‘Brussels’ Economic Policy Leads Europe to Ruin’

Slovenian macroeconomist Jože Mencinger stated in an article for the Maribor daily Večer on Wednesday that the European Commission has been pursuing a wrong economic and industrial policy for years, leading the European Union and its member states towards ‘social and political ruin’.

Brussels, Mencinger notes in his article, has caused the relocation of jobs outside Europe through its misguided industrial policy, as evidenced by unemployment data, particularly among the youth, which he believes exacerbates the potential for social conflicts and violence.

The esteemed economist and former deputy prime minister, whom younger colleagues consider a member of the ‘old’ school due to his views and advocacy for a ‘social state’ and opposition to ‘neoliberalism’, also claims that Brussels’ insistence on an economic policy that dictates austerity and fiscal consolidation has deepened the crisis.

The European Commission has thus supported the decision of the Slovenian parliament to introduce a ‘golden fiscal rule’ as a brake on borrowing and budget deficits, thereby ‘demonstrating its power while attempting to cover its own guilt for the economic, social, and political ruin in the European Union’, Mencinger stated.

He asserts that the wrong EU policy is also evident in Slovenia, where GDP fell by 4.8 percent in the first quarter of this year compared to the first quarter of last year, marking the fourth consecutive quarter of negative economic activity, and it is expected that the GDP decline by the end of the year will exceed initial forecasts of around a two percent drop in GDP.

All of this occurs after Slovenia lost its monetary sovereignty upon entering the eurozone and in a situation where member states have increasingly less sovereignty in both economic and fiscal policy, which demonstrates the wrong direction of Brussels, according to Mencinger.

Regarding the privatization of state-owned companies, which the EU recommends for Slovenia, Mencinger stated that it is based on ‘capitalist fundamentalism’, similar to how nationalization was carried out after World War II according to the recipe of ‘communist fundamentalism’. The recommended structural reforms aimed at strengthening competitiveness actually lead to a reduction in social and labor rights, an increase in unemployment, and ‘economic cannibalism’ that benefits ‘multinationals’ employing cheap labor in Asian countries, among other points Jože Mencinger notes in the daily Večer.

The record decline of Slovenia’s GDP in the first quarter of this year can logically be explained by what economists technically call ‘a decrease in aggregate demand’.

-There can be no other way because economic growth is determined by demand. When you reduce demand, it automatically leads to economic decline, and employment, budget revenues, household consumption, and investments decrease, along with public debt and social despair- concluded Mencinger.