ifo President Fuest Calls for a “Europe of Opportunity” Instead of “Europe As a Fortress”
Three weeks before the European elections, ifo President Clemens Fuest expressed his opposition to the political mishandling of populism. In his speech at the award ceremony for the Schleyer Prize in Stuttgart, he spoke out against the vision of “a Europe that protects,” recently outlined by French President Emmanuel Macron.
“This was certainly well intentioned,” Fuest said in his speech, “but the image conveyed here is not the right one. It is the image of a Europe on the defensive. It is a Europe that is afraid. A Europe that is a fortress. A Europe that is not governed by freedom, markets, and competition, but one where there is tough regulation and management of scarcity.” Fuest contrasts this with a “Europe of opportunity.” He criticized the French and German governments for wanting to weaken competition in the European single market in order to build large corporations meant to be hailed as European champions. “In fact, these privileged companies would just become lazy and inefficient; inequality in Europe would increase, and growth would slow down,” Fuest said.
He also believes that making a national minimum wage mandatory in all EU member states is the wrong way to go. “The EU can impose a minimum wage, but it cannot guarantee that there will be jobs at that wage. Only an appropriate level of productivity can achieve that.”
Fuest demanded that governments should instead create conditions that would allow people in Europe to overcome their challenges. “Most people can do it, and they can do it on their own. We need a Europe of opportunity in which everyone bears the responsibility to take advantage of these opportunities. That’s why I say the answer to populism is not a welfare state that regulates everything; no, the right answer is liberal economic policy.”
That means competition, open markets, private property, flexible prices and wages, and personal responsibility. “Markets and competition require a framework built around competition policy that prohibits cartels, and bank regulation that prevents situations in which profits are privatized while losses are socialized, as happened in the financial crisis,” Fuest said. The Europe of opportunity also includes effective environmental and climate protection. “We need a Europe that is open to the outside world while also being dynamic and diverse internally. However, Europe must represent its interests effectively in the world where the member states cannot do this on their own; for example, in trade policy, migration policy, defense policy. Europe must also take specific action internally and in concert when it comes to reforming the eurozone, expanding European infrastructure, and coordinating internal security,” Fuest said.
“A strong welfare state should enable, not disempower; it must provide for basic material needs and open up access to health care, social contacts, education, participation, and opportunities for advancement. Its social safety net should catch those who cannot help themselves because they have suffered unfortunate setbacks, become unemployed, or fallen sick. Without these prerequisites, the scope for freedom is of little value,” Fuest said.
