Guida pratica per uscire dall’euro, di Michele Masneri

Il concorso a premi per consigliare Atene (e noi tutti) sul break-up

Oggi la Troika, cioè il terzetto composto da emissari del Fondo monetario internazionale, della Banca centrale europea e della Commissione di Bruxelles sarà nuovamente ad Atene in un clima sempre più incerto. Ieri il Fmi in una nota ha precisato di stare “appoggiando la Grecia per permetterle di superare le proprie difficoltà economiche”. Ma nei giorni scorsi erano filtrate indiscrezioni di alto livello circa un possibile disimpegno proprio del Fondo. Anche dal governo di Berlino, ieri, trapelava la volontà di non impegnarsi ulteriormente nel sostenere la Grecia.

Insomma, scenario pesantissimo quello che si prospetta per Atene, ma nel frattempo qualcuno ha pensato bene di studiare una guida pratica, una specie di Baedeker per Atene, mostrando esattamente che cosa succederà e in che tempi per il paese che uscirà dalla moneta unica. Lo ha fatto la società di consulenza Capital Economics, una delle più importanti del mondo, presentando un documento di centoquarantadue pagine intitolato “Lasciare l’euro. Una guida pratica”, che ha vinto un importante premio economico britannico, il Wolfson Prize.
Il premio, di 250 mila sterline, secondo solo al Nobel per generosità, è sponsorizzato dal Charles Wolfson Charitable Trust che fa capo a sua volta alla famiglia Wolfson, proprietaria del marchio di abbigliamento Next e con un interesse molto sviluppato per la politica. Simon Wolfson, quarantaquattrenne, è direttore generale di Next ma soprattutto è un membro preminente della Camera dei Lord (nelle file dei Tories guidati oggi dal premier David Cameron).

Ammesso nel 2010 alla Camera alta del regno, Wolfson secondo il Telegraph è una delle 100 teste più interessanti dei conservatori inglesi. E’ stato uno dei maggiori contribuenti alla campagna elettorale 2005 dell’attuale primo ministro David Cameron oltre che condirettore della commissione sulla Competitività predisposta dallo stesso Partito conservatore. E’ stato anche uno dei trentacinque firmatari di una lettera aperta al consigliere dello Scacchiere George Osborne che chiedeva maggiori iniziative per ridurre il deficit. Anche il padre di Wolfson, David, è un membro della Camera alta, sempre per il Tory party.
Il premio Wolfson quest’anno chiedeva di mandare proposte attorno al tema “se uno stato membro lascia l’Unione economica e monetaria, qual è il sistema migliore per generare crescita e prosperità per i membri rimanenti” e Capital Economics ha vinto su oltre 400 studi inviati.
La strada, secondo il direttore della società di consulenza, Roger Bootle, capoprogetto della ricerca, è articolata. Il caso di scuola naturalmente riguarda la Grecia che avrebbe “l’ottanta per cento di possibilità nei prossimi due anni di abbandonare l’euro”. In primo luogo, per Atene si tratterebbe di reintrodurre la dracma. Tuttavia, dice lo studio, “abbiamo chiesto ad alcune tra le più importanti tipografie del settore quanto tempo serve per stampare materialmente moneta e ci hanno risposto un minimo di sei mesi”, dunque tempi troppo lunghi, ecco perché Atene i primi tempi dovrebbe “sbianchettare” gli euro circolanti trasformandoli ufficialmente in dracme. A partire dal primo giorno di uscita dall’euro, la dracma dovrebbe essere quotata alla pari; così come tutti i prezzi, salari, prestiti e depositi vengono ridenominati uno a uno rispetto al vecchio euro. Nonostante la parità, a partire dal primo giorno di break-up ci sarebbe un crollo della nuova moneta del 30-50 per cento; con conseguente impennata dei prezzi almeno del 10 per cento.

Ecco perché si tratterebbe di mettere in atto veloci misure contro la fiammata inflazionistica che arriverebbe: un regime di inflation targeting, con una serie di regole fiscali molto dure, monitorate da un organismo di esperti indipendenti. Anche il debito pubblico dovrebbe essere rinominato in dracme: debito pubblico che dovrebbe essere naturalmente ristrutturato; Capital Economics prevede un default con un “haircut” o riduzione che lo porti almeno al 60 per cento del pil.
Naturalmente, se i mercati fossero a conoscenza di questi preparativi, ci sarebbe un’immediata (e maggiore rispetto a quella già in atto) fuga di capitali. Ecco perché Bootle propone che i funzionari del paese uscente si incontrino in segreto un mese prima dell’annuncio pubblico del break-up. I partner dell’Eurozona e le altre istituzioni monetarie internazionali sarebbero informati poi solo tre giorni prima del “D-Day”, che dovrebbe preferibilmente avvenire di venerdì. Subito dopo questo annuncio, banche e mercati finanziari domestici andrebbero chiusi; ma il blocco dei capitali dovrebbe durare il meno possibile. Questo per i “sommersi”.

