Europe’s Lost Keynesians
Kenneth Rogoff
PROJECT SYNDICATE, 23 May 2013
CAMBRIDGE – There is
no magic Keynesian bullet for the eurozone’s woes. But the spectacularly
muddle-headed argument nowadays that too much austerity is killing Europe is
not surprising. Commentators are consumed by politics, flailing away at any
available target, while the “anti-austerity” masses apparently believe that
there are easy cyclical solutions to tough structural problems.
The eurozone’s
difficulties, I have long argued, stem from European financial and monetary
integration having gotten too far ahead of actual political, fiscal, and
banking union. This is not a problem with which Keynes was familiar, much less
one that he sought to address.
Above all, any
realistic strategy for dealing with the eurozone crisis must involve massive
write-downs (forgiveness) of peripheral countries’ debt. These countries’
massive combined bank and government debt – the distinction everywhere in
Europe has become blurred – makes rapid sustained growth a dream.
This is hardly the
first time I have stressed the need for wholesale debt write-downs. Two years
ago, in a commentary called “The Euro’s Pig-Headed Masters,” I wrote that
“Europe is in constitutional crisis. No one seems to have the power to impose a
sensible resolution of its peripheral countries’ debt crisis. Instead of
restructuring the manifestly unsustainable debt burdens of Portugal, Ireland,
and Greece (the PIGs), politicians and policymakers are pushing for ever-larger
bailout packages with ever-less realistic austerity conditions.”
My sometime co-author
Carmen Reinhart makes the same point, perhaps even more clearly. In a May 2010
Washington Post editorial (co-authored with Vincent Reinhart), she described
“Five Myths About the European Debt Crisis” – among them, “Myth #3: Fiscal
austerity will solve Europe’s debt woes.” We have repeated the mantra dozens of
times in various settings, as any fair observer would confirm.
In a debt
restructuring, the northern eurozone countries (including France) will see
hundreds of billions of euros go up in smoke. Northern taxpayers will be forced
to inject massive amounts of capital into banks, even if the authorities impose
significant losses on banks’ large and wholesale creditors, as well they
should. These hundreds of billions of euros are already lost, and the game of
pretending otherwise cannot continue indefinitely.
A gentler way to
achieve some modest reduction in public and private debt burdens would be to
commit to a period of sustained but moderate inflation, as I recommended in
December 2008 in a commentary entitled “Inflation is Now the Lesser Evil.”
Sustained moderate inflation would help to bring down the real value of real
estate more quickly, and potentially make it easier for German wages to rise
faster than those in peripheral countries. It would have been a great idea four
and a half years ago. It remains a good idea today.
What else needs to
happen? The other steps involve economic restructuring at the national level
and political integration of the eurozone. In another commentary, “A Centerless
Euro Cannot Hold,” I concluded that “without further profound political and
economic integration – which may not end up including all current eurozone
members – the euro may not make it even to the end of this decade.”
Here, all eyes may be
on Germany, but today it is really France that will play the central role in
deciding the euro’s fate. Germany cannot carry the euro on its shoulders alone
indefinitely. France needs to become a second anchor of growth and stability.
Temporary Keynesian
demand measures may help to sustain short-run internal growth, but they will
not solve France’s long-run competitiveness problems. At the same time, France
and Germany must both come to terms with an approach that leads to far greater
political union within a couple of decades. Otherwise, the coming banking union
and fiscal transfers will lack the necessary political legitimacy.
As my colleague
Jeffrey Frankel has remarked, for more than 20 years, Germany’s elites have
insisted that the eurozone will not be a transfer unión. But, in the end,
ordinary Germans have been proved right, and the elites have been proved wrong.
Indeed, if the eurozone is to survive, the northern countries will have to
continue to help the periphery with new loans until access to private markets
is restored.
So, given that Germany
will be picking up many more bills (regardless of whether the eurozone
survives), how can it best use the strength of its balance sheet to alleviate
Europe’s growth problems? Certainly, Germany must continue to acquiesce in an
ever-larger role for the European Central Bank, despite the obvious implicit
fiscal risks. There is no safe path forward.
There are a number of
schemes floating around for leveraging Germany’s lower borrowing costs to help
its partner countries, beyond simply expanding the ECB’s balance sheet. For
meaningful burden-sharing to work, however, eurozone leaders must stop dreaming
that the single currency can survive another 20 or 30 years without much
greater political union.
Debt write-downs and
guarantees will inevitably bloat Germany’s government debt, as the authorities
are forced to bail out German banks (and probably some neighboring countries’
banks). But the sooner the underlying reality is made transparent and becomes
widely recognized, the lower the long-run cost will be.
To my mind, using
Germany’s balance sheet to help its neighbors directly is far more likely to
work than is the presumed “trickle-down” effect of a German-led fiscal
expansion. This, unfortunately, is what has been lost in the debate about
Europe of late: However loud and aggressive the anti-austerity movement
becomes, there still will be no simple Keynesian cure for the single currency’s
debt and growth woes.
Kenneth Rogoff, Professor of Economics and
Public Policy at Harvard University and recipient of the 2011 Deutsche Bank
Prize in Financial Economics, was the chief economist of the International
Monetary Fund from 2001 to 2003. His most recent book, co-authored with Carmen
M. Reinhart, is This Time is Different: Eight Centuries of Financial Folly.
=============================================================
Nenhum comentário:
Postar um comentário