Comments on: The European Monetary Union failed because of misunderstood macroeconomics

By: Arturo Hermann

Arturo Hermann — Fri, 30 Nov 2018 13:48:45 +0000

Another key element for promoting EU’s economies pertains to a better coordination between macroeconomic and structural policies.
In this regard, many theories point out that in order for an economic area to be successful (and even more so when there is a common currency), it is necessary a parallel convergence of the main economic parameters of member states. However, this condition it is often difficult to realise, in particular when a monetary union steers up, by facilitating transactions, “economies of agglomeration” in the stronger areas.
This being the case, leaving the euro would weaken economically and politically EU’s member countries in the face of financial speculation and of stronger countries. A much more promising alternative would be to promote structural policies for revitalising the economies and societies of peripheral areas. Many initiatives, with the key involvement of local communities, can be projected – also by fostering synergies – in culture, tourism, high-tech industries, sustainable agriculture.

By: Arturo Hermann

Arturo Hermann — Sat, 17 Nov 2018 16:49:50 +0000

I appreciate your work, is really full of insights. My modest idea is that the EU’s trouble does not lie so much in Maastricht parameters but in interpreting them through the neo-liberal lens of reducing at any cost public spending. This neo-liberal drive has been responsible for the lack of public investments in material and immaterial infrastructures and the consequent loss of competitiveness and resilience of the EU in the international arena. As for fiscal policy, I would stand for a policy of a tendentially balanced public budget. As a matter of fact, a policy of deficit spending, although far more advisable than a policy of “austerity”, has the serious drawback of increasing the burden of interest payments.
In this way, a growing share of public spending is diverted from objectives of public utility to rent. This aspect plays a two-fold role in depressing the economic system, because: (a) the multiplier effects of rent-based incomes are likely to be lower than that of public spending; (b) public spending directed to public purposes is likely to be more useful than rent for economic and social progress. In order to overcome these drawbacks, it is appropriate to note that, as highlighted by the “Haavelmo’s theorem” (1945), public spending can have an expansionary effect even if it is accompanied by an equal amount of taxation.
Another relevant element for promoting economic development is a monetary policy oriented to keep at a permanent low level real interest rate.

By: David Harold Chester

David Harold Chester — Wed, 17 Oct 2018 13:47:19 +0000

Macroeconomics can be better understood when it is cast into a logical and semi-engineering framework. So far this has never been achieved. However, my recent book achieves this and it is original in the methods used and some of the results obtained. Write to me at chesterdh@hotmail.co for a free e-copy of this 310 page explanation.