Giandomenico Majone > Quotes

“In the words of the German finance minister, Wolfgang Schaeuble, as reported by the International Herald Tribune (Castle and Erlanger 2011): ‘In recent months it has become clear: the answer to the crisis can only mean more Europe. . .Without. . . further steps toward stronger European institutions, eventually Europe will lose its effectiveness. We have to look beyond the national state.’ Other members of the Berlin government, possibly including the Chancellor herself, seem to share the view that the crisis could, paradoxically, bring the EU much closer to a political union. The crisis, they argue, cannot be resolved without a much tighter coordination of the fiscal and social policies of the members of the euro zone, even if this implies additional limits on national sovereignty. Also the leader of the opposition Social-Democratic Party, Sigmar Gabriel, is of the opinion that the crisis calls for political union.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“the consequences of this state of affairs have been drawn by the Hungarian-born American financier George Soros who, in an essay published in September 2012 (Soros 2012), argued that in order to avoid a definitive split of the euro zone into creditor and debtor countries, and thus a likely collapse of the EU itself, Germany must resolve a basic dilemma: either assume the role of the ‘benevolent hegemon’ or else leave the euro zone. If Germany were to give up the euro, leaving the euro zone in the hands of the debtor countries, all problems that now appear to be insoluble, could be resolved through currency depreciation, improved competitiveness, and a new status of the ECB as lender of last resort. The common market would survive, but the relative position of Germany and of other creditor countries that might wish to leave the euro zone would change from the winning to the losing side. Both groups of countries could avoid such problems if only Germany was willing to assume the role of a benevolent hegemon. However, this would require the more or less equal treatment of debtor and creditor countries, and a much higher rate of growth, with consequent inflation. These may well be unacceptable conditions for the German leaders, for the Bundesbank and, especially, for the German voters.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“The legitimacy crisis sparked by the crisis of monetary union is aggravated by the refusal of the larger member states to accept their share of responsibility for the present predicament. A convenient theory has been advanced in order to justify this hypocritical stance. The theory, as summarized by Fritz Scharpf (2011: 21–2), runs something like this: if successive Greek governments had not engaged in reckless borrowing the euro crisis would not have arisen; and if the Commission had not been deceived by faked records, rigorous enforcement of the Stability Pact would have prevented it. So, even though the more ‘virtuous’ members are now unable to refuse to help the ‘sinners’, such conditions should never be allowed to occur again. Such arguments, which in the ‘rescuer’ countries still dominate debate about the origins of the crisis, are used to justify the disciplinary measures discussed in the preceding pages. The emphasis is on continuous, and rapid, reduction of total public-sector debt; on the European supervision of national budgeting processes; on greater harmonization of fiscal and social policy; on earlier interventions and sanctions; and on ‘reverse majority’ rules for the adoption of more severe sanctions by ECOFIN. As most experts agree, however, the received view on the causes of the euro crisis is only partly correct for Greece and completely wrong for countries such as Ireland and Spain. At any rate, it should not be forgotten that Greece was admitted in 2001 as the twelfth member of monetary union in spite of the fact that all governments knew that Greek financial statistics were unreliable.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“Differences in national economic structures, values, cultures, institutions, and histories contribute profoundly to competitive success. . .While globalization of competition might appear to make the nation less important, instead it seems to make it more so. With fewer impediments to trade to shelter uncompetitive domestic firms and industries, the home nation takes on growing significance because it is the source of the skills and technology that underpin competitive advantage. . .The home base [for successful global competitors] is the nation in which the essential competitive advantages of the enterprise are created and sustained. It is where a firm’s strategy is set and the core product and process technology (broadly defined) are created and maintained. (Porter 1990: 19)”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“countries heavily engaged in international trade, like Sweden or the Netherlands, devote the highest proportion of their resources to the public sector – between 55 and 60 per cent of GDP.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“According to the Mundell-Fleming Theorem, countries cannot simultaneously maintain an independent monetary policy, capital mobility, and fixed exchange rates. If a government chooses fixed exchange rates and capital mobility it has to give up monetary autonomy. If it chooses monetary autonomy and capital mobility it has to go with floating exchange rates. Finally, if it wishes to combine fixed exchange rates with monetary autonomy it has to limit capital mobility. In a paper published in 2000, Rodrik argued that the open-economy trilemma can be extended to what he called the political trilemma of the world economy. The elements of Rodrik’s political trilemma, in its more recent (2011) version, are: hyper-globalization, the nation state, and democratic politics. The claim is that it is possible to have at most two of these things, as in the standard trilemma of international economics. If we want deep globalization (‘hyper-globalization’), we have to go either with the nation state, in which case the domain of democratic politics will have to be significantly restricted, or else with democratic politics. In the latter case we would have to give up the nation state in favour of global federalism. If we want democratic legitimacy we have to choose between the nation state and deep globalization. Finally, if we wish to keep the nation state, we have to choose between democratic legitimacy at home and deep globalization internationally.