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Trichet calls for EU-level official with authority to impose shock doctrine on member state governments?

No, thanks.

The only finance minister that would solve the problem is necessarily one which would administer a large federal budget and fund EU-level industrial policy where mamber states are barred from doing so by "illegal state aid" rules.

The EU's budget is currently about 1% of GDP and a large fraction of that is used for structural funds. It should be increased to maybe 5% of GDP with most of the increase going into structural funds and used to fund productive investment in countries experiencing below-EU-median economic growth and where the central government is already at the 3% deficit threshold.

Of course, tax harmonization is the only way to prevent free-riding of such a system. You cannot be running an excessive deficit because of low taxes and then go asking for EU stimulus.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Thu Jun 2nd, 2011 at 11:00:37 AM EST
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