As Europe awaits results from both the French and Greek elections this weekend, it is probably fair to say that Europe is swinging if not left then towards a counter-austerity sentiment. In short, even people on the conventional centre-right, who accept the need for public spending to be brought under control (with a liontamer’s whip and chair in some cases) are now beginning to also accept that whilst applying a firm grip on spending is a great idea if the country in question is surrounded by economic “normal” countries, but if a whole region attempts to do it together it creates a giant suckhole that could pull everyone down together.
As if that is not problem enough, there are two further issues complicating things: the first is that Germany, which is benefitting greatly from its own reforms on the 1990s but also the European single market and the eurozone, is being asked to basically stump up the cash to resolve the issue of deflation in the Mediterranean.
Secondly, there is the danger that deflation in the PIGS will cause major public unrest and political extremism. What’s to be done?
Is it time to consider some form of European Basic Income or welfare payment, funded by Brussels, to ensure that no one slips totally beneath the waves whilst also injecting money in those economies? Such a scheme would allow for some stability in the PIGS whilst also demonstrating that the EU is not just for the rich. How would we fund such a thing? Well, a mixture of quantative easing by the ECB, direct funding by the Germans and perhaps an EU wide wealth tax of some description, or maybe an EU wide Tobin Tax?
What’s that, you say? O’Mahony proposing a wealth tax? I’m just thinking out loud here, but the key argument against the left raising taxes against the rich in a European country is that the people upon whom the tax is levied can move. But if the tax is levied on the whole EU, that’s a different kettle of fish, because leaving the EU means leaving a single market of 500 million consumers, not just a single state. It would also be hilarious to watch the Irish hard left in particular do political gymnastics as they tried to figure out what approach to take on a federal wealth tax.
Additional comments written later: It also occurs to me that a European Basic Income would address one issue that causes problems in nearly every member state, that of perceived welfare shopping. If every citizen could only receive the income amount that pertained in their home state, unless they had been living in another state for a number of years, would that not encourage non-working EU citizens to stay at home in their own member states, as there would be no benefit to travelling to another member state other than to work? Just a thought.