Rays of hope for the economy?


During the last few weeks the Chairman of the European Central Bank, Mario Draghi, has announced that there are cautious signs of recovery in the eurozone as a whole. In particular, firms have more confidence in the economic prospects. This is a lovely message to receive during a hot summer. It’s also a lovely message on the eve of the German elections. Pity it’s not reliable.

Draghi says himself that recovery is directly connected to economic growth elsewhere in the world. Should this suffer setbacks, the chances of which are great in view of, to take just one example, disappointing figures in China, the promised recovery will fail to emerge. Furthermore, he links his positive message to a proviso: it will occur only if the member states enact the necessary ‘reforms’. That means, amongst other things, a more ‘flexible’ labour market and reductions in wages, because according to people like Draghi that’s how you become more competitive on the world market. If despite all this there are still member states with a high rate of unemployment, then it must be possible for the unemployed to emigrate to another part of Europe where there remains work to be had. Those are the sort of reforms he means. As if the level of wages hasn’t already fallen over recent decades, and along with these reductions have not come fewer and fewer rights for workers. And as if emigration is a serious option for everyone. What if you have small children, or provide care within the family for elderly parents?

Structural imbalances in the eurozone remain just as great as they were at the onset of the crisis. Southern Europe has still not developed a productive economy and unemployment persists in being sky-high.  If Draghi is now betting on migration, he must have money to burn. Many people are simply not going to migrate. Those who do are often young and would be able to make a useful contribution to the economy in their own country.  

So let’s understand that this sort of lovely message in fact means nothing at all. Such messages are intended first and foremost to make us believe again in the euro. This goes in particular for the Germans, because Merkel needs of course to win the parliamentary elections in September. Imagine that Germany were suddenly to turn around and elect a left government. Support for neoliberal dogmas would crumble away still further, and people like Dutch Prime Minister Mark Rutte and Labour Party leader Diederik Samsom would be even more isolated and the centre-right/centre-left coalition government could well fall. That’s why Draghi plays fast and loose with the facts, and that’s why for our part the SP feel it is our duty to cut through this baloney. Should it succeed in unsaddling budgetary fetishism in Europe, we can start building a real economic recovery. With reforms, for sure, but reforms attacking the culture of bonuses and tax evasion, not the position of ordinary working people.

Dennis de Jong is a Member of the European Parliament for the Socialist Party of the Netherlands. The photo of Mario Draghi with Greek Prime Minister Antonis Samaras is from the latter’s publicity.