Evert-jan Quak is now Research Officer for the K4D Programme at the Institute of Development Studies. Evert-Jan was a freelance knowledge broker for The Broker on the themes ‘Inclusive Economy’ and ‘Food Security’. Over his career, he has specialized in international economics, corporate social responsibility and trade issues. Evert-Jan is the author of the book Het onzichtbare label (‘The invisible label’), in which he tackles the question of why current corporate social responsibility policies do not seem to work. Evert-Jan has a degree in international economics and economic geography from the University of Utrecht. He has a mixed professional background, both as a journalist and a policy advisor in international development.
Is the current recovery policy for the financial and economic crises in the Eurozone a genuine answer for the complexity and diversity of the problems that all member states face? Not really. The responses are too one-sided and mainly export and austerity driven. In particular, the current policy ignores the fact that the euro crisis is a systemic crisis that cannot be overcome with more of the same. This euro crisis living analysis showcases in an innovative and interactive way that there are feasible alternatives that not only could bring back some economic growth to the Eurozone, but could also ensure that the recovery endures and includes all the people of Europe. This requires a dramatic rethink on debt restructuring, rising investment levels without triggering over-indebtedness again, and a systemic change of the financial sector industry. Such a strategy should be combined with a wage-led growth strategy based on more and better jobs to reverse the race to the bottom of the current supply side and export-led competitiveness strategies in the Eurozone. Only then is a healthy future for the single currency possible.
The structural causes of the euro crisis – high unemployment, low growth rates and debt-ridden states in the eurozone – are not the fault of lazy Greeks, Portuguese and Spaniards. The euro itself cannot be blamed either. The problem is that the European single currency is part and parcel of an economic and financial model which contains all the ingredients for the current crisis. For example, deregulation of the financial markets went hand in hand with indebtedness of the eurozone countries. Economies within a single currency zone need to harmonize, but the national economies in the eurozone developed in very different directions, increasing the imbalances between the member states. The key to finding the right answer to the crisis is understanding the debts and imbalances in the eurozone. Just blaming debtor states like Spain, Portugal, Italy and Greece and focusing reforms on them, as is the case at present, is to ignore the whole picture. Other solutions for recovery were possible, but a deliberate policy choice was made to offload all the rebalancing efforts onto the weakest economies.
Profits are reinvested less in productive sectors, where labour can benefit, and more in capital markets.
The argument that pits the lazy Greek or Spaniard against the hard-working Dutchman or Fin is clearly too simplistic. It is not a clash of nations, but of economic classes.