Antonio Fatas is Professor of Economics at INSEAD, a business school with campuses in Singapore and Fontainebleau
A quarter of the population is at risk of poverty or social exclusion, says Eurostat. What is wrong with the EU?
The statistic you mentioned is a consequence of the financial crisis. Europe suffered from a deep recession caused by the large imbalances built before 2008 that was then followed by an inappropriate policy response that translated a recession into a depression.
Why this has happened is the result of a weak institutional setting to make appropriate and coordinated policy decisions within the EU but also because of the ideological bias that European governments (especially those making decisions) displayed during the crisis.
It has been five years since the outbreak of the finance crisis. There is still no return in sight to normality. Can the European project be saved?
As much as the outcome of the crisis has been a disaster, I remain optimistic about the European project, partly because there is no alternative. For many historical and political reasons there is enough support for the European project.
Even in the periphery, despite the suffering and the overall loss of credibility of politicians and governments, I do not see strong forces towards moving away from Europe. Radical parties become popular but so far they tend to lose their momentum when they get to power or close enough to power.
Why does ideology dominate the macroeconomic analysis? Don’t we have the knowledge and the tools to get out of the depression?
I am not sure I have a good answer here. To be honest I have been surprised during this crisis about how much ideology and priors about what works and does not has dominated the political and economic debate.
I am not naive and I understand that we all come to these debates with our own biases, but what we have seen during this crisis goes beyond what I expected.
There are some basic economic principles that I thought were accepted by most because they are either logical or have been proven right by the accumulated evidence. And the crisis has, in my mind, provided even more evidence to support certain economic arguments.
But this evidence has been ignored. As someone who teaches this basic concepts often in a classroom, it is hard to understand why they are not understood or used by European policy makers.
Thank you very much.
Antonio Fatas is the Portuguese Council Chaired Professor of European Studies and Professor of Economics at INSEAD, a business school with campuses in Singapore and Fontainebleau (France).
He is a Senior Policy Scholar at the Center for Business and Public Policy at the McDonough School of Business (George Town University, USA) and a Research Fellow at the Center for Economic PolicyResearch (London, UK).