Three Things on the Road to "What is to be done?"

Three things that might be worth reading together as one route to thinking through the mess Europe is in. Martin Wolf's piece in the FT is really interesting because it thinks beyond the debate around the German "duty" to carry Europe on its back. As Wolf himself points out the institutional context for an "insurance and adjustment union" is really hard to imagine though. The political economy of such a union is not obvious either but Steiglitz's latest helps to specify why the goal of such a union should be minimising inequality if it wants to maximise efficiency. Acemoglu and Robinson have an awful lot of useful things to say about the institutional design and civic culture that promote these goals. Their thinking is directed for the most part toward developing nations and economies, but the central insight that a democratic citizenry is the necessary context for a rational economy holds in other directions.

Read together these amount to a specification for a refounded European Confederation. A United States of Europe is politically incredible and the current institutional architecture does not work. Necessity does drive innovation.