E cosa deve fare chi resta dentro?
E i “salvati”, cioè i rimanenti membri dell’Eurozona? Secondo Bootle, essi devono accelerare l’unificazione delle proprie politiche fiscali e di bilancio. Ma nello stesso tempo, liberati dalle tensioni greche, i membri dell’Eurozona potrebbero allentare la morsa di bilancio di Bruxelles e rilanciare la crescita. E’ importante, dice l’economista, che tutto ciò avvenga molto rapidamente, non più di qualche mese. Anche perché nel frattempo qualche paese dell’area euro vedendo gli sviluppi greci (svalutazione, dimezzamento del debito, eccetera) potrebbe cominciare a provare qualche invidia e “subire qualche tentazione”.

http://www.ilfoglio.it/soloqui/14333

Sorpresa, per i banchieri la troppa finanza fiacca la crescita, di Alberto Brambilla

Un sorprendente paper degli economisti della Banca dei regolamenti internazionali. 

Numeri, confronti e analisi

Da quarant’anni l’idea che l’iper sviluppo del settore finanziario sia utile alla crescita è stata accreditata dall’accademia come un postulato. Non è più così. Un working paper della Banca dei regolamenti internazionali (Bri), che ha come azionisti le Banche centrali di tutto il mondo, prova esattamente il contrario e mette in discussione uno dei capisaldi della moderna teoria economica al quale si sono ispirati governatori della Federal Reserve come Alan Greenspan e il suo successore in carica Ben Bernanke per spingere verso una decisa deregolamentazione. “Come succede in molti aspetti della vita, con la finanza si può avere troppo di una cosa positiva. Quindi in misura limitata un sistema finanziario ampio va a braccetto con una crescita della produttività. Ma arrivati a un certo punto – che molte economie avanzate hanno superato molto tempo fa – più banche e più credito portano a una crescita inferiore”, affermano il consigliere economico Stephen Cecchetti e l’economista Enisse Kharroubi che nei ringraziamenti includono anche il capo ricerche Bri, l’italiano Claudio Borio.

Le conclusioni hanno aspetti sorprendenti, come spesso avviene con gli studi della Bri che hanno sempre solide basi. Un sistema finanziario oleato contribuisce infatti ad abbassare i costi delle transazioni, ad aumentare gli investimenti e favorisce un equilibrio nella distribuzione del capitale e dei rischi, ma al contempo fa concorrenza ad altri settori decisivi per l’intera umanità. L’esempio calzante è quello di un ingegnere nucleare che per ottenere il massimo profitto sceglie una carriera nella finanza dei derivati e mette le proprie capacità al servizio di una banca d’affari. Lo stesso può accadere con un medico che avrebbe dedicato la vita alla ricerca sul cancro oppure uno scienziato che sarebbe in grado di fare un salto quantico per favorire l’arrivo dell’uomo su Marte. Sono menti “rubate” alla crescita e allo sviluppo perché inserite nel mondo affollato della finanza che non avrebbe bisogno di loro. La soglia limite di impiego è stabilita dai calcoli della Bri che vigila sui rischi sistemici per l’economia globale: “Quando il settore finanziario rappresenta il 3,5 per cento della forza lavoro totale, ogni altro incremento tende ad essere non solo superfluo ma lesivo per la crescita”. Paesi che hanno superato il limite sono per certi aspetti gli Stati Uniti, poi Canada, Svizzera e Irlanda, dove per inciso la rapidissima crescita del settore finanziario dal 2005 ha pesato per un terzo sulla diminuzione della produttività per lavoratore. Ma altri si stanno avvicinando di gran carriera al punto critico di “massimo profitto” come ad esempio la Gran Bretagna. “La lezione – aggiungono dalla banca di Basilea, nota come la Banca centrale delle banche centrali – è che una forte e rapida espansione del settore finanziario può essere molto costosa per il resto dell’economia. Perché distrae risorse essenziali tali da andare a detrimento della crescita complessiva”.