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“While in other policy areas the EU is to some extent accountable to its citizens – indirectly through the national representatives in the Council of Ministers and more directly, at least in theory, through the EP – democratic accountability is almost totally absent in the critically important area of monetary policy. Here we are facing no longer a deficit of accountability but rather a total absence of it.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“David Landes, the distinguished economic historian, has even seen in the political fragmentation of the Old Continent one of the roots of its later global dominance. By decentralizing authority, fragmentation made Europe safe from single-stroke conquest – the fate of many empires of the past, from Persia after Issus (333 BC) and Rome after the sack of Alaric (410 AD) to Aztec Mexico and Inca Peru. The American historian concludes his argument with a citation from Patricia Crone’s Pre-Industrial Societies: ‘Far from being stultified by imperial government, Europe was to be propelled forward by constant competition between its component parts’ (Landes 1998: 528). These and other scholars stressing the importance of inter-state competition in European history have been inspired by the arguments advanced by Eric Jones in his well-known book The European Miracle. The miracle the British historian wished to explain is the fact that one thousand years ago, more or less, nobody would have thought possible that Europe could ever be able to challenge the great empires of the East, but five hundred years later European global dominance was already becoming a reality. According to Jones the essence of this ‘European miracle’ lies in politics rather than in economics: in its long-lasting system of competing but also cooperating states. Considered as a group, the members of the European states system realized the benefits of competitive decision-making but also some of the economies of scale expected of an empire: ‘Unity in diversity gave Europe some of the best of both worlds, albeit in a somewhat ragged and untidy way’ (Jones 1987: 110).”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“Switzerland, with a population of about seven million, had emerged as an industrial country of importance far beyond its small size, and in the post-World War II period it became one of the richest industrialized countries. By some measures it actually had the highest per capita income in the world by the 1960s. Swiss companies, among them Nestlé, Sandoz, Ciba-Geigy, and Lindt are among the most global of any country, and generally employ far more people outside the country than in Switzerland. The Swiss case, writes Porter (1990: 307–8), ‘vividly illustrates how a small nation, without a large home market as in Japan or America, can nevertheless be a successful global competitor in many important industries. Switzerland is also an economy that has continuously upgraded itself to support a rising standard of living.’ Also Sweden, not significantly larger than Switzerland in terms of population, is the home base of a striking number of large, global companies. Its economy supports a very high standard of living, as well as one of the most highly developed welfare states in the world.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“Soros (2013) notes that the euro crisis has already transformed the EU from a free association of states enjoying equal rights to a more or less enduring relationship between debtors and creditors. The creditors risk losing a good deal of money if a member states leaves the union, while the debtors are forced to accept conditions which can only aggravate their economic depression, and place them in a subordinate position for an indefinite period of time. In this way the euro crisis threatens to destroy the EU itself. According to the American financier these are the consequences of the fatal flaw of the European monetary union: in creating the ECB as a fully independent central bank the member states indebted themselves in a currency which they cannot control. As a consequence, when the risk of a Greek default became concrete, the financial markets reacted by reducing the status of all heavily indebted members of the euro zone to that of developing countries with large debts in foreign currencies. In this way, these members of the euro zone were treated as if they alone were responsible for their present condition. The correct response to this situation, Soros concludes, would be the creation of Eurobonds and a banking union, together with the necessary structural reforms. However, Germany refuses to choose between the two alternatives: either accept the Eurobonds or leave the euro zone. On the other hand, a solution of the crisis would also require a level of centralization of the economic and fiscal policies of the member states that is, most likely, politically unfeasible. Thus the end of monetary union appears to be only a question of time, while the position of the major German parties – pro monetary union but against Eurobonds – is clearly contradictory.