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July 10, 2017

EU in self-destruction mode

Fintan O’Toole writes that Brexit is a wake-up call for the European Union, which is facing its own demise. Don’t blame the British for Brexit, remember the two founding nations France and the Netherlands came very close to have their version of Frexit or Nexit, and Italy is still flirting with Itexit. This is a much more profound crisis of the EU. O’Toole writes that, unlike nations, the EU is based on ideas and values, but it fails to deliver on them because it lacks the power to do so. This contradiction is not easily solved as voters mistrust the EU technocracy, and are reluctant to pass on more power to the EU. Going back to basics, O’Toole has this intriguing observation about why the EU exists:

"The EU is one of the very few examples of a political project built on fear that is positive and inclusive. It came about because of fear of fascism and communism on a continent that had been torn apart by one and split in two by a totalitarian form of the second." 

The EU was there to provide the basis for a dignified and secure life in Europe. As the threat of totalitarianism and communism receded, so did the rationale for the EU. At the same time, income inequality rose over the last few decades: In the 1980s the average income of the richest 10% of Europeans was seven times higher than that of the poorest 10%, today it is about 9.5 times higher. The young are now more likely than the elderly to be at risk of poverty. This is not a healthy foundation for the future. Growing inequality is ultimately incompatible with political and economic stability. We already experienced the volatility of voters and the fragility of economic recoveries. And it is this fear that the EU needs to use to motivate itself. Its raison d’être should be to protect its citizens in a globalised world as a transnational power, with powerful democratic institutions and the power to redistribute wealth from its richest to its poorest citizens.

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July 10, 2017

The EU's fault lines

Hans Kundnani writes that much of the triumphalism about the EU is vastly exaggerated. 

"...the problems that the EU has struggled with for the last seven years since the euro crisis began, and that have led to the increase in euroscepticism, remain unresolved. The multiple overlapping fault lines within the EU remain as deep as ever, as was illustrated when, shortly after being elected, Macron accused central and eastern Europe countries of treating the EU "as a supermarket". The EU has also done little to help Italy cope with another wave of refugees from Africa, thousands of whom are now dying in the Mediterranean."

Kundnani says that the idea of a Europe taking its security interests in its own hands is going to fail because Germany is reluctant to increase defence spending. Strategic autonomy would require defence spending far higher than the unmet 2% Nato commitment. 

Another issue not mentioned by Kundnani is Germany’s and the eurozone’s persistent current-account surplus. The Economist has written an editorial on this question. It says that Trump is wrong to focus on bilateral deficits, but

"...in one respect, at least, Mr Trump has grasped an inconvenient truth. He has admonished Germany for its trade surplus, which stood at almost $300bn last year, the world’s largest (China’s hoard was a mere $200bn). His threatened solution—to put a stop to sales of German cars—may be self-defeating, but the fact is that Germany saves too much and spends too little. And the size and persistence of Germany’s savings hoard makes it an awkward defender of free trade."

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July 10, 2017

Fake News and Fake views

Wolfgang Munchau writes about how confirmation bias - a form of wishful thinking - is affecting commentary and analysis, not only in the media but also among investors. The fundamental idea is that people weed out information that is not consistent with their beliefs. Apart from the obvious examples - Brexit, and Trump’s victory - there are numerous other cases where confirmation bias leads to positively mistaken forecasts. Here are a few examples:

  • that Jeremy Corbyn, the UK Labour leader, would invariably lose the elections by a landslide;
  • that Donald Trump will be impeached;
  • that Brexit will somehow be averted;
  • that the eurozone has finally turned the corner;
  • that Emmanuel Macron will reform France.

Ian Katz, the editor of the BBC’s newsnight programme, focuses specifically on the media and notes that the percentage of people trusting the media in the UK fell from an already low level of 36% to 24%. He said one of the problems is that journalists have been getting many things wrong. He suggests four courses of action: more humility; more open engagement with conspiracy theories; allowing a greater diversity of views; and, finally, acknowledging that we have a problem.