Anche guardando la questione dal punto di vista del sistema bancario, il risultato non cambia. Sebbene il credito bancario porti effettivi benefici all’economia reale, quando questo supera il 90 per cento del pil risulta deleterio perché è il punto massimo oltre al quale risulta difficile rispondere con prontezza a eventuali choc, come la crisi finanziaria. In India, paese al quale è indirizzato il lavoro della Banca dei regolamenti internazionali, c’è possibilità di trarre ulteriore beneficio dallo sviluppo controllato del credito privato perché rappresenta solo il 50 per cento del pil. Insomma, se non bastassero i fatti e le cronache quotidiane, il mito della finanza come panacea è in parte sfatato: “C’è la pressante necessità – concludono i ricercatori – di rivedere la relazione tra finanza e crescita economica nei sistemi moderni. Per questo più finanza non è sempre un bene”.

http://www.ilfoglio.it/soloqui/14297

Growing Up in the Eurozone, by Stefano Micossi

A rapid and large increase of government debt has been a general phenomenon in the advanced countries since the 2007-09 crisis: for the first time, the average debt/GDP ratio for OECD countries has surpassed 100%. Fiscal consolidation will weigh on growth prospects for two generations to come, and the welfare state as we have known it in Europe since World War II will have to be transformed, especially given a rapidly aging population.

Illustration by Margaret Scott

CommentsBut the eurozone debt crisis has distinctive features. Most importantly, while the average debt/GDP ratio is no higher than it is in other advanced countries, and consolidation efforts started earlier, the eurozone has been mired in a severe crisis of confidence for the past two years. This points to a systemic dimension of the crisis that cannot be reduced to profligate behavior by fiscal sinners.

CommentsIndeed, the Greek crisis exposed three main flaws in the monetary union itself. First, the system lacked effective arrangements to align fiscal and other economic policies. As long as enforcement of fiscal discipline is entrusted to an intergovernmental body, the problem is bound to reappear, limiting the credibility of common budgetary rules.

CommentsMoreover, financial markets underpriced private and sovereign credit risks, in the implicit belief that no one would fail, and that all debts would somehow be made whole, implying weak market discipline on borrowers.

CommentsFinally, once the crisis hit, leading to a re-pricing of risks in financial markets, the need to avoid an economic and financial meltdown compelled governments to support aggregate demand and make private liabilities whole. But the disconnection between centralized monetary and decentralized fiscal powers de facto impeded the full use of monetary instruments to meet monetary and financial shocks.

CommentsThat left individual eurozone members exposed to brutal pressure by financial markets at a time when excessive private debt was turned into unsustainable public debt. Suddenly, the eurozone had become a straightjacket.

CommentsAnd so it has remained: budgets are cut, growth falters, and periphery countries must engineer substantial real exchange-rate devaluations to regain competitiveness and close their external deficits. Core countries, meanwhile, argue that they can do little to strengthen aggregate demand and relieve pressure on their partners, even as the periphery’s agony is dragging the core into recession, owing to its dependence on peripheral export markets. And, indeed, recent data point to a rapidly worsening economic environment in Germany, where the trade surplus has shrunk dramatically in recent months.

CommentsOver the past two years, fundamental changes in the eurozone’s economic governance have aimed at rectifying the monetary union’s founding flaws. And, along the way, an intergovernmental process has become communitarian. Key powers over the implementation of common policy guidelines have been entrusted to the European Commission, and the European Council has limited its own ability to reject Commission recommendations by requiring a qualified majority to change them.

CommentsStrong economic-governance rules, however, will not suffice. A fully functioning monetary union also requires a central bank that is free to act as required to confront liquidity and confidence shocks, some mutualization of government debts, and centralized control over fiscal policy. Moreover, it must have centralized banking supervisory policies, with strong powers to manage bank crises and to liquidate banks that cannot be rescued.

CommentsAll of this can be achieved only gradually, as Europe moves to a fully-fledged federal union. Whether the eurozone will survive in the meantime will be determined by the European Council’s capacity to establish intermediate arrangements that can halt the crisis and restore trust among its members.

CommentsAt their meeting at the end of June, European leaders acknowledged for the first time the multiple dimensions of the crisis, accepting that austerity – putting everyone’s house in order – will not suffice. Accordingly, new joint policy initiatives will address economic growth, banking union, and liquidity. Moreover, European leaders have placed these new policies within a coherent longer-term framework that may also include “the issuance of common debt.”

CommentsLikewise, the European Council has agreed on a new “Compact for growth and jobs” that identifies a specific European dimension of growth policies, mainly integration of energy, transport, communications, and services, together with higher infrastructure investment.

CommentsWhat is notably missing is recognition of the need for greater flexibility on fiscal-consolidation efforts. As the Commission has requested, countries with stronger fiscal positions should consider slowing their consolidation efforts in order to avoid aggravating the recession. But, in order to preserve investors’ confidence, some eurozone countries must strike a difficult balance between austerity and overkill, which would have been facilitated had the European Council issued a clear statement that letting automatic stabilizers work, while remaining on track with structural budget targets, fully complies with European Union obligations.

CommentsMoreover, a greater share of the adjustment burden must fall on Germany. Recent fairly generous wage agreements in Germany will help, but are not enough; there is also a need to boost domestic demand. More aggressive liberalization of the bloated banking system, network services (especially in energy and transport), and public procurement may contribute significantly over time to raising domestic investment and incomes. The sizeable investments required to make up for the loss of nuclear energy may contribute more immediate stimulus.

