whether they should use the Brexit opportunity to change their own organisation to deal with other “unsatisfied members” and future entries and exits.
The current situation, in relation to neighbouring countries, is depicted in the diagram shown above in page 207, which needs to completed by a list of six Western Balkan countries, of which four (Albania, Macedonia, Montenegro and Serbia) are already official candidates and two (Bosnia and Kosovo) are potential candidates. The Balkan problem can be resolved swiftly through a bold enlargement. Although the Balkan countries are problematic due to rampant criminality (Albania), ties to Russia (Serbia), and Islamic population (Bosnia and Kosovo), they should not be excluded.
Indeed, their membership would make more compelling the need to transform the European Union into an official multi-tier union, based on a variable geometry as discussed in chapter 10. The institutionalisation of a variable geometry would allow member countries to opt out or to be demoted from some policies without major political upheavals. For instance, temporarily, Greece could leave the euro until she has sorted out her foreign debt. Romania could be demoted from the free movement of people while the current members could repatriate professional beggars from that country. Likewise, countries like Hungary and Poland, which are diverging from the EU pattern of democracy, could be demoted to a lower level of integration.
The long-waiting candidacy of Turkey to join the European Union should be abandoned; it seems to have replaced its strategic membership of the EU by an attempt to become the leading Islamic power in the Middle East.
Indeed, the end of the American leadership in the free world brought about by the new Trump administration is likely to generate a new drive towards the creation of rival spheres of influence. In Europe, Britain, Russia and Turkey are likely to strive to create their own spheres of influence at the expense of the European Union.
This new XXI rivalry will differ from nineteenth-century imperialism. It will use modern weapons to impact on the policies pursued by the European Union. For instance, Erdogan’s Turkey might use migration and refugees to destabilise Europe; Putin’s Russia may use energy and its spies and corrupt oligarchs to trap neighbouring countries and discredit democratic EU institutions; while Theresa May’s Britain may be tempted to use tax competition to break the social security net in the European Union.
Although individually, each of these countries is too small to threaten the EU economically, when combined, their challenge cannot be ignored in the design of new EU policies to keep and foster the integration process.
To cope with this challenge, the EU needs to simultaneously launch new common policies whilst disengaging or scaling back some of the current, more divisive policies. Moreover, the new exclusive policies should have a significant budgetary value (e.g., raising its level from less than 2 percent to a value closer to 10 percent) to have a macroeconomic role. Moreover, they should not be of a sector nature and distort international competition.
At the top of the list should be a single policy on migration and refugees, inspired by the Canadian or Australian models. In second place should be a policy of common defence and security, including a nuclear deterrent, so that the EU becomes ready to lead NATO should the United States weaken its commitment to the alliance.
Next should be the financing of the high end of two fundamental public services—education and healthcare. Given the success of the Erasmus student mobility program and the rising costs and competition of research, higher education and hospital healthcare are two obvious candidates to be funded at the European level.
Looking forwards, a regionally differentiated basic-income policy for unemployed, destitute, and old people should also be considered.
Of course, a multi-tier Europe with new single policies can only work with proximity and the trust of the people. The model based in the centralisation of the European civil servants in Brussels is no longer efficient or acceptable to guarantee accountability and democracy.
The current institutions have not done enough to prove their accountability, and direct elections for the European Parliament have not contributed to create truly European parties where the electors feel represented. Moreover, the idea that the current institutions—commission, council, and parliament—may transform into a government, senate, and congress of a future federation or confederation is utopian.
The EU needs to create institutions that are adapted to its diversified country basis. One such solution would be to split the European Parliament into upper and lower houses, the first made of members elected by the national parliaments and the second by members elected directly in European lists.
To sum up, like the founding fathers had to select policies that were then crucial, any restoration of the European Union has to do the same. Back then, the challenge was to reconstruct a democratic Europe from destruction. The obvious industries were atomic, coal, steel, and farming. Now the challenge is to win the race for talent and technology and to do so with social stability and security, in a world threatened again by multi-polar power players.
Subscribe to:
Posts (Atom)
Posts
