Tuesday, December 16, 2014

Jean Tirole: "I'm a big federalist"

These words came after a question by the BBC journalist Zeinab Badawi to the 2014 Economics Nobel Prize asking whether it was true that Tirole was a federalist in favor of a European state. It was in the context of the "Nobel Minds debate" in BBC World during the past week-end. Badawi's question in turn came after two questions by young ladies, the first of one by Maria asking whether it would be easier to regulate small terriotries like Catalonia and Scotland instead of Spain and the UK. Maria spoke with a Catalan accent (I know about this particular accent). Tirole's answer perhaps came as a surprise to Maria: "I'm a big federalist," reminding the audience that the objects that must be regulated are more and more international in nature: banks are multinational. Google, climate chnage, all have to be regulated at the global or at least European level. Tirole emphasized that he tries to be politically neutral, but he also left clear that he has little patience with the "horrible" policies of extreme parties. The euro zone institutions are weak, said Tirole, unlike the US: "I would like to have a common budget and a common law." Hopefully that will come, he argued, although "My ideas seem to be against the current because we don’t learn the lessons of history." The French economist defended the idea of a strong EU budget and a EU federal government that operates with higher transfers of sovereignty from the member states and that looks for coordinated solutions to the current economic crisis. It is therefore not only Thomas Piketty and Branko Milanovic who discuss federalism in their work among the economists. Now it will also be this year's Nobel prize.

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