Time to rediscover the credible centre ground.

Artículo aparecido en  "Policy Network" el 21 de abril de 2015.

European progressives need to rediscover their capacity to advocate a credible centre ground, and regain the courage to lead

The crisis in Greece serves as a warning to democrats everywhere. The country that centuries ago gave birth to the democratic ideal has the potential today to ignite a populist revolt that could engulf its neighbors and bring Europe to its knees. European leaders have chosen to punt decisions on Greece’s economic future until the summer. In the intervening months, progressives need to define a pro-growth alternative and bring about a ‘European spring’.

In France, Italy and Spain, as elsewhere across the Mediterranean, the threat is tangible. There are little or no significant signs of economic growth. Populist movements from Podemos, to Five Star and the National Front remain strong or are gaining momentum. In this context, the voice of the pro-growth progressive left is trapped in a pincer movement between an ideological right wedded to Angela Merkel’s austerity agenda and disenchanted voters encouraged to blame Europe, foreigners and immigrants for their current woes. The Spanish Socialist Workers Party´s (PSOE) results in Andalucia are great news for progressives but there is still a lot to achieve in coming elections