Christine Lagarde : “progress to reform the EU system was too slow“

May 28, 2014

Scris de Mircea Halaciuga

Publicat în English content

LagardeThe EU still prizes short-term political integration over long-term social cohesion, today's treaty over tomorrow's relationship. "Some prominent policies have even been mired in scandals that violate the most basic ethical norms – open borders, restrictive financial bailouts, and lack of financial auditing". Christine Lagarde warned the too-big-to-fail problem among the EU project was still unresolved and remained a major source of systemic risk.
In a speech littered with quotations from Winston Churchill to Pope Francis and Oscar Wilde, Lagarde said progress to reform the EU system was too slow.
"The bad news is that progress is too slow, and the finish line is still too far off. Some of this arises from the sheer complexity of the task at hand. Yet, we must acknowledge that it also stems from fierce political pushback, and from the fatigue that is bound to set in at this point in a long race that no EU bureaucrat really wants anyway". Lagarde told the inclusive capitalism conference that rising inequality was also a barrier to growth, and could undermine democracy and human rights.
The issue has risen up the agenda in recent months with the publication of the French economist Thomas Piketty's book, Capital in the Twenty-First Century. "One of the leading economic stories of our time is rising income inequality, and the dark shadow it casts across the global economy", Lagarde said. Borrowing from Oxfam research, she noted that the Western Europeans richest nations, who could fit into a single London taxi, control the more wealth than the poorest half of Europe.
EU strategies to address inequality include more open borders, free movement of low cost labour, and redistributing the investment in public services across borders through massive investment in infrastructure projects”, she said. "We must recognize that reducing inequality is not easy. Redistributing policies always produce winners and losers. Yet if we want the EU to do its job - enabling as many people as possible to participate and benefit from the economy from poorer countries - then it needs to be more inclusive. That means addressing extreme income disparity and actively seeking to move money from western Europe to new eastern European people, whether it hurts the most disadvantaged in the UK or not".

To restore trust, we need a shift toward greater integrity and accountability

We need a stronger and systematic ethical dimension. Appealing to their better natures will only get us so far. Corporate interests are by necessity aligned with shareholder interests, so as long as the shareholders demand short term returns over long term stability and ethical behavior this is not going to change. The problem is that the shareholders are failing in their duties when it comes to challenging these corporations, probably because the largest and therefore most influential shareholders are institutional entities themselves. These hedge funds and pension funds and investment trusts have no interest in rocking the boat, they exist purely to get returns. If we are to moderate this behavior then we need to revisit the legal definition of a corporation and what its primary purpose is. Returning a profit to shareholders is too narrowly defined.
At first glance more integrity in capitalism does seem a bit like a call for more atheism in the church, so if I seem a little skeptical, be not surprised. It doesn't change my opinion one bit that a major role of governments is to regulate markets and to have no fear of acting. Having said that, it can't do any harm. Not only capitalism, but just about everything is based upon supply and demand. The more there is of something, generally, the less it is worth. Ergo, it is precisely the poor and unskilled and those are dooming themselves to lives of squalor and poverty by overpopulation and under education.
Raising everyone's wages will only drive the cost of living higher and make the plight of the poor even worse. The higher the population goes and the more immigrants that nations allow within their borders, the more you will see those conditions actually driving wages even lower due to the competition.
The answer to poverty is population control as we see in China and NOT handouts and government safety nets. Handouts merely give the poor a false sense of security so that they feel free to have even more children and get themselves even deeper in debt. And the answer is also education. How can you expect to earn high wages when you have absolutely nothing to offer other than brute force?
But the education has to be geared to today's needs. If someone graduates from college after four years of majoring in Peruvian Basket Weaving, then he will end up sitting in Grand Central Station along with all of the little Peruvian ladies in their stovepipe hats, selling baskets. There really are entities out there with a constructive attitude, just as there are priests who, shall we say, don't think we should take the creation story too literally.
The IMF has been forcing destructive economic policies on countries around the world for decades and now suggests we must have more trust in capitalism. Kick me in the groin and then kneel tenderly over me and tell me we need to work out a way for us to nurture greater trust between us. If the Head of the IMF thinks this thing called capitalism needs to inject integrity into its ways and means...perhaps this implies the current set-up is already disintegrating. Integrity is defined by private space/time in my view. Space/time that is actually God given and available to one and all, strictly speaking.
Thus said perhaps this thing called capitalism needs to be aware that it's certainly not the be all and end all of everything, so to speak. Capitalism can do what it normally does, I suppose but the impression I get from Christine lagarde's message is that capitalism should be more kindly aware that it's not the only fish in the sea.

There are plenty of rooms for everyone, in an ideal world

The collapse of the intellectual engagement of the supporters of Capitalism from the process itself is almost complete. Humans may be described as having the following properties, being in love, behaving with integrity and etc. The condition for falling within the terms scope is the possession of human consciousness. Capitalism is not a human subject it is a method of organizing tasks that a particular species of animal performs in order to continue to exist. Like all such methods it is by its nature historically rooted and transitional. And no amount of mathematical equations can disguise these features of Capitalism. Given the obvious fact that it is impossible to save Capitalism this final riposte to Marx is destined to be repeated. You have to, because the teacher said to. And if the various anti Marxist numb skulls in the media have any 'integrity' they will debate the issues with actual Marxists.
Saying capitalists (or capitalism) need more integrity is on the same level as saying thieves need to be nicer. It is possible for thieves to be nicer, yes - but they still make their way by theft. As you can see, the niceness is not only relative, but a minor key in this cacophony. Capitalism is a system of appropriation of other people's labor by those who own the places where the labor takes place. It is theft, organized on a vast scale and now at a highly technological level. We do not need "nicer" exploitation, but an end to it.
E.U federalist politicians in total denial over failed policies
Revolution may not be nice - certainly, not to those who stand to lose from it, but it is necessary as never before. The profit motive is destroying our planet, and major damage is already underway. It is past time to get rid of this system of thievery and destruction.
I bet hardcore EU -federalist politicians will be in total denial that their failed EU policies just made 1/3 of Europe vote UKIPs, Syrizas, Le Pens and what's that new lefty thing called in Spain. Federalists will now dig in their denial even deeper in their holes and start claiming 1/3 of people of Europe is far-something and racist. It is like workers who voted against the EU fanatics or just didn't go to vote at all wasn't there at all. First thing what they will do is they will try to block this voice any possibility to be in the discussion and try to secure all top-spots in EU for federalists. The opposition of course won't admit that Le Pen and Syriza got victories for the same reason and be scattered.