Bretton Woods, Brussels, and Beyond: Redesigning the Institutions of Europe

Abstract

In most countries on the continent, Europe has become contentious, to put it mildly. For good (rather, bad) reasons. The euro area debt crisis came as a shocking surprise; the authorities were totally unprepared, and it showed. In the event, the banking system has become fragmented, the precise opposite of what the single currency was designed to deliver. For more than a decade, the middle classes have stagnated while the famous ‘top 1%’ have become much richer. Meanwhile, those at the bottom were preserved from the onslaught of globalisation and the shake-up from technological change. The immigration crisis has demonstrated the inability of the EU to deal with the consequences of freedom of movement. And, of course, Brexit has broken the taboo that Europe is a much-desired one-way street. Most of these humiliating developments had been, or should have been, anticipated. Policymakers chose to ignore warnings. The ‘system’ did not produce the kind of critical introspection that is vital for long-term success. When problems surged, the EU proved unable to react properly. True, there were innovations, but none is satisfactory yet. The Banking Union remains work in progress. The Stability and Growth Pact was reformed a few more times to become a machinery of great complexity and limited usefulness. Some countries are saddled with huge debts likely to be unsustainable, but no official will talk about this risk. Denial and complacency remain the order of the day. This is all a failure of European institutions. The editors of this eBook must be commended for having brought together an impressive array of authors who focus their contributions on institutions. Collectively, they do not offer a blueprint of what has to be done, but the disconnect between their analyses and what policymakers debate suggests that, once again, the EU is not ready to take serious remedial action ahead of trouble. This eBook should be required reading for all those who care deeply about Europe and, especially, for its policymakers.