Economic and Social Committee
Malosse: Regulating financial markets not number one priority
By Gaspard Sebag | Monday 16 July 2012
The financial markets should not be blamed for the crisis, says the next President of the European Economic and Social Committee (EESC), Henri Malosse. He believes neglecting industrial production for the utopia of a knowledge-based society was an error and calls for a push toward reindustrialisation.
Regulating the financial markets to exit the crisis is not the number one priority, according to the man who was chosen by the EESC’s Employers’ Group (I) to head the whole institution from April 2013 onward. He does not encourage “too much regulation,” which “would create again the image of Europe being a big bureaucracy”. The priority, Malosse says, is to support economic policy through reindustrialisation by pushing to have European industrial champions. Germany, which kept an industrial strategy, is an example to follow. The EU made “an error” in placing too much faith, between 2000 and 2010, in the development of a knowledge-based society through the Lisbon strategy and at the same time neglecting production. “A knowledge-based society is a dream, propaganda,” says the Frenchman.
In any case, the cause of the crisis “is not in the financial markets,” according to Malosse. He believes that one of the key problems is that the increase in competitiveness in Europe in the last few decades was not matched with an equal rise in salaries. This in turn paved the way for the world of finance to create artificial products – “virtual money” – so that consumption could continue. The mortgage financial products that led to the subprime crisis are one example.
Beyond the industrial answer, there is also an institutional answer to the crisis, says the future EESC president. “Europe has a double crisis: a crisis in Europe and a crisis of Europe,” Malosse argues. The United States’ federal government was able to take quick decisions to address the crisis. The same cannot be said of the EU, whose governance is much less reactive. The culprit? The EU12 enlargement. “Unanimity at twenty-seven is a nightmare,” deplores Malosse. “I was very supportive of enlargement. The mistake is that we didn’t reinforce the common rules [beforehand],” he says, adding that it was foolish not to modify EU governance before the enlargement.
One country, already part of the EU15, has been dragging its feet since day one and stalling further European integration: the United Kingdom. “They joined in the seventies because they had no choice: their economy would have collapsed otherwise,” says Malosse. Since then, “politically the UK has always created problems”. Yet he believes it would be “a pity” if the UK left as it has brought a lot of ideas to the EU. Economically, it makes sense for it to stay, he says, underlining that most the pro-European forces in the country are the employers. “Why is the City of London so successful?” he asks. The UK’s main advantage is access to the single market. British Premier David Cameron is perfectly aware of that and repeats it regularly to justify EU membership. n