eu-austerityIs the medicine making the patient worse? As uncertainty continues to rock the Eurozone, member-states are implementing a range of austerity packages to tackle mounting government debts – but is any of it actually working? We’ve seen riots and protests across the continent, as ordinary people lash out at public sector cuts many see as unnecessary at best and, at worse, actively damaging to recovery.

We had a comment sent in from Jakob from Germany, suggesting that public sector cuts should be seen as an excuse to slim down excessive bureaucracies and reduce the size of the state. We took the idea to a range of policy-makers for their responses, to gauge how politicians viewed austerity across Europe.

Averof Neofytou, a conservative Cypriot politician, was sympathetic to the idea that government needed to be reduced:

Yes I think so. The point is not to cut public services but the cost of these services to the taxpayer. Many governments in Southern Europe employ more people that they need and with a higher average pay than the private sector. In order to begin to reduce the size of governments, fewer people than those that retire should be employed. Various government departments can be joined together and civil servants should be transferred between departments that have higher needs in personnel than others. In this way there would be no need to hire more people but merely to move them between departments depending on the demand of services.

Not all on the centre-right were so convinced that austerity was the only solution, however. Andreas Schwab, a Member of the European Parliament (MEP) for the German Christian Democrats, cautioned against ideologically motivated cuts:

Smaller government is not necessarily in the interest of the citizens. Today’s world is interdependent and multilayered. Government has to deal with these complex structures and adapt to the new circumstances. Therefore it has to be checked for effectiveness and efficiency and one has to make sure that there is no money wasted. This may lead to restructuring and thus to reduction of jobs – not due to fiscal reasons but because of structural ones. Saving money must never end in a situation in which government is not able to perform its duties any longer.

Others were neutral. Dirk Sterckx, a Belgian liberal MEP, argued that Europeans shouldn’t care where their services came from, as long as they were efficient: 

Voters should in the first place call for efficient government. Not all “small government” is efficient or cost effective. I have no ideological preference for “public” service over “private” service. We will have to provide the services at the highest level of quality and lowest cost. If governments or public service providers provide this quality and cost-efficiency, so much the better. If not, let private providers do the job and let government regulate, control and finance if and where it is necessary. But let us not fool ourselves, budget deficits destroy the basis of good public service provision.

Finally, some were fiercely critical of the idea that “less government” was the answer. Monica Frassoni, an Italian Green politician and former MEP, for example:

On the very contrary: the current crisis is in many cases not due to excessive public spending, but to speculation, bad financial management, lack of regulation, which had a major impact on public deficit. We have to get out of the old already failed liberist idea that shrinking the government will help growth. It will help growth of richer people and banks. People in the streets need more welfare not less. Tax evasion and lack of regulation, inequal distribution of resources are a huge growing problems in our societies. And if the EU keeps on giving “just tighten your belts” as its only message to its citizens, then there can be no solution to its loss of legitimacy.

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4 comments Post a commentcomment

  1. avatar
    Nico Keppens

    First of all: if everything went perfectly efficient, maybe up to half of the people would be out of job. Would that then be a solution ? Would that create economic growth ? In order to be able to buy something one needs to have an income first. Yes, there may be too many people working for administrations, but otherwise society would have to ‘support’ them in another way.
    It is so cruel to try to reverse the crisis, initially caused by the greed of people who already had a lot but wanted more, on the back of those already less off.
    Perhaps a solution lays in asking people what they want the authority to take care of, after having explained objectively what the consequences of a choice would be: the price to pay in money as well as on (lack of) protection, quality of services.
    Perhaps a solution lays in recognising that even jobs considered now as of low value are necessary too to make a society run well, and that those jobs earn as much respect as the one performed by the person with several diplomas. By the way, perhaps the fact that nowadays so much effort goes to promoting education (whereas only a minority of a population is capable – for several reasons – to acquire several diplomas) is one of the reasons of pushing back many citizens from the European project: they expect that they will not profit from it.
    Perhaps a solution lays in making all of us feel more responsible for what happens in society, in making us understand that personal power should not be the goal, but the input of all our capacities to make this world for all a good place to live on.

  2. avatar

    I ‘m attonished to hear this “Euro leaders” said the right escape from the crisis is more taxes end less service from the State.
    Are this “so called” leaders really at people service ?

    The right escape from crisis is do like Iceland.
    We don’t want to pay a debit that dosen’t exist to the central banks.

    • avatar
      Debating Europe

      Do you mean we should default on our debts and devalue like Iceland? The problem is that Iceland is a tiny country outside of the Eurozone. Imagine if ALL European countries devalued. The last time this was attempted in the 1930s – with a devastating “race to the bottom” that resulted in the Great Depression.

  3. avatar

    The main issue is not raising taxes but collecting taxes. Austerity is only one part of the game. The fact that corporate taxes vary widely from country to country and that tax avoidance is favored by domestic tax loopholes and international evasion by creating legally foundations or corporate entities in Luxemburg, Cyprus, Switzerland or Ireland owning assets in higher tax countries and reselling them to other companies or individuals without paying capital gain taxes. The main issue is not only tax governance but tax convergence and stating the fiscal rules to ensure the elimination of tax evasion competition within the EU. Let’s set the rules now for the Euro success, it is already late, otherwise the system will tumble and the Euro will sink….Those who may not like the rules can opt to quit the Eurozone….and drift along Iceland

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