All of this should not be seen as a concession, but as part of the obligations undertaken by eurozone governments to address excessive imbalances. Now more than ever, Germany must be persuaded that without its contribution in reviving growth and correcting external imbalances, the eurozone faces prolonged depression and certain collapse.

http://www.project-syndicate.org/commentary/growing-up-in-the-eurozone

Is Inequality Inhibiting Growth?, by Raghuram Rajan

To understand how to achieve a sustained recovery from the Great Recession, we need to understand its causes. And identifying causes means starting with the evidence.

Illustration by Paul Lachine

Two facts stand out. First, overall demand for goods and services is much weaker, both in Europe and the United States, than it was in the go-go years before the recession. Second, most of the economic gains in the US in recent years have gone to the rich, while the middle class has fallen behind in relative terms. In Europe, concerns about domestic income inequality, though more muted, are compounded by angst about inequality between countries, as Germany roars ahead while the southern periphery stalls.

Persuasive explanations of the crisis point to linkages between today’s tepid demand and rising income inequality. Progressive economists argue that the weakening of unions in the US, together with tax policies favoring the rich, slowed middle-class income growth, while traditional transfer programs were cut back. With incomes stagnant, households were encouraged to borrow, especially against home equity, to maintain consumption.

CommentsRising house prices gave people the illusion that increasing wealth backed their borrowing. But, now that house prices have collapsed and credit is unavailable to underwater households, demand has plummeted. The key to recovery, then, is to tax the rich, increase transfers, and restore worker incomes by enhancing union bargaining power and raising minimum wages.

This emphasis on anti-worker, pro-rich policies as the recession’s primary cause fits less well with events in Europe. Countries like Germany that reformed labor laws to create more flexibility for employers, and did not raise wages rapidly, seem to be in better economic shape than countries like France and Spain, where labor was better protected.

CommentsSo consider an alternative explanation: Starting in the early 1970’s, advanced economies found it increasingly difficult to grow. Countries like the US and the United Kingdom eventually responded by deregulating their economies.

Greater competition and the adoption of new technologies increased the demand for, and incomes of, highly skilled, talented, and educated workers doing non-routine jobs like consulting. More routine, once well-paying, jobs done by the unskilled or the moderately educated were automated or outsourced. So income inequality emerged, not primarily because of policies favoring the rich, but because the liberalized economy favored those equipped to take advantage of it.

CommentsThe short-sighted political response to the anxieties of those falling behind was to ease their access to credit. Faced with little regulatory restraint, banks overdosed on risky loans. Thus, while differing on the root causes of inequality (at least in the US), the progressive and alternative narratives agree about its consequences.

CommentsThe alternative narrative has more to say. Continental Europe did not deregulate as much, and preferred to seek growth in greater economic integration. But the price for protecting workers and firms was slower growth and higher unemployment. And, while inequality did not increase as much as in the US, job prospects were terrible for the young and unemployed, who were left out of the protected system.

CommentsThe advent of the euro was a seeming boon, because it reduced borrowing costs and allowed countries to create jobs through debt-financed spending. The crisis ended that spending, whether by national governments (Greece), local governments (Spain), the construction sector (Ireland and Spain), or the financial sector (Ireland). Unfortunately, past spending pushed up wages, without a commensurate increase in productivity, leaving the heavy spenders indebted and uncompetitive.

CommentsThe important exception to this pattern is Germany, which was accustomed to low borrowing costs even before it entered the eurozone. Germany had to contend with historically high unemployment, stemming from reunification with a sick East Germany. In the euro’s initial years, Germany had no option but to reduce worker protections, limit wage increases, and reduce pensions as it tried to increase employment. Germany’s labor costs fell relative to the rest of the eurozone, and its exports and GDP growth exploded.

The alternative view suggests different remedies. The US should focus on helping to tailor the education and skills of the people being left behind to the available jobs. This will not be easy or quick, but it beats having corrosively high levels of inequality of opportunity, as well as a large segment of the population dependent on transfers. Rather than paying for any necessary spending by raising tax rates on the rich sky high, which would hurt entrepreneurship, more thoughtful across-the-board tax reform is needed.

CommentsFor the uncompetitive parts of the eurozone, structural reforms can no longer be postponed. But, given the large adjustment needs, it is not politically feasible to do everything, including painful fiscal tightening, immediately. Less austerity, while not a sustainable growth strategy, may ease the pain of adjustment. That, in a nutshell, is the fundamental eurozone dilemma: the periphery needs financing as it adjusts, while Germany, pointing to the post-euro experience, says that it cannot trust countries to reform once they get the money.

