The Wall Street Journal talks about Mario Draghi’s plan to save the European economy – Mesh Talk

This article will be short and to the point. The Wall Street Journal editorial board failed to address the crux of the matter.

How to save Europe’s economy

The Wall Street Journal says Mario Draghi has A plan to save Europe’s economyif anyone will actually read it.

Mario Draghi is once again trying to save the European economy, and it’s nice that people are actually reading his plan. But the buzz surrounding Mr Draghi’s new report on boosting European competitiveness helps explain why he needed to write it in the first place.

The former European Central Bank president and Italian prime minister published a nearly 400-page book on Monday. cry of the heart The economic slowdown in Europe today poses a major challenge. The US economy is now 30% larger than the EU’s; it was 17% larger in 2002. By one measure, Europe’s GDP per capita is 34% lower than that of the United States.

Unfortunately, European politicians and their media backers only read the parts of Mr Draghi’s book they want to read. That’s why you might have read that he proposes spending up to €800 billion a year on research and development, digital transformation, climate goals and defence, among other things. This is already being interpreted as a call for more government “investment”, even though Mr Draghi is clear that this figure should include private capital alongside taxpayers’ money.

This selective reading also explains why commentators tout Mr Draghi’s support for decarbonising Europe’s economy and issuing new eurozone bonds. Indeed, this is the kind of institutional manipulation that Brussels loves to discuss despite, or perhaps because of, the impossibility of any such thing happening. Neither of these points is the crux of Mr Draghi’s case.

The crux of the matter is that Europe needs to overhaul its approach to the private economy in order to keep up with America, afford higher defense spending, and maintain its influence in world affairs. The continent needs a growth strategy.

Entrepreneurs face a lot of bureaucracy as they try to set up businesses and bring new products and services to market. Mr Draghi points out that tech companies must deal with 100 technology-focused laws, administered by 270 regulatory bodies spread across the EU and 27 national governments.

But once Mr Draghi published his report, Europe’s political class proved more interested in punishing America’s success than in imitating it, as evidenced by Tuesday’s ruling by the European Court of Justice that upheld Brussels’ move to impose a €13 billion tax on Apple and a €2.42 billion antitrust fine on Google.

The painful truth for Europe is that little of Mr Draghi’s report comes as a surprise, even if he has done a valuable public service by bringing all this information together in one place. His few suggestions will bear fruit until Europe’s politicians – and their voters – decide that gradual economic decline is unacceptable.

Five Things the Wall Street Journal Got Right

1. The US economy is now 30% larger than the EU’s; it was 17% larger in 2002. By one measure, Europe’s per capita output is 34% less than that of the United States.
2. Draghi proposes spending up to €800 billion a year on research and development, digitalisation, climate goals and defence, among other things.
3. Entrepreneurs face a lot of bureaucracy when trying to set up companies and bring new products and services to market. Tech companies have to deal with 100 technology-focused laws, administered by 270 regulatory bodies spread across the EU and 27 national governments.
4. No sooner had Mr Draghi published his report than Europe’s political class proved more interested in punishing America’s success than in imitating it.
5. The painful truth for Europe is that little in Mr Draghi’s report comes as a surprise.

As a beginner, I read the whole thing.

Second, I have been discussing the obvious flaws of the European Union and the eurozone monetary union for decades.

The Wall Street Journal editorial board failed to cite any root causes for the EU’s collapse other than regulation.

The Wall Street Journal defends the second point without question. Governments rarely spend their money wisely. Investment must come from the private sector, but regulation is the issue.

Mario Draghi proposes appointing a “vice president for simplification of procedures”

Did the Wall Street Journal editorial board really read the entire report?

I scoffed at the suggestion in my opinion. Former ECB President Mario Draghi proposes appointing a ‘vice president for monetary policy simplification’

One of my readers commented that my response was too long. Here are the main points that the Wall Street Journal failed to address and that Mario Draghi did his best to avoid.

• Draghi’s spending proposals are completely out of the question given EU budget rules.
• Draghi wants to increase the financing capacity of the banking sector and complete the banking union, which is a violation of the treaty signed by all countries.
• Draghi hails EU wealth redistribution plans. How did the Wall Street Journal miss this?
• Draghi wants a stronger pension system without specifying who will pay for it. This is another Wall Street Journal error.
• Draghi grumbles about the costs of EU decarbonization, but supports it anyway.
• Draghi proposes forming a cartel of LNG buyers. What a ridiculous idea.

Finally!

To begin reducing the regulatory “stock”, the report recommends appointing a new Vice-President of the Commission for Simplification to simplify the acquisitions, with a single, clear methodology for measuring the cost of the new regulatory “flow”!

Vice President for Simplification

What a loud laugh! There’s no way you could have made that up.

The European Union and the eurozone monetary union are both broken beyond repair.

It cannot be reformed because any changes to the treaty itself require unanimous consent.

Draghi’s budget proposal is not feasible for budgetary reasons.

The EU’s bureaucracy is such that it might spend the next five years creating a “vice president for simplification.” All that position would do (at best) is introduce more rules that some countries might object to.

Change the treaty

In his 69-page report, Draghi mentioned the word “treaty” only four times. Each time, it was a futile attempt to get around the fact that treaty change was necessary.

Questions and answers about the basic problem

Q: What is holding the European Union back?
A: The treaty itself.

Q: Why is the treaty not changed?
A: This requires unanimous approval. Every country has a veto, and it only takes one vote.

Q: Which countries pose the biggest obstacles?
A: Germany regarding financial rules and France regarding agricultural rules.

Q: What is Germany’s role?
A: Germany joined the European Union and the European Monetary Union only if it had veto power over the common budget, and the German constitution also forbids that.

Q: What is the role of France?
A: France wants to protect small, inefficient French farmers. It has veto power over all agricultural policies except those expressly permitted by the agreement.

Q: What about trade negotiations?
A: Every country has veto power in trade negotiations. That’s why it took the EU 15 years to agree a seemingly simple treaty with Canada. Every country that joins the EU has the same veto power.

Q: Why is the treaty not amended to allow majority rule?
A: Germany says no on financial issues, France says no on agricultural issues, and any number of countries say no on trade and military issues.

Is this hopeless?

Yes, of course.

The reason there is no Microsoft, Google, Amazon, Apple or Facebook in the EU is because the EU will destroy them in the name of creating competition before they become big.

The EU looks from the outside for basically the same reason, but also adds DEI.

For a longer shot, please see: Former ECB President Mario Draghi proposes appointing a ‘vice president for monetary policy simplification’

Finally, the idea of ​​a “simplification vice president” who adds layers of bureaucracy to eliminate bureaucracy, without any authority (by treaty) to change anything, speaks for itself.