Haliassos, M. (2014) “The Fiscal Crisis as a Crisis in Trust“, Goethe University Frankfurt, Center for Financial Studies and SAFE, Frankfurt: 12 Μαΐου.
The sources of the fiscal crisis have been different, but the prescribed measures amount to two: achieve budget surpluses to start reducing the size of the debt, and undertake the necessary reforms to create or boost the productive base, so as to make repayment of the debt possible and compatible with acceptable living standards. If we manage to hit only the first bird, the other may well fly away.
“Owning” an adjustment program is a hopeless prospect when practically all its measures are widely perceived as negative. On the fiscal front, we have had cuts in government expenditures (including investment, education, and social programs), massive layoffs, cuts in salaries, wages, and pensions, increases in tax rates (such as VAT), and creation of new taxes (such as those on real estate). On the reform side, we found ourselves trying to liberalize professions that are not in short supply, and trying to explain to people why making it easier to lay workers off in the midst of higher unemployment rates than in the Great Depression is actually good for employment.
Dismal macroeconomic performance, even in the face of a primary budget surplus, creates a vicious cycle of mistrust. Northern public opinion, if not always the politicians, does not trust in the South because it views the continuing poor growth performance as failure of the South to reform itself and to produce. Southern public opinion does not trust the North, because it views the recession as the creation of Northern insistence on budget and salary cuts and on reforms that threaten job security. We need to break out of this vicious cycle of mistrust, macroeconomic underperformance, and social unrest, and refocus our efforts on creating a strong productive base, debt repayment potential, and conditions for investment-led, export-oriented, sustainable growth.
Σχετικές αναρτήσεις:
- Bowles, J. (2014) “Southern Europe is suspicious: the evolution of trust in the EU“, Bruegel Think Tank, 14 Μαΐου.
- Harteveld, E. (2013) “Fostering a European identity is unlikely to be a successful method for increasing citizens’ trust in the EU“, LSE European Politics and Policy Blog, 27 Νοεμβρίου.
- Exadaktylos, Th., Zahariadis, N. (2012) “Policy Implementation and Political Trust: Greece in the Age of Austerity“, Hellenic Observatory Papers on Greece and Southeast Europe, GreeSE Paper No. 65.