CommentsThe Germans have been insisting on institutional change – more centralized eurozone control over periphery banks and government budgets in exchange for expanded access to financing for the periphery. Yet institutional change, despite the euphoria that greeted the latest EU summit, will take time, for it requires careful structuring and broader public support.

CommentsEurope may be better off with stop-gap measures. If confidence in Italy or Spain deteriorates again, the eurozone may have to resort to the traditional bridge between weak credibility and low-cost financing: a temporary International Monetary Fund-style monitored reform program.

CommentsSuch programs cannot dispense with the need for government resolve, as Greece’s travails demonstrate. And governments hate the implied loss of sovereignty and face. But determined governments, like those of Brazil and India, have negotiated programs in the past that set them on the path to sustained growth.

As a reformed Europe starts growing, parts of it may experience US-style inequality. But growth can provide the resources to address that. Far worse for Europe would be to avoid serious reform and lapse into egalitarian and genteel decline. Japan, not the US, is the example to avoid.

http://www.project-syndicate.org/commentary/is-inequality-inhibiting-growth-

The First World’s Fiscal Follies, by Jeffrey Frankel

The world’s advanced economies remain divided over whether to strengthen budget balances in the short term or to use fiscal policy to promote recovery. Those worried about the short-run contractionary effects on the economy call the first option “austerity”; those concerned about long-term sustainability and moral hazard call it “discipline.”

Illustration by Paul Lachine

CommentsEither way, the debate is akin to asking whether it is better for a driver to turn left or right; depending on where the car is, either choice might be appropriate. Likewise, when an economy is booming, the government should run a budget surplus; when it is in recession, the government should run a deficit.

CommentsTo be sure, Keynesian macroeconomic policy lost its luster mainly because politicians often failed to time countercyclical fiscal policy – “fine tuning” – properly. Sometimes fiscal stimulus would kick in after the recession was already over. But that is no reason to follow a destabilizing pro-cyclical fiscal policy, which piles spending increases and tax cuts on top of booms, and cuts spending and raises taxes in response to downturns.

CommentsPro-cyclical fiscal policy worsens the dangers of overheating, inflation, and asset bubbles during booms, and exacerbates output and employment losses during recessions, thereby magnifying the swings of the business cycle. Yet many politicians in the United States, the United Kingdom, and the eurozone seem to live by it. They argue against fiscal discipline when the economy is strong, only to become deficit hawks when the economy is weak.

CommentsConsider the positions taken over the last three decades by some American politicians. 

CommentsIn his 1980 campaign and again in 1981, a period of recessions, President Ronald Reagan urged immediate action to reduce the national debt.

CommentsIn 1988, however, as the economy approached the peak of the business cycle, candidate George H.W. Bush was unconcerned about budget deficits, even though the national debt was rapidly approaching three times the level that it had been under Reagan. “Read my lips: no new taxes,” Bush famously declared.

CommentsPredictably, Bush and the US Congress finally summoned the political will to raise taxes and rein in spending growth at precisely the wrong moment – in 1990, just as the US was entering a recession. Although the timing of the legislation was poor, the action was courageous: pay-as-you-go (PAYGO) budgeting rules and other reforms deflected government finances back onto a path that eliminated the budget deficit by the end of the decade.

CommentsBut, three years later – at the start of the most robust recovery in American history – all Republican congressmen voted against President Bill Clinton’s 1993 legislation to maintain Bush’s spending caps, PAYGO, and tax increases. Even after seven years of strong growth, at the peak of the business cycle in 2000, with unemployment at record lows, George W. Bush based his 2000 campaign on a platform of large tax cuts.

CommentsAfter recovery from the 2001 recession had gotten underway, and the inherited budget surpluses had nonetheless turned to record deficits, the Bush administration pushed through a second round of tax cuts in 2003, and maintained a rate of spending growth that was triple the rate under Clinton. As Vice President Richard Cheney put it, “Reagan proved that deficits don’t matter.”

CommentsThese policies were maintained for another five years, as another $4 trillion was added to the national debt. Predictably, when the worst recession since the Great Depression hit in 2007-2009, politicians were reluctant to launch an adequate fiscal response, owing to the huge deficits and debts that the government had already been running.

CommentsRepublicans suddenly re-discovered the evil of budget deficits. They opposed Obama’s initial fiscal stimulus in February 2009, and succeeded in blocking further efforts when its effects petered out two years later. In my view, the government spending cutbacks of the last two years are the most important reason why the economic recovery that began in June 2009 subsequently stalled in 2011.

CommentsHere, then, are three generations of politicians who favored fiscal expansion during booms (1982-1989, 1992-2000, 2002-2007) and austerity during recessions (1980, 1981, 1990, 2008-09). A similar unfortunate cycle – large fiscal deficits when the economy is already expanding, followed by fiscal contraction in response to a recession – has also been visible in the UK and the eurozone in recent years. 

