How to destroy the European Union
Once, the “European idea” helped unite a war-weary continent. Now, overbearing central authorities, suffocating bureaucracies and reams of red tape are limiting the freedom that idea once promised. Europeans are losing trust in their institutions, and worry for their own security. At the heart of the problem is weak leadership.
Politics follow the money – the ECB’s fate
History contains many examples of what happens when politicians gain control over the currency. Few of them end well.
Dark clouds gathering over the global economy
We are probably coming to the end of a global economic recovery. But with interest rates still hovering around zero, central banks will have no ammunition to fight a recession. Meanwhile, debt is high and more trade barriers are going up. The underlying causes of global economic imbalances, and not ...
EU budget plan offers progress and pitfalls
The European Commission is finally taking steps to trim unproductive spending in areas like agriculture in its budget framework for 2021-2027. But while the new emphasis on fighting waste is promising, the fiscal plan also contains troubling proposals. One of the most disturbing is to reduce cohesion payments to countries ...
Irrational tax and regulatory systems
The true story of the Paradise Papers is less about shady business deals than about the byzantine regulatory and tax structures of developed countries. It is a lesson that politicians like French President Emmanuel Macron are studiously trying to ignore.
Creating tax cartels would be detrimental to the EU
The EU needs to maintain a healthy dose of tax competition among member states. Replacing it with a uniform “European taxation system” would encourage excessive public spending.
Taxation horrors and Europe’s frustration
The European Union wants to create new, complicated systems to tax technology companies. Doing so will only harm its economy. Instead of engaging in an economic tit-for-tat with the United States, it should look at how Americans have fostered innovation and built tech giants. Good places to start include increasing ...
Protectionism undermines European principles
Emmanuel Macron came to office promising to liberalize the French economy and reduce the role of the state. But his government is already turning protectionist, threatening to “temporarily nationalize” a shipyard. The move undermines European and liberal principles.
Crusade for total control
The campaign in many countries against cryptocurrencies such as bitcoin is part of a larger government quest for citizen control. Oversized transaction and compliance systems, ostensibly imposed on financial institutions to help fight the gray economy and terrorism, are in fact control tools, used both by democratic and authoritarian governments. ...
The Chinese economy: it’s about debt
China’s high ratio of debt to gross domestic product (GDP) will necessarily lead to an economic slowdown. The question is whether that can happen in a controlled manner that limits the negative effects on the country and the region, or whether it will bring China’s economy crashing down.
An unholy tax saga: Apple and the European Commission
The European Commission put itself on a shaky legal ground when it resorted to unfair competition charges to frame its attack against a tax deal between Ireland and Apple Inc. Disturbingly, the commission also has resorted to blatantly populist rhetoric to justify its action against a profitable company.
Clueless central banks
Despite quantitative easing, forward-guidance and negative interest rates, global GDP growth has not taken off. Avoiding the business cycle should not be the priority of central banks or governments. Creating conditions that allow businesses and individuals to deal with the cycle, should.
After Brexit, what is Europe?
Brexit can be a healing shock to the European Union. The United Kingdom’s decision to opt out forces Brussels to finally confront a central issue: what is Europe’s true identity. The European project can thrive only if it is democratically developed from the ground up, by its diverse and pragmatic ...
Cheap money policy does not fool citizens
Central bankers and a sizeable group among western economists and political leaders believe that low to negative interest rates are encouraging consumption and economic growth. The policy has not been working, however, because citizens rightly distrust it and appreciate the importance of savings.
Market economies, regulation and crony capitalism
The global economic crisis arose in the world's most highly regulated sector – the financial industry. That is certainly no coincidence. When government intervention and easy money meet big banks, the result is cronyism – the furthest thing from genuinely free markets.
Economic riders of the apocalypse
The G20 finance ministers and central bank governors have already met twice this year to discuss the world economic situation, writes Prince Michael of Liechtenstein.After the February meeting in Shanghai, they released a cautiously optimistic communique congratulating themselves for “important achievements” in bolstering growth and stability...
When Ronald Reagan was elected president of the United States in 1980, the country was living through a difficult economic downturn marked by high inflation. Its reputation had taken a big hit, writes Prince Michael of Liechtenstein.The Reagan administration energetically got to work addressing the problems. They simplified taxes, cut ...
Economies need structural reform, not helicopter money
Zhou Xiaochuan, governor of the People’s Bank of China, admitted at a press conference during the G20 summit in Shanghai that monetary measures have a limited scope for stimulating the economy. Structural reforms, though they hurt, are necessary. GIS experts have repeated this many times over the past few years, ...
Reducing the role of cash will destroy the public’s trust in money
Money facilitates trade and serves as remuneration for work. It also stores value. Money that is earned but not spent becomes savings, which can provide capital for investment. The effort expended in providing labor, services, or entrepreneurial activities, as well as the need for goods and investment, form the basis ...
Loose talk on poverty and inequality
Perhaps the biggest success of the past two decades has been huge progress in reducing poverty. In the early 1990s, more than two billion people were living below the line defined by the World Bank as extreme poverty. Today, that number has dropped below one billion, writes Prince Michael of ...
Yearning for the central banks of yore
In the good old days, the role of a central bank was straightforward, clear-cut, one might even say, boring. Central bank independence meant that the super-bankers were to abstain from politics. Their job was predictable: to raise benchmark rates when inflation appeared on the horizon. If the economy started to ...
US and European monetary policy upsets the markets
Bad news on the US economy resulted in equity markets closing on a high for the S&P; and the Dow Jones indexes on Monday, May 18. But looking at market fundamentals, this is a paradox, writes Prince Michael of Liechtenstein.Economic bad news is likely to dissuade America’s central bank, the ...
ECB policy has unintended consequences
Switzerland issued bonds with negative interest rates which were heavily subscribed. It means the bondholder earns no interest but pays interest on the purchase. This is perverted and punishes savers, writes Prince Michael of Liechtenstein.Saving is renouncing consumption in favour of investing in the economy in the expectation of a ...
EU finance: Greek comedy and French tragedy
Greek theatre was known for its tragedies and French theatres and playwrights have a tradition for comedy, writes Prince Michael of Liechtenstein. The Greek debt crisis has kept Europe busy for a number of years. But Greece’s economic problem is virtually ring-fenced so a Greek exit from the euro - ...