Fiscal Crisis in Europe or a Crisis of Distribution?
AbstractWe are in a new episode of the global crisis: the struggle to distribute the costs of the crisis. The financial speculators and corporations are relabeling the crisis as a “sovereign debt crisis” and pressurizing the governments in diverse countries ranging from Greece to Britain to cut spending to avoid taxes on their profits and wealth. In Europe the crisis laid bare the historical divergences. At the root of the problem is the neoliberal model which turned the periphery of Europe into markets for the core. The restrained policy framework, which is based on strict inflation targeting, and which lacks fiscal transfers targeting productive investments in the periphery is the main cause of the divergences. The EU’s current policies are still assuming that the problem is a lack of fiscal discipline and do not question the structural reasons behind the deficits and the “beggar my neighbor” policies of Germany. The deflationary consequences of wage cuts may turn the problem of debt to insolvency for private as well as the public sector.The crisis calls for a major change in policy framework within Europe that places regional and social cohesion at the core of policy making. This is a crisis of distribution and a reversal of inequality at the expense of labor is the only real solution.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number wp226.
Date of creation: 2010
Date of revision:
Other versions of this item:
- Ozlem Onaran, 2010. "Fiscal Crisis in Europe or a Crisis of Distribution?," Discussion Papers 18, Research on Money and Finance.
- NEP-ALL-2010-06-18 (All new papers)
- NEP-CBA-2010-06-18 (Central Banking)
- NEP-EEC-2010-06-18 (European Economics)
- NEP-MAC-2010-06-18 (Macroeconomics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- S. Devrim Yilmaz & Burak Saltoglu, 2013.
"Why is it so Difficult and Complex to Solve the Euro Problem?,"
Centre for Growth and Business Cycle Research Discussion Paper Series
180, Economics, The Univeristy of Manchester.
- Burak Saltoðlu & Devrim Yýlmaz, 2013. "Why is it so Difficult and Complex to Solve the Euro Problem?," Working Papers 2013/02, Bogazici University, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Judy Fogg).
If references are entirely missing, you can add them using this form.