CommentsTurning left every time the road goes right, and vice versa, is worse than switching policies randomly.

CommentsBut the pattern is understandable: when the economy is booming, there is no political support for painful spending cuts or tax increases. There is a hole in the roof, but the sun is shining. Then, when the thunderstorms roll in, sinners suddenly get religion and proclaim the necessity of reforming – just when it is most difficult to fix the problem.

CommentsHistorically, it used to be developing countries whose dysfunctional political systems produced pro-cyclical fiscal policies. Almost all of them showed a positive correlation between government spending and the business cycle from 1960 to 1999.

CommentsBut things have changed. About a third of emerging-market countries’ governments – including authorities in China, Chile, Malaysia, South Korea, Botswana, and Indonesia – managed to reverse the historical correlation. They took advantage of the 2003-2007 boom to strengthen their budget positions, saving up for a rainy day. They were thus in a good position to use fiscal stimulus when the global recession hit them in 2008-2009.

CommentsIn fact, a majority of the governments that have pursued countercyclical fiscal policies since 2000 are in emerging-market or developing countries. They figured out how to achieve countercyclical fiscal policy during precisely the decade when so many politicians in “advanced countries” forgot.

http://www.project-syndicate.org/commentary/the-first-world-s-fiscal-follies

One Big Union, by Howard Davies

In the last few weeks, the idea of establishing a European banking union has become the latest remedy advanced as a solution to the long-running euro crisis. But, whatever the merits of a banking union – and there are many – proposals to establish one raise more questions than can currently be answered.

Illustration by Chris Van Es

CommentsThe motivations of those who advocate a banking union differ markedly. For some, particularly in southern Europe, it is seen as a means of shifting the burden of supporting their indigent banks to those with deeper pockets. For others, especially in the European Union’s Brussels Eurocracy, it is seen as another leap forward in the construction of a European super-state. Taking their cue from the sacred Rome Treaty’s reference to “ever closer union,” the European Commission’s theologians view every crisis as an opportunity to advance their federalist agenda.

CommentsThe European Central Bank has been more thoughtful, though no less enthusiastic, arguing that a banking union should have three objectives. First, stronger eurozone-wide supervision should reinforce financial integration, “mitigate macroeconomic imbalances,” and improve the conduct of monetary policy. How a single EU supervisor would address the problem of imbalances is not explained, but it is surely a worthy aim.

CommentsThe second objective should be to “break the link between banks and sovereigns,” which has been a particularly dangerous feature of the last year, while the third is to “minimize the risks for taxpayers through adequate contributions by the financial industry.” The third aim could be achieved country by country, but it is certainly arguable that an across-the-board banking levy, or a Europe-wide financial-transaction tax, would eliminate competitive distortions.

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CommentsHow might these laudable objectives be achieved? The European Commission has argued that a fully-fledged banking union would need to rest on four pillars: a single deposit protection scheme covering all EU (or eurozone) banks; a common resolution authority and common resolution fund, at least for systemically important and cross-border banks; a single European supervisor for the same banks; and a uniform rule book for prudential supervision of all banks in Europe.

CommentsAnyone who has been involved in banking supervision can see at once that these four pillars will require careful construction. Many individual countries have taken a generation to develop their own domestic schemes. And, in this case, three big political issues have yet to be resolved.

CommentsFirst, the identity of the single European banking supervisor remains undecided, and the ECB has seen an opportunity for a power grab. Central bankers in Europe have always resented the narrow monetary-policy mandate given to the ECB under the Maastricht Treaty. Banking supervision was not included among the ECB’s objectives, though one article of the treaty gives the system of European central banks as a whole the task of contributing to effective supervision. They now argue that the simplest solution would be to expand that remit and make the ECB the de facto pan-European supervisor.

CommentsThat is not the outcome favored by the European Commission, which has only just set up the European Banking Authority. The EBA is closely linked to the Commission itself, and is seen as the natural candidate for a broader role.

CommentsThe Commission has a case, but it also has a problem. During the political horse-trading that preceded the creation of the EBA (together with two equivalent bodies for securities and insurance), it was agreed that the new authority would be based in London. That seemed logical at the time, but not if the EBA’s role is to be broadened. How could a eurozone supervisor be based outside the eurozone?

CommentsThe second unresolved question is how to achieve a banking union in legal terms. Constitutional change on this scale would normally require a new European treaty. But that would take time, and Europe’s leaders have run out of it.

CommentsFurthermore, there is no guarantee that voters in countries that require a referendum on treaty changes would support a further transfer of sovereignty. So the likely outcome is that, in the EU’s time-honored fashion, the banking union will be constructed using existing powers, finessing the sovereignty question, and avoiding any reference to public opinion. That points towards reliance on the ECB.