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“According to the survey conducted by the Pew Research Center in 2012 (see the Introduction) Germany is today the only member of the EU in which most people, 59 per cent, think their country has been helped by European integration. Majorities or near majorities in most countries surveyed now believe that the economic integration of Europe has actually weakened their economies. This is the opinion in Greece (70 per cent), France (63 per cent), Britain (61 per cent), Italy (61 per cent), the Czech Republic (59 per cent), and Spain (50 per cent). The survey data also show that the crisis of the euro has triggered a full-blown crisis of public confidence: in the economy, in the future, in the benefits of European economic integration, in membership in the EU, in the euro and in the free-market system. Again, Europeans largely oppose further fiscal austerity to deal with the crisis; they are divided on bailing out indebted nations; and oppose Brussels’ oversight of national budgets. In short, the European project is a major casualty of the ongoing sovereign-debt crisis: we are witnessing the failure of the attempt to integrate Europe through a ‘positive’ law that has neither produced the promised benefits for the people, nor has it been enacted by the people itself.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“ECB – unlike, say, the US Federal Reserve which is placed within a political structure where Congress, the President, and the Treasury supply all the necessary political counterweights – is free (indeed, is supposed) to operate in a political vacuum: the parliaments and governments of the members of the euro zone have lost control over monetary policy, while the EP has no authority in this area. Moreover, the ECB enjoys not only ‘instrument independence’ but also ‘goal independence’. When a central bank enjoys only instrument independence, it is up to the government to fix the target – say, the politically acceptable level of inflation – leaving then the central bank free to decide how best to achieve the target. In the case of goal independence, the discretionary power of the central banker is much larger. The idea that central bankers, or other economic experts, may know what rate of inflation is in the long-run interest of a country (and, a fortiori, of a group of countries at very different levels of socioeconomic developments such as the EU) is indeed extraordinary. Politicians and elected policymakers, rather than experts, can be expected to be sensitive to the public’s preferred balance of inflation and unemployment. If the public wants to trade some unemployment for a somewhat higher rate of inflation, it can make this preference known by electing candidates who stand for such a policy; but no such possibility is given to the citizens of the euro zone or to their political representatives.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“for most political leaders the warnings of the experts counted for little when compared with the immediate advantages of monetary union. As soon as a country adopted the euro, its public debt received the highest rating by the international agencies, and consequently its government could borrow at about the same interest rate as the most virtuous members of the bloc. This meant that countries like Greece, Portugal, Spain, or Italy could borrow at rates well below the double-digit rates they had to pay before adopting the euro. In particular, the possibility of borrowing at low cost in the international financial markets is what made possible the Spanish real-estate boom. As a result of the euro-induced boom, wages and inflation grew much faster in Spain than in Germany or France. At the same time, the ECB, being mainly concerned with the level of inflation in the largest economies of the euro zone – Germany, France, and Italy – allowed the interest rate to remain low – too low for the conditions prevailing in Spain.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“One of the standard arguments used in the 1990s to justify the introduction of a common European currency was that exchange-rate instability would disrupt trade in the common market. A monetary union between Canada and the US, however, has never been seriously considered even though the trading relationship between these two countries is the largest bilateral trading relationship in the world, see the preceding section. The fact that Canadian and US traders continue to operate, apparently with success, using their own currencies shows that the argument about currency swings dampening inter-state trade is far from convincing. Trade is also booming between Canada, Mexico and the US, the three members of NAFTA, in spite of the coexistence of three national currencies (Vega Cànovas 2010).”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“As we know, integrationists saw EMU as a decisive step toward European unification, while different national leaders had different, but in each case political, reasons for supporting it. In contrast, most ‘neo-liberal’, or simply old-fashioned liberal, economists – from Milton Friedman to Martin Feldstein, from Kenneth Rogoff to Paul Krugman and the majority of German economists – opposed the idea of a centralized monetary policy for structurally diverse economies. After the introduction of the common currency, and even before the debt crisis of the euro zone, most competent economists continued to remain sceptical about the long-term success of the project – for good reasons.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“Jean Monnet expressed this philosophy with admirable clarity: ‘since the people aren’t ready to agree to integration, you have to get on without telling them too much about what is happening’ (Ross 1995: 194).”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“What is even more shocking, among the largest receivers of CAP subsidies are some of the most prestigious aristocratic families of Britain, as well as the present owners of the large collective farms privatized after the fall of East Germany’s communist regime. According to a study by professor Richard Baldwin of the Graduate Institute of International Studies in Geneva (reported by the International Herald Tribune (Castle 2007) in the 2003–2004 farming year, the Queen of England and Prince Charles received 360,000 euros in EU farm subsidies, the Duke of Westminster 260,000 euros, and the Duke of Marlborough 300,000 euros. Incidentally, the capture by powerful national interests of what was supposed to be the core of a ‘welfare state for farmers’ exemplifies the kind of problems that a European welfare state – advocated by some to correct the alleged neo-liberal bias of the EU – would have to face.