{"id":21344,"date":"2013-06-25T08:44:01","date_gmt":"2013-06-25T07:44:01","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=21344"},"modified":"2013-06-25T08:44:18","modified_gmt":"2013-06-25T07:44:18","slug":"jp-morgan-wants-europe-to-be-rid-of-social-rights-democracy-employee-rights-and-the-right-to-protest","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2013\/06\/25\/jp-morgan-wants-europe-to-be-rid-of-social-rights-democracy-employee-rights-and-the-right-to-protest\/","title":{"rendered":"JP Morgan wants Europe to be rid of social rights, democracy, employee rights and the right to protest"},"content":{"rendered":"

In late May J P Morgan issued a chilling review <\/a>of what\u00a0they\u00a0saw as the state of progress on tackling the Eurozone crisis. As they put it:<\/p>\n

The narrative of crisis management in the Euro area has two dimensions: first, designing new institutions for the next steady state (EMU-2); and\u00a0second, dealing with the national legacy problems, some of which were\u00a0there at EMU\u2019s launch and some of which arose during the first decade of\u00a0the monetary union\u2019s life.<\/p><\/blockquote>\n

Their\u00a0assessment\u00a0of progress is:<\/p>\n

- Sovereign deleveraging\u2013about halfway there.<\/p>\n

- Real exchange rate adjustment\u2013almost there for a number of countries.<\/p>\n

- Household deleveraging in Spain\u2013about a quarter of the way there in stock terms,\u00a0but almost there in flow terms.<\/p>\n

- Bank deleveraging\u2013hard to say due to heterogeneity across countries and banks,\u00a0but large banks have made a lot of progress.<\/p>\n

- Structural reform\u2013hard to say but progress is being made.<\/p>\n

- Political reform\u2013hardly even begun.<\/p><\/blockquote>\n

I could comment on the first five issues, but it is the last that is most chilling. They argue of 'the journey of national political reform' as they see it:<\/p>\n

At the start of the crisis, it was generally assumed that the national legacy problems\u00a0were economic in nature. But, as the crisis has evolved, it has become apparent that\u00a0there are deep seated political problems in the periphery, which, in our view, need to\u00a0change if EMU is going to function properly in the long run. The political systems in the periphery were established in the aftermath of\u00a0dictatorship, and were defined by that experience. Constitutions tend to show a\u00a0strong socialist influence, reflecting the political strength that left wing parties gained\u00a0after the defeat of fascism. Political systems around the periphery typically display\u00a0several of the following features: weak executives; weak central states relative to\u00a0regions; constitutional protection of labor rights; consensus building systems which\u00a0foster political clientalism; and the right to protest if unwelcome changes are made to\u00a0the political status quo. The shortcomings of this political legacy have been revealed\u00a0by the crisis. Countries around the periphery have only been partially successful in\u00a0producing fiscal and economic reform agendas, with governments constrained by\u00a0constitutions (Portugal), powerful regions (Spain), and the rise of populist parties\u00a0(Italy and Greece).<\/p>\n

There is a growing recognition of the extent of this problem, both in the core and in\u00a0the periphery. Change is beginning to take place. Spain took steps to address some of\u00a0the contradictions of the post-Franco settlement with last year\u2019s legislation enabling\u00a0closer fiscal oversight of the regions. But, outside Spain little has happened thus far.\u00a0The key test in the coming year will be in Italy, where the new government clearly\u00a0has an opportunity to engage in meaningful political reform. But, in terms of the idea\u00a0of a journey, the process of political reform has barely begun.<\/p><\/blockquote>\n

What J P Morgan is making clear is that 'socialist'\u00a0inclinations\u00a0must be removed from\u00a0political\u00a0structures; localism must be replaced with strong, central, authority; labour rights must be removed,\u00a0consensus\u00a0(call it democracy if you will) must cease to be of concern and the right to protest must be curtailed. This is an agenda for hard right, corporatist, centrist\u00a0government. There's another word for that, and it's what the bankers seem to want.<\/p>\n

You have been warned. Amazingly, they\u00a0had\u00a0the nerve to\u00a0issue\u00a0the warning.<\/p>\n","protected":false},"excerpt":{"rendered":"

In late May J P Morgan issued a chilling review of what\u00a0they\u00a0saw as the state of progress on tackling the Eurozone crisis. As they put
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