CommentsThe final question is what such a eurozone banking union would mean for the single financial market, and especially for EU countries that are outside the single currency. Many of them would sign up willingly, as they intend to join as soon as possible, in spite of the euro’s difficulties. But that is not the case for the United Kingdom, and London remains the continent’s biggest financial center, by far.

CommentsI fear that the French and Germans have now lost patience with the troublesome British, and are reluctant to cut a deal. And Euroskeptic British politicians see this as an opportunity to recast the UK’s relationship with the EU; indeed, for some, it means a chance to negotiate an exit.

CommentsOpinion in the City of London tends to favor a middle way, which would allow the UK to cling to the benefits of the single market, without conceding unified regulation. That will be hard to pull off.

I suspect that a banking union of some kind will be implemented, and soon. Otherwise, the eurozone banking system will collapse. But the consequences of such a step for Europe’s great free-trade experiment could be serious, and, if not managed carefully, could lead to Britain’s withdrawal. The political stakes are high, and the outcome is likely to reflect that.

http://www.project-syndicate.org/commentary/one-big-union

Green Domestic Product?, by Bjørn Lomborg

One of the recurrent themes at the United Nations’ spectacularly unsuccessful Rio+20 summit in June was the need to change how we measure wealth. Many argue that we must abandon our “obsession” with Gross Domestic Product and develop a new “green” accounting standard to replace it. In fact, doing so could be a serious mistake.

Illustration by Paul Lachine

CommentsGDP is really just an account of the market value of all goods and services. This sounds like a good indicator of wealth, but, as is frequently pointed out, it includes things that do not make us richer and leaves out things that do.

CommentsFor example, if people are not compensated for the harm done by pollution, its adverse effects will not be included in GDP. If we pay to clean up pollution, this increases GDP, but no wealth has been created. Likewise, there is economic value produced when wastewater is naturally cleaned by wetlands, but no transaction has occurred, so it is not counted in GDP.

CommentsIt is worthwhile to consider these limitations of GDP as a measure of wealth. And it could make sense to produce a better GDP, which adds uncounted benefits, subtracts the costs of externalities, and excludes activities that generate no wealth. Unfortunately, many of the proposed “green” substitutions, however well intentioned, may not address these limitations adequately and could, in fact, produce worse outcomes.

CommentsOne prominent example reported in the run-up to Rio+20 and used to support “greening” GDP centered on the Nakivubo Swamp in Uganda’s capital, Kampala, where wastewater flows from the city toward Lake Victoria. Without the swamp’s purification services, a study showed, Kampala would need a sewage plant costing at least $2 million a year.

CommentsAccording to economist Pavan Sukhdev, the former head of the United Nations’ Green Economy Initiative, the point was simple: “It’s going to cost $2 million per year to do what the swamp was doing for free, and they don’t have that money.” Thus, swayed both by the uncounted benefits from wastewater treatment – estimated at up to $1.75 million a year – and the potential outlay to build a sewage plant, Kampala decided to protect the area. “Economic logic prevailed,” says Sukhdev.

CommentsThe Nakivubo Swamp is an excellent example of the need for careful valuation of the environment. Such information is crucial for making good decisions. For example, if the wetland were to be destroyed to make way for a new district, we know that its benefits would have to be at least $1.75 million higher than the costs.

CommentsBut there is also a significant risk of political misuse of such information. Kampala’s decision-makers decided to protect the area. In other words, they rejected ever considering alternative possibilities for the area.

CommentsGreen campaigners often seek such outcomes, but they are entirely unjustified. The swamp is close to the city center and its industrial center, and there is a land shortage in Kampala. In all likelihood, the net benefits of job creation and economic growth that could result from creating a new district (in place of the swamp) would be dramatically higher than the $1.75 million. There is a reason why few large, rich cities, if any, have undeveloped wetlands in their midst.

CommentsIf green measures are used to shortcut the political process, we can actually end up worse off, because countries will be deprived of jobs, wealth, and welfare, while relatively small environmental benefits will be achieved. The Nakivubo Swamp is not a case of economic logic prevailing, but exactly the opposite – a failure to consider all options and choose the best.

CommentsImagine if our ancestors had made a similar valuation in the past, deciding to protect swampland at all cost. Much of lower Manhattan would still be a swamp, rather than being turned into the powerhouse of New York City, at a huge cost to society.

CommentsIn general, green accounting may end up being more biased than conventional GDP measures. Green GDP does include uncounted losses, so it avoids the problem of overestimating our wealth, but it fails to account for the potentially much larger benefits of innovation.

CommentsFor example, the World Bank claims that in order to be green, we need to take into account that consuming fossil fuels will deprive future generations of those resources. In reality, burning fossil fuels over the past 150 years has enabled us to be free to create and innovate an amazingly richer world of antibiotics, telecommunications, and computers. These will further enrich the future, but are not counted.