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“At any rate, since the rise of mass democracy no political leader has seriously proposed to use the ‘ignorance’ of the voters – any more than their level of education or the lack of taxable property – as excuses to restrict the right to vote at national or local elections. From the viewpoint of democratic theory, therefore, the arguments of integrationist leaders and their academic supporters against ratification by referendum, are flawed. In refusing to meet the requirements of modern mass democracy, pro-integration leaders are conditioned by a political culture in many respects similar to that prevailing before the great reforms of the franchise in the nineteenth century, when policy was considered a virtual monopoly of cabinets, diplomats, and top bureaucrats. In this as in other respects the political culture of old-regime Europe still influences the supposedly post-modern system of governance of the EU (Majone 2005: 46–51).”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“[T]he existing sovereign national states are mostly of such dimensions and composition to render possible agreement on an amount of state interference which they would not suffer if they were either much smaller or much larger. . .Planning, or central direction of economic activity, presupposes the existence of common ideals and common values; and the degree to which planning can be carried is limited by the extent to which agreement on such a common scale can be obtained or enforced. It is clear that such agreement will be limited in inverse proportion to the homogeneity and the similarity in outlook and tradition possessed by the inhabitants of an area. Although, in the national state, the submission to the will of a majority will be facilitated by the myth of nationality, it must be clear that people will be reluctant to submit to any interference in their daily affairs when the majority which directs the government is composed of people of different nationalities and different traditions. It is, after all, only common sense that the central government in a federation composed of many different people will have to be restricted in scope if it is to avoid meeting an increasing resistance on the part of the various groups which it includes. . .There seems to be little possible doubt that the scope for the regulation of economic life will be much narrower for the central government of a federation than for national states. (Hayek 1948: 264–5, footnote omitted)”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“As globalization of competition has intensified, some have begun to argue a diminished role for nations. Instead, internationalization and the removal of protection and other distortions to competition arguably make nations, if anything, more important. National differences in character and culture, far from being threatened by global competition, prove integral to success in it. (Porter 1990: 30)”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“Instead of viewing competition as a discovery procedure (Hayek 1984), the tendency has always been to assume that integration can be only one way if one wants to prevent a ‘Europe of Bits and Pieces’ (Curtin 1993). The reluctance of politicians and bureaucrats to rely on competition – especially inter-country or inter-institutional competition – is understandable, since ‘competition is valuable only because, and so far as, its results are unpredictable and on the whole different from those which anyone has, or could have, deliberately aimed at. . .the generally beneficial effects of competition must include disappointing or defeating some particular expectations or intentions’ (Hayek 1984: 255).”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“globalization makes nations more, not less, important”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“According to the data of the EU statistical office (Eurostat) pro capita GDP (measured in purchasing power parity, with EU 27=100) in 1999 was 113 for the euro zone, 121 in Germany, 162 in the US; in 2008 it was 109, 116 and 147, respectively; in 2009: 109, 116, 145; in 2010 the pro capita GDP was 148 in the US, 108 in the euro zone and 118 in Germany (Sarrazin 2012: 109, table 3.3). Thus pro capita GDP in the euro zone outside Germany has actually declined since the beginning of monetary union.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“the advocates of ‘more Europe’ ignore Tocqueville’s warning that the real weakness of confederal governments increases in direct proportion to the growth of their nominal powers,”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?

“Germany exported its problem of a lack of competitiveness to other member states. Since 1999 this country has followed a tight policy of wage moderation while the rest of the euro zone maintained more or less constant wage increases of around 3 per cent per year. Thus, each year Germany tended to improve its competitive position vis-à-vis the rest of the euro zone – a trend partly explained by the fact that the power of German labour unions has declined significantly, more so than in other euro zone countries. Other countries with particularly close economic ties to Germany are forced to intensify their policies of wage moderation, inducing the leading country again to restrict wage increases. A vicious circle may result when everybody attempts to improve its competitiveness at the expense of the others. As in the case of the so-called race to the bottom in environmental policy, the final outcome is that these countries will not have improved their relative position, but will have adopted wage policies that do not correspond to the preferences of their citizens. At the same time, the distance between the leading group and the other member states keeps growing.”
― Giandomenico Majone, Rethinking the Union of Europe Post-Crisis: Has Integration Gone Too Far?