Does an economic government for Europe make sense?

Rainer Brüderle, Federal Minister for Economics and Technology, sees no reason for a further centralisation of economic policy in Europe. The best possible rendering of structural reforms for a particular situation of a member state is best carried out in national responsibility and according to national factors. The attempt to find tailor-made solutions for every member state from a central location would - because of enormous information costs and ultimately insurmountable information problems - be expensive and inefficient. In particular, the efficiency advantages of a decentralised approach and best-solution competition should not be abandoned. Georg Fahrenschon, Bavarian State Minister of Finance, warns against a European economic government with its levelling-out control functions. Its proponents have not yet provided the evidence that this approach would strengthen and not weaken Europe's competitiveness. Instead, we should enhance self-reliant coordination in which the currently somewhat stronger states help the less strong to mobilise new strengths. Also Carsten Hefeker, Siegen University, argues against a common economic government. Two things are more important than an even stronger unification. One must ask where externalities exist and where mechanisms are necessary to control these externalities. And agreement must be reached on the consistent enforcement of the rules that have been established. Rainer Schweickert, Siegen University, argues that one should not combat government failure with more competencies for governments. A European economic government cannot help to overcome the current crisis better or to avoid future crises. What is needed is to improve the rules of the game and thus prevent both market and government failure. Instead of insisting on coordination and harmonisation, emphasis should be placed on evaluations by the market. For Konrad Lammers, Hamburg, a European economic government is not a useful alternative. From his viewpoint, stimulus and sanction mechanisms are lacking in the monetary union that force the economic-policy participants to engage in responsible behaviour both at the national as well as the European level. The monetary union does not need a European economic government, but it needs an effective governance to induce this behaviour.