Overhaul Capitalism to Save Democracy

Why have our societies become so deeply divided, which is inimical to democracy? How do growing distributional conflicts impact governance structures? Why does fake news take often precedence over truth? What should be done to avert that the rule of law is undermined by the rule of the mob? It may be that the current crises (public health and economic) are harbingers of a new turning point in the evolution of capitalism. This evolution is interlocked with cycles of ideas, of public policies, and institutional change. A mixed economy took shape over time, in which a public sector and a private sector cohabit, based on market dynamism, entrepreneurship, with the shares held by the two sectors shifting in accordance with historical and local conditions. The debate that has started after the outbreak of the last financial crisis is about the path of capitalism, of the mixed economy, of democracy. We need to steer the course of events in the right direction via wise policies. Safeguarding democracy relates to the urgency to deal with climate change as an existential threat

Provocările adoptării euro pentru statele non-membre ale Eurozonei

The intensification of financial turmoil and the impairment of the functioning of credit markets would restrain economic activity in the near future.euro adoption, economic crisis, Maastricht criteria, European Monetary Union

Un om între oameni

A plecat dintre noi Vasile Pilat, unul din membrii de frunte ai Societăţii Române de Economie (SOREC). A fost de o modestie ieşită din comun, un exemplu de onestitate intelectuală şi dedicaţie pentru adevăr, un patriot.

EURO zone crisis and EU governance: Tackling a flawed design and inadequate policy arrangements

This paper focuses on the roots of strain in the European Monetary Union (EMU). It argues that there is need for a thorough reform of the EU governance structure in conjunction with radical changes in the regulation and supervision of financial markets. The EMU was sub-optimal from its debut and competitiveness gaps did not diminish against the backdrop of its inadequate policy and institutional design. The euro zone crisis is not related to fiscal negligence only; over-borrowing by the private sector and poor lending by banks, as well as a one-sided monetary policy also explain this debacle. The EMU needs to complement its common monetary policy with solid fiscal/budget underpinnings. Fiscal rules and sanctions are necessary, but not sufficient. A common treasury (a federal budget) is needed in order to help the EMU absorb shocks and forestall confidence crises. A joint system of regulation and supervision of financial markets should operate. Emergency measures have to be comprehensive and acknowledge the necessity of a lender of last resort; they have to combat vicious circles. Structural reforms and EMU level policies are needed to enhance competitiveness in various countries and foster convergence

Return to Common Sense Is Needed

I have written these words at a time of a deepening financial crisis which is ricocheting worldwide and causing tremendous anguish and tremors, a spreading economic downturn. It is also not a long while after the European Parliament passed a report which I worked out together with a Dutch colleague, Ieke van de Burg, in which we argue in favour of an overhaul of the regulatory and supervision frameworks of financial markets in the EU.financial crisis, free markets, regulatory and supervision frameworks

Which Way Goes Romanian Capitalism? - Making a Case for Reforms, Inclusive Institutions and a Better Functioning European Union

This paper examines the Romanian economy and its version of capitalism from a long-term perspective and in a broad context. It focuses on economic prospects in the face of a legacy of backwardness and the endurance of domestic weaknesses, in the context of the Great Recession and the eurozone crisis. Romania has a pressing need to mobilise its internal resources and absorb EU funds on a much greater scale so that it can enhance economic growth and mitigate external shocks. To this end, Romania needs to undertake thorough reforms in the public sector, combat rent-seeking and waste, foster domestic savings. The functioning of institutions and of taxation should convey a sense of fairness to citizens. Romania needs to rethink its growth model. Romania must improve its education system by increasing the level of resources assigned to education and creating coherent policies to strengthen institutional capacities and to improve quality standards. The Romanian economy would benefit significantly from EU policies that are more responsive to the economic and social fractures revealed by the current crisis. Not least, financial markets have to be tamed in Europe and elsewhere if they are to serve economies

MANAGING DIVERSITY FOR A GROWING EUROPE: A ROMANIAN VIEW ON THE EU BUDGETARY REVIEW PROCESS

Facing major external and internal challenges (climate change, redistribution of power in the world economy, increased EU complexity following the Eastern enlargement etc), the European Union needs to overhaul its budget, observing some basic principles such as: solidarity, interdependence of policies, necessity to redesign the national budgets as well, all under the legal framework of the Lisbon Treaty. There is still considerable scope for improving the implementation of the Cohesion Policy, as one of the most important EU policies with tools designed to manage the EU's socio-economic complexity. The reform of the Common Agricultural Policy has to be undertaken in view of the effects of global warming and the need to secure adequate food supply inside the EU and around the world. The implementation of the eventual reform of the budget should be carried out gradually in order to avoid the emergence of disequilibria. For better management and accountability, the Financial Perspective span should be reduced to 5 years, similar to the mandate of the European Parliament and the Commission. Increased flexibility of the Financial Perspective needs to be considered for better answering to unforeseen situations. In the long term the EU budget should be increased and new resources should be added to the existing ones

Romania’s Euro Area Accession: The Question is Under What Terms!

Euro area (EA) accession should mainly depend on the achievement of a critical mass of real and structural convergence, which should diminish the risks to operate in an incomplete monetary union. Accession would also be enhanced by reforms in the functioning of euro area institutions and policies which should deal with asymmetric shocks. We argue that the true stake of euro adoption in Romania should be neither “if’’ nor “when”, but “under what terms” and “how it will be done”. The essential prerequisite for real convergence is raising competitiveness. Our analysis shows common problems regarding competitiveness in new member states in terms of infrastructure, institutional development, business sophistication, innovation; it points out the scale of risks attached to a premature euro area accession. This accession does not require the achievement of the euro area average level of GDP/capita (in PPP terms). As we argue, one can imagine Romania’s accession after having achieved a minimum of 75% of euro area GDP/capita average and the fulfilment of a series of structural conditions against the backdrop of euro area reforms.