crum, saving the euro at the cost of democracy? Flashcards Preview

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Flashcards in crum, saving the euro at the cost of democracy? Deck (18):
1

positives of eurozone

reduction of intra-eu transaction costs, stabilization of intl financial relations

2

the political trilemma of the world economy

dani rodrik, we cannot simultaneously pursue democracy, national determination and economic globalization- pursuing two precludes the 3rd.

3

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

4

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

5

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

6

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

7

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

8

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

9

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

10

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

11

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)

12

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

13

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

14

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

15

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

16

2 implications of a dem. federalism

1) would pave way for a fiscal union. EU budget would increase thru taxes, eurobonds would mutualize debts,
2) bc some countries wouldn't want to join, would likely create a core Europe w fed government, along with a secondary circle w members who only participate in some policies

17

problem with dem. federalism

if there arent changes in ppls attitudes (generalized party system, political participation), itll be nothing more than in institutional facade where entrenched elites make the decisions

18

leaving the eurozone?

-would be hard for indiv. countries to do in practical terms, and also dangerous espesh for debtor states (studies indicate 60% currency devaluation and halved GDPs), and create intl financial uncertainty
-other countries would be impacted by the financial market uncertainty
-best way to do it would be for other countries to provide an exit package to soften their landing, and keep them in the european market