• Karl Pichelmann

Hi folks,

I will use this web site for occasional posts on pertinent issues regarding the EU in the global economy. I will not write a regular blog, rather use this as an outlet for some thoughts that may come to my mind on rainy Brussels weekends.

As a starter, here is my visualisation of Europe's prosperity triangle.

Europe needs to reload its prosperity model of combining stability, efficiency and fairness. The medium-term structural challenges for our societies - already visible before the crisis - have not gone away, and now that the urgency of the wake of the crisis is gone, it is time to prepare vigorously for medium-term challenges, i.e. for what the next two or three decades are likely to have in store for us in terms of demographic, technological and societal change: an ageing population with stronger stratification along socio-demographic characteristics, not least due to migration; a rapidly changing world of work with increasing participation challenges stemming from risks of skill-biased technological change and a widening digital-robotic divide; further increasing varieties of work and life careers, offering yet more choices but perhaps coming at the price of further rising vulnerabilities and putting strains on established welfare systems; rising competition from emerging economies, with which we would not be able to compete on costs; and an intensifying challenge to tackle climate change.

Against that background, mapping out a new narrative for European prosperity can be usefully framed in terms of re-establishing positive feed-back-cycles between stability, efficiency, and fairness. Efficiency per se is obviously not an end in itself, it is an essential driver of growth and well-being in society, but it also needs to be stable and sustainable, with the benefits it brings being widely and fairly shared across society. Stability is of course crucial, carefully balancing the adequate short-run stabilisation instruments with long-term sustainability requirements and safeguarding against the risk of systemic crises endangering broad standards of living. Fairness considerations are indispensable as well, for the growth process cannot enjoy sustained democratic support if its fruits are excessively unequal distributed, including from an intergenerational perspective, and reaped by just a privileged few. Thus, an integrated policy approach is called for to fully exploit the synergies in Europe's prosperity triangle.

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