Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

The only good growth comes after real "reform"

by Jerome a Paris Mon Oct 2nd, 2006 at 06:48:06 AM EST

Wolfgang Munchau in the FT

There is a tale, told by people who should know better, according to which Germany’s economic recovery is the fruit of reforms undertaken in previous years.

(...)

The story is as intuitively appealing as it is wrong.

Growth that comes in the absence of "reforms" is cyclical, temporary, and, frankly, undeserved.


During the 1999-2000 boom, the Schröder government did not undertake nearly enough economic reforms to improve the country’s economy’s resilience. When the downturn finally came, it was unnecessarily hard. When people look at 2007 and beyond, they remember 2002 and 2003.

(...)

In the meantime, expect more bragging by European politicians about the salutary effects of economic reforms. This is not a tale told by an idiot. It is a convenient tale by those who tell it. The truth is not that good economic reforms are finally paying off. The truth is that many good economic reforms have still to be undertaken in the first place.

But the sad part about politicians bragging about reforms is that they are also buying the message that "reform" is good and a worthy goal (like dictators like to pretend they are really democrats and organise sham elections, thus acknowledging that democracy is the better system and pretending to be one).

There is an opening for a mainstream politician to suddenly say loudly that "reform" is a sham and that other policies need to be promoted. Who will take it?

Display:
which is present in the bit I quote, is that


The only good use of "growth" is to do real "reform".

i.e. - There is no good time to share the profits.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Oct 2nd, 2006 at 08:30:42 AM EST
There is a good time to share the profits - right before the pitchforks are raised towards you.

Not to be overly facile, but that was the magic of the Popular Front, or the New Deal in America, wasn't it?

The trick is to give quarter in time before the unruly crowd starts demanding three quarters.

Unfortunately, it is often hard to convince people who are certain of the rectitude, indeed god-endowed right to wealth that perhaps it might be a good time to start easing up on the accumulation bit.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Mon Oct 2nd, 2006 at 10:52:12 AM EST
[ Parent ]
"There is an opening for a mainstream politician to suddenly say loudly that "reform" is a sham and that other policies need to be promoted. Who will take it?"

It can't be a mainstream politician, can it? Mainstream implies acceptable to conventional wisdom which is generally formed by folks who read the Economist and FT, right? Ok, the Medef people aren't necessarily going to endorse your policies but they will at least have some of their membership endorsing some of your policies, or at the very least, abstaining from comment due to their relatively inoffensive character viz. those folks who actually own things.

I do know of a few politicians who will say "reform" is a sham and that we need to go another way, though, and they don't much read the anglo-saxon conventional wisdom and they are offensive to the Medef crowd.
Quite a few of these have done moderately well, at least in France.

Unfortunately (or fortunately if you are Royal) they are imploding these days, as the "left" of the "left" often do.


The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Mon Oct 2nd, 2006 at 10:48:14 AM EST
This is a topic that makes me uneasy when it comes to Portugal. The word is Reform for sure.

But the problem here is that needed reforms of institutions and processes, namely slow justice, unnecessary bureaucracy and most important a reform of a certain way of thinking the "public cause", namely what is public being regarded as belonging to nobody instead of belonging to all of us.

This becomes easily entangled with the reforms of social security or labour laws, for example.

One can not voice his opposition against "reform" without risking throwing away the proverbial baby with the bath water... The much needed reforms.

by Torres on Mon Oct 2nd, 2006 at 01:19:55 PM EST


Display:
Go to: [ European Tribune Homepage : Top of page : Top of comments ]

Top Diaries