CommentsMoreover, as we have burned fossil fuels, we have simultaneously found new resources and discovered new methods, such as horizontal fracturing, which has dramatically increased the availability of natural gas while driving down its cost. All of this leaves future societies amazingly richer – but would be missed in green GDP measures.

CommentsIn practice, green accounting might easily have led our forefathers not to cut down forests, because this would entail losing a valuable resource. But converting forests to agriculture led to cities and civilization. Innovation and substitution followed, which ultimately produced many more calories and much more wealth.

Most policymakers still focus on GDP, because, while not perfect, it is strongly correlated with highly prized real-world outcomes. A country with higher GDP generally has lower child mortality rates, higher life expectancy, better education, more democracy, less corruption, greater life satisfaction, and often a cleaner environment.

So, while green accounting certainly can play a role, we must not allow it to become a roadblock to development.

http://www.project-syndicate.org/commentary/green-domestic-product-

Una radicale, utopica e inutile spending review nella Francia del ’700, di Antonio Gurrado

La madre di tutte le spending review risale al 1768, quando il giovane parigino Louis-Sébastien Mercier inizia a scrivere un volume in cui racconta di essere stato colpito dalle critiche mosse da un inglese ai “numerosi e strani abusi” del regno di Luigi XV. Mercier, stupito che la Francia stia ancora in piedi, congeda l’inglese e sogna un futuro migliore. Trattandosi forse del primo esperimento di utopia temporale e non spaziale, non può costruire dal nulla leggi che regolino idealmente gli abitanti di un recesso immaginario – come invece Platone, Moro o Campanella – ma si vede costretto a vagliare quelle che già governano la Francia, rivendendole o rimaneggiandole per metterla al passo con le nazioni europee più civili. Lo ossessionano gli sprechi e, di conseguenza, i tagli; i quarantaquattro capitoli del suo libro sono altrettante proposte radicali di eliminazione di spese inutili mostrate, grazie all’escamotage della visione del futuro, già operative nei loro effetti.

Sorprendono le analogie col giorno d’oggi. Sotto la scure di Mercier cadono i tribunali, “teatro della licenza e della follia” mentre i loro impiegati “muoiono di noia” e di nullafacenza. Per Mercier i processi sono inutili perché “chiariti e giudicati sin dal loro nascere”: se un uomo è colpevole vorrà essere condannato, se è innocente sarà necessariamente assolto, se è reo di omicidio l’esecuzione capitale avverrà seduta stante. Seguono gli ospedali: basta chiuderli perché tutti i malati guariscano, non più avvelenati dalle pozioni di medici incompetenti. Molte malattie dipendono dal lusso, che genera mollezza e infiacchimento: basta impoverire la popolazione perché tutti si sentano meglio. Invece di accorpare le province Mercier elimina i corpi intermedi, i parlamentini che fanno da tramite fra decreti regi e legislazione locale; il Re torna a vivere in mezzo ai cittadini comuni mentre Versailles cade in rovina; a nobili e prelati viene tolta la carrozza, antesignana dell’auto blu. Pezzi storici di demanio statale come il Cabinet du Roi o le Tuileries vengono riattati a scopi più redditizi. Crudeli tagli si abbattono sull’istruzione: niente più latino e greco nei licei e rubinetti chiusi per l’università, “una vecchia zitella che parla una lingua morta spacciandola per nuova, fresca e affascinante”. La Sorbona riceve fondi per la ricerca a patto che le facoltà umanistiche vengano utilizzate come teatro anatomico per sezionare i cadaveri.

In un eccesso di zelo Mercier ribattezza i ponti di Parigi, riordina i sensi unici, abroga il Papato, trasforma i servizi segreti in vigili urbani, costringe gli autori di brutti libri a girare mascherati finché non ne scrivono uno bello, cambia gli impianti di illuminazione stradale e già che c’è taglia anche l’editoria: spariscono Saffo, Aristofane, Lucrezio, Catullo; Ovidio e Orazio vengono epurati, Seneca ridotto a un quarto, Montaigne a un agile libretto mentre non c’è più traccia di Pascal. Solo Rousseau resiste in edizione integrale.

In compenso viene imposta un’aliquota unica al 2 per cento, talmente bassa che i contribuenti fanno la fila per versare spontaneamente le tasse all’erario; non contenti, sovente lasciano ben più del dovuto così che i conti dello stato siano sempre in attivo. Tutto va bene dunque, salvo un dettaglio: perché la spending review vada a regime bisogna armarsi di pazienza, e infatti la visione di Mercier s’intitola “L’anno 2440”. Quando il suo ideatore può vederne gli effetti è costretto a mordersi il labbro: “Ho settecento anni ormai, e tutte le persone che conoscevo sono morte”.

http://www.ilfoglio.it/soloqui/14202