crum, saving the euro at the cost of democracy? Flashcards
positives of eurozone
reduction of intra-eu transaction costs, stabilization of intl financial relations
the political trilemma of the world economy
dani rodrik, we cannot simultaneously pursue democracy, national determination and economic globalization- pursuing two precludes the 3rd.
democratic federalism
brings political decision making structures in line w monetary integration by effectively creating “democratic federation”, where the eurozone is ruled by a euro govt, but national determination would be eliminated
value of national determination
mainly, diversity: The nation is the way that the dividedness of the world polity has historically come to be embodied
also, provides established infrastructure for addressing issues
4 reasons for value of diversity in politics
1) increases ability to respond to local conditions
2) policies more shaped by local preferences
3) policymakers feel more responsible for the ppl their policies are meant to affect
4) bc diff approaches are existing together, increases mutual learning and experimentation
diversities in countries economies
- diff sources of economy- industry and construction sig. more important in germany compared to france, while retail and personal services v important in greece. Leads to diff growth levels and business cycles
- normally (outside of euro monetary integration) this would mean v different policies
diversities in countrys politics used to reg. economy
- distinction between liberal (UK) and co-ordinated (most continental Eur. countries) market econs
- further distinctions between coordinated econs- archetypal Rhineland of germany, social democrat of Scandinavia, latin capitalism for mediterranean countries, dependent market econs in eastern europe
preconditions for dem. govts to secure exercise of collective political autonomy
1) stable constitutional order that ensures decisions are widely viewed as legit
2) shared space for political debate/will formation thats equally accesible for all
3) pol. process must faciliate development of diff, competing views on decisions to be made
- conditions have been filled for most european nation states, but NOT on the European level. No overriding const, 27 diff political debates (no shared space), and european pol. process geared more towards consensus rather than presentation of competing idea
- so, more of a negotiation sitch, making it inferior to nation state democracies
inital setup of EMU
much of ability to manipulate interest handed over to European Central Bank
Member states could adjust policies as long as theyre within parameters set by Stability and Growth Pact
no-bail-out clause, intended to ensure countries wouldnt depend on others to bail them out
why it would be very bad for everyone for a country to go bankrupt
- unclear whether they would have to exit eurozone or not
- would decrease confidence in other states, risk domino effect of other countries defaulting
- undermine trade position of creditor states (bc of dissolution of export markerts and the resulting increase in euro exchange rate)
- but they can’t unconditionally vouch for each other; this goes against no bailout clause
how the EU is dealing with potential of countries econmic failing
-common fund for members in crisis, w conditions that aim to restore sustainability of the natl budgets + confidence in financial markets (incl. budget cuts + more tax)
result of policies around EU countries failing
-shifting balance of trust- creditor countries feel debtor countries shirking terms of EMU, debtor countries must pay massive price in terms of political autonomy
Fiscal Compact (2012)
25/27 signed
binds them to run a balanced budget, forces corrective financial measures if goal not met
-if excessive debt, countries must have individualized “budgetary and economic partnership programme” to reform
3 implications of policy frameworks + surveillence measures remaining under control of natl govts
1) the processes operate beyond effective parliamentary
scrutiny
- requires budget committees to regularly have exchanges, but provides no sig. power to have them change govt agreements
2) basically means that creditor states call the shots, debtors must comply or leave (bc it evolves according to logic of intl power)
-leads to asymmetries in qualities of democracy
3) increased use of “technocratic” procedures; EU committees like ECB and European Commission given power to supervise
THIS ALL MEANS: tendency towards an executive federalism; meaning increasingly detailed policies that reduce political autonomy and give creditor states all the power
what a democratic federalism would look like
to make integration work (equality between nationstates) , policy making and surveillence responsibilities wouldbe given to an EU economic govt, with a democratically elected EU president