Inglorious procrastination is one of the European Union’s standard responses to major crises. This is not merely due to the difficulty of getting twenty-seven Prime Ministers and Presidents to agree. It is also because of their motivated tendency to ask themselves the wrong questions, thus heading slowly but inexorably to self-harming policy solutions.
After the demise of Lehman Brothers in October 2008, a group of policymakers gathered in Washington to ponder the relevant question (“How do we bail out the bankers to stop them from consuming us?”). Meanwhile, in Brussels a much larger group mused for years over a toxic version of the same question (“Given that EU rules prohibit bailouts, how do we maintain the pretence we are respecting them as we bailout the bankers anyway?”). The result was a costly delay and policy choices which ensured that, whereas in 2008 Europeans earned, in aggregate, 10% more than Americans, by 2022 Americans were earning 26% more than Europeans.
Today, the European Union is about to repeat this self-harming act in response to another unforeseen blow that struck Brussels a year ago. On 16th August 2022 President Biden signed into law the misleadingly labelled Inflation Reduction Act that released $783 billion of subsidies, over a decade, in support of US industry’s green energy transition. In one fell swoop Washington had torn up the so-called Washington consensus; the rules-based free trade and industrial policies that America
— source yanisvaroufakis.eu | Yanis Varoufakis | 14/09/2023