A new European way
After the French elections there seems to be a chance for a European future. With 314 of 577 seats in parliament, the socialist party of François Hollande now has a strong position in French. I am still fascinated how impressive Hollande showed, that he knows about his responsibility for the whole Eurozone. Not only at his fast visit in Germany but also with his words to Athen.
However France still has to improve its own consolidation in order to reduce the financial deficit. But according to the politic of economical growth it is necessary, that they don’t cut down governmental benefits but raise the taxes. One way Hollande proposed, is a higher taxation for people with a high income. Another way could be the taxation of the financial sector. For Europe it is most important, that France shows its capability to return to former economical strength on its own. Every way to solve this crisis in the Eurozone would be much easier with a strong economy in France.
But if we look at the Eurozone and its problems, then Hollande also has to demand a higher participation of Germany, which profits most on the Eurozone. Spain, France and Italy have disadvantages in the current situation, because it is easy for investors to change the country of investment inside this zone. Usually the loss of invests leads to a loss of value of the currency in a country, but with a single currency there is no such effect. Moreover the single currency leads to wrong incentives for production and consumption in the different parts of the union.
The problems of wrong incentives could be solved with an adjusted taxation. Such an adjusted taxation also could support France to come back to economical strength. But for Spain or Portugal this effect would be still higher. For such a regulation a common Institution in the Eurozone is needed. Such an institution would also be necessary for a distribution of the advantages. Without a fair distribution of the profits, the common currency won‘t have a future.
A growth pact which is financed by the strong countries, mainly Germany, would be a first sign. This would show that we work together for a European future. With such a project we could improve transportation in Europe or reduce the dependence on Oil and Gas.
Another important sign for a new economical policy could be a common taxation of the financial sector in the whole Eurozone. This would be a step for more integration and would help to improve the budget of the member countries. This also would be a way to solve the problem at the origin, the financial deficit.
In my opinion we need a common institution in the Eurozone to adjust the taxation, to distribute the advantages, and to control the consolidation. But a growth pact and a common taxation of the financial sector would be at least small steps in the right direction. I think Merkel can’t deny that the financial pact alone is not enough to save the European future. It’s only a matter of time that Merkel changes her direction. If she doesn’t change, she will isolate Germany in the Eurozone and risks to lose her influence. A danger for Merkel, she never had with her Sarkozy. Perhaps this danger is the opener for a new way of common economical policy in the Eurozone.
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The problems of the eurozone (www.mister-ede.de – 04.05.2012)