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  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • November 04, 2019
  • Brexit tactical voting is happening - on both sides
  • Merkel promises 1m charging stations - but doesn't tell us how
  • June 24, 2019
  • Economic reform has torn up the SPD - climate policy does the same for the CDU/CSU
  • Not intruding, not really
  • February 11, 2019
  • SPD dumps Hartz IV
  • Macron's revival
  • October 04, 2018
  • The Brexit Queen’s new dancing clothes
  • Ceci n’est pas une crise politique
  • May 28, 2018
  • A no-confidence motion that could backfire
  • The political repercussions of a historic referendum in Ireland
  • Why the lack of an international role for the euro matters
  • January 19, 2018
  • On the futility of discussing the German current account surplus
  • The Brexit revocation madness
  • Varadkar, the enfant terrible in the Brexit negotiations
  • September 14, 2017
  • Bravo Mr Juncker
  • ... what he said about the labour market
  • ... and what his speech means for Brexit
  • May 11, 2017
  • Germany rejects IMF’s policy recommendations before they are issued
  • Why Labour is losing
  • January 05, 2017
  • French Socialist primaries - old wine in new bottles
  • Le Pen's hard ecu
  • Will Tusk get a second mandate?
  • Themes of 2017
  • August 26, 2016
  • Will the refugee crisis return?
  • Montebourg en avant
  • Moisi on Sarkozy's chances
  • Binary choices
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • November 18, 2019
  • Is Macron facing another uprise against elites?
  • Forget the inflation target: Lagarde’s job is much bigger.
  • October 07, 2019
  • What did Conte know?
  • August 27, 2019
  • Remain’s narrowing pathway
  • Macron's diplomatic masterstroke
  • July 10, 2019
  • Turkish drilling off Cyprus - a test case for the EU
  • Labour’s new Brexit policy is not really a shift
  • June 03, 2019
  • Reinventing the French right without Wauquiez
  • Tory leadership election is between feasible and unfeasible Brexit options
  • April 29, 2019
  • Labour's national executive to vote on second referendum
  • What the debate about electric cars says about Germany
  • March 25, 2019
  • An object lesson in realpolitik
  • On the probability of a no-deal Brexit
  • February 18, 2019
  • How the splits on the left and the right will affect Brexit
  • January 14, 2019
  • Our Brexit predictions
  • 1789 - Macron's version
  • Tsipras calls confidence vote after Kammenos pulls out
  • December 14, 2018
  • Running down the clock
  • Macron, Philippe - untouchable no more
  • EP blasts Commission over Babis
  • November 14, 2018
  • Now what?
  • October 15, 2018
  • Black Brexit smoke
  • Bettel can relax and stay in office
  • Solving the crime vs solving the problem
  • September 17, 2018
  • About the new partnership between Russia and China
  • EU ponders Irish backstop protocol to help May
  • August 20, 2018
  • ... and a subtle shift in EU policies towards both Russia and Turkey
  • Nothing to celebrate about the end of the bailout programme
  • Support for Brexit holding up
  • July 20, 2018
  • Why preparations for no-deal Brexit are a positive development
  • On confirmation bias in the Brexit commentary
  • June 25, 2018
  • Trump's car tariff to come early
  • On the lack of a sharp focus in the eurozone debate
  • June 01, 2018
  • Will France and Germany stick together in their response to US trade tariffs?
  • From a eurozone budget to a slush fund
  • May 09, 2018
  • A moment of truth in the Brexit talks
  • A leap of faith, Mr Kierkegaard?
  • April 16, 2018
  • Italy's and Germany's pained response to the Syria attacks
  • On the end of the eurozone's economic honeymoon
  • Why Bulgaria should stay out of the euro
  • Where shall we meet after Brexit?
  • March 26, 2018
  • On the run no more
  • Terrorist attack will challenge Macron
  • A double-whammy of geopolitical and financial uncertainty
  • March 05, 2018
  • One rock, two vetos, three governments
  • Rutte weighs in
  • February 12, 2018
  • What the euro debate is really about
  • How Brexit can still falter
  • January 22, 2018
  • Carles Puigdemont's flying circus
  • Macedonia and the insurrection of Greek patriotism
  • On the real hurdles for Brexit revocation
  • And the satellites, too
  • January 05, 2018
  • Catalonia's government by Skype
  • The case for EEA membership
  • December 07, 2017
  • Schengen suspended
  • Puigdemont's European arrest warrant withdrawn
  • Another Greek red line crossed
  • What the (failed) agreement on the Northern Irish border tells us
  • November 21, 2017
  • A short note on the impact of German political chaos on Brexit
  • A scandal, overshadowed
  • November 06, 2017
  • Pressures on EU rise over Catalonia
  • German pre-coalition talks hit glitch
  • If you thought UK politics couldn‘t get worse...
  • October 23, 2017
  • Macron's plans for the European Parliament
  • First phase of Brexit negotiations in final stretch
  • Why the left hates Europe
  • October 10, 2017
  • The UK is slowly gearing up for a no-deal Brexit scenario
  • No liberal parties in Austria
  • September 29, 2017
  • Is the CDU about to rebel against Merkel?
  • What about defence?
  • What happened to the French mainstream parties?
  • September 18, 2017
  • Why Germany cannot lead Europe, let alone the free world
  • Will Macron help to build up Mélenchon?
  • Boris' Coup
  • September 07, 2017
  • Northern Ireland and Brexit - a diplomatic nightmare
  • Can Macron succeed where Balladur failed?
  • ECJ upholds relocation of asylum seekers
  • August 29, 2017
  • The deep significance of Labour's Brexit U-turn
  • The day after the SPD loses
  • August 21, 2017
  • Soft, getting softer
  • Tsipras' chances of a boost
  • On the fallacy of a middle-ground option for the eurozone
  • July 31, 2017
  • Russia sanctions bill becomes US law
  • Spain's Guardia Civil in the eye of the Catalan storm
  • A grand bargain between France and Germany
  • July 24, 2017
  • Macron's popularity falls amid more budget cuts
  • Orbán to support Polish government against EU
  • No exit from Brexit
  • July 17, 2017
  • What Tony Blair's Brexit confusion tells us
  • Schulz advocates compulsory investments
  • Italy’s government has effectively lost its majority
  • July 14, 2017
  • We are entering the technical phase of Brexit
  • Don’t be too complacent about the EU
  • July 12, 2017
  • And now for the real Brexit talks
  • July 11, 2017
  • The political fallout of the G20 in Germany
  • July 10, 2017
  • EU in self-destruction mode
  • The EU's fault lines
  • Fake News and Fake views