Sunday, January 27, 2013

The Rebirth and Regrowth of the European Union

With regards to the financial state of the European Union, it's clear that we're in a better situation than several years ago. Nonetheless, it's also clear that there is strong discussion with regards to re-molding the union to serve greater good over the long term. Things that should be factored include:
- one model I've been considering revolves around three layers of cohesion within the union. One is core Europe and uses the Euro as it's currency, another is less cohesive and uses another currency which will allow for greater flexibility with regards to currency movements during times of ecnonomic stress. The final group is very loose and is based on primarily around trade purposes. All would technically be part of a geo/socio/political union but ultimately they would be of course associated with Europe. Countries free to move between levels as desired or deemed to fit. Naturally, moving between different groups wouldn't be easy to remove possible chance of nations shifting between them for tactical/cynical reasons. Bonus, is that countries can gain benefits of union without potential for 'contamination' of issues that face those countries that aren't quite as mature in some areas
- this structure will allow for flexibity and to facilitate needs of states that do not want to be part or sense a desire to be part of a European state
- smaller groups of geographical unions will also reduce the possible number of issues in question. Easier to govern/more representative of those in question. After all, if their core values/aspirations/interests are more similar in the first place agreement should be easier over the long term (level of cohesion to be determined by those in question obviously). Moreover, why bother with central organisations if people refuse to play by the rules that they are supposed to develop, implement, and enforce?
- needs to be a reason for a union if you are to go deeper and it seems clear that there are those who still remain unclear in regards to this. The way I see it, you can't force a square block into a round hole. Moreover, centralised decision making/bodies should only take precendence if it can be proven that it is for the greater good or those who are currently making decisions lack the ability to do so by themselves. Even so, I think this is a longer term issue
- also, clear that interests of those at stake are very much different. A restructure/rethink of the governance mechanisms behind EU should be an option to be considered (majority instead of complete agreement) during times of crisis?
- people often underestimate the challenge of running a country/state. So many conflicting interests. Put yourselves in the place of European, United States, or Japanese leaders during the recent crises. Incredible number of variables involved, measurements and projections are not always accurate, people's lives are on the line. What would you do?
- think about bottom-up stimulus as another option rather than purely top-down stimulus. Local experience has proven that downward movement in interest rates from a central bank doesn't always get passed on in it's entirity to the average citizen. Consumers are more likely to spend on necessities, business will obviously try to make a profit...
- I covered a lot of issues in my 'Covergence' report. The World Economic Forum have since come up with several further studies that expand on that work and quantify many of the issues in discussion. Interesting reading
- need to think about economics more carefully. It's almost like a game, a relatively closed system that is governed by rules and has a relatively finite number of players. If everyone cheats by changing the rules of the game then the original game is no longer the same/valid. However, if everyone makes the same changes, the relative dynamic between players remains the same. Your level of competitiveness does not change relative to others. If however, by building on distinctive changes that separate your ecnonomy from others then significant gains (and potential losses) are possible. Almost like a game of risk/reward,0,3641151.story
- time has proven that many bailouts (American TARP program was successful and several European states are well on their way to dealing with their debt issues) have been successfully repaid. If this is the case, don't see any reason why the largest banks shouldn't have a place in bailing out smaller banks? Larger banks to be bailed out by smaller banks and central bank only when situation is critical (Basel agreement/reforms should go some way towards dealing with this problem in future provided we continue to push forward). Must be more willing to let banks go bust. Reward performance, not incompetance. Central bank guarantee of funds with deposits being shifted to other well performing, stable, well structured banks?
- a lot to learn/gain from some meetings. May need better structure though. Perhaps time limits for each speaker as in some parliaments?
- can't pursue growth above all else. Perhaps termporarily but over the long term environmental, resource, social issues on the line as well
- do the people in question really share a common identify? One thing I've noticed that older people are less aware (and are less willing to take advantage) of many benefits the European Union. If Europe is going to go down the route to deeper integration the benefits must be sold to the public. Believe that time may be a few decades down the road