I don’t read Hopi Sen but apparently he reads me, as evidenced by this blog post regarding the idea of a “fiscal policy council” analogous to the monetary policy committee, but with a substantially wider remit and membership. I can remember when this was floated in the late 90s in a wave of cheer about the success of the MPC, but it strikes me as weird to fall in love with it just when independent central banks are very much in question.
Not only aren’t they as independent any more, with the exception of the ECB, but there is plenty of intelligent criticism of how well they worked in the first place. After all, we had a hella-big bubble and then a three-fisted crash and then a picayune pint-sized recovery and they were meant to avoid all three. About the only thing they did achieve was to stop real wages going up, and this is now a situation that has not necessarily developed to our advantage, as Emperor Hirohito so wisely said.
Anyway, Hopi’s version includes people from the IMF and OECD. Right now this would be fun, because the IMF wants stimulus and the OECD wants more austerity. Hey, democracy is discord, right? But this isn’t my point.
Angela Merkel has, according to Reuters, rowed-back on giving the EU more power to intervene in national fiscal policy. This is possibly because France recently started talking about its longstanding idea of an “economic government” for the eurozone, and if such a thing emerged from giving the EU (ECB? Council? Commission? Parliament?) more power it might not agree with her.
Another reason to row back, though, is that the EU has quite enough power to do so now all the member states but the UK have ratified a sort-of balanced budget amendment, and both the German government and the ECB have constituted themselves as a sort of international air force to back up Olli Rehn’s judgments. From the same Reuters piece:
Hollande had infuriated officials in Germany and Brussels by initially suggesting that the Commission had no right to “dictate” to Paris. The Germans believe that a strengthening of the EU’s Stability and Growth Pact has granted the Commission that right.
“The chancellor made very clear in Paris that Hollande had an obligation to follow the Commission’s recommendations,” a German official told Reuters on Sunday.
See those contrails? Right. Here’s my point. If you don’t think the UK’s economic policy process should be placed under permanent supervision by Olli Rehn, with the ECB close air support wheeling overhead, why would you think it should have a similar setup just with the OECD’s terrifyingly mad advice informed by the IMF’s notoriously worthless forecasts?
And in what way isn’t the left-eurosceptic critique that the EU is an outsourced agency for policies towards workers that you couldn’t get through a British general election actually borne out, if you’re trying to implement a structure equivalent to troika surveillance within the UK?
Larry Elliott’s alternate history of what would have happened if Alex Harrowell got his way in 2003 in today’s Grauniad is very much on point here, with the exception that I can well see alt-George Osborne explaining again and again why we must stay the course with the Euro to fight for competitiveness and stability and you get the fucking picture. Perhaps the Tory hard right would have all gone ‘kipper, and the “official” Tories would have borged the Lib Dems. Like a lot of other Eurozone political classes, ours would have taken full ownership of the project, and there’s probably a reason for that.