A European New Deal

Published on 18 September 2009 at 09:42

The increase in hunger around the world has exhausted 80% of the World Food Programme's budget, but just one percent of the money which has been injected into banks to save them from bankruptcy could put it back in the black again. Recently, Portuguese Prime Minister José Sócrates proposed the introduction of a new tax on banks. Shouldn't high finance contribute to the resolution of a problem that it has created? Some people think so. The limitations of the model we have been using for the last 20 years are now abundantly clear — mathematical models failed to foresee the crisis on the financial markets — and even the instruments we use to measure economic reality can result in distortions. It is for this reason that President Nicolas Sarkozy asked Economics Nobel Prize laureate Joseph Stiglitz to develop an indicator to replace GDP — one which would take into account social realities. When times get hard, these same realities can result in human tragedies. In corporate France for example, there have been 23 suicides in France Telecom in just one year — clearly, questions should be asked about the management of this company and its human resources policy. At the same time, the directors of major industrial groups are driven to apoplexy by proposals for restrictions on management bonuses. For example this week, Nestlé threatened to move its headquarters out of Switzerland if the government in Bern did not drop its plan to limit fees paid to board members. With unemployment at 10% throughout the Union, pressure to reform labour law and legislation on workers' rights can only increase. Now that Barack Obama is trying to introduce a European style health-care system in the United States, could it be time for a European New Deal?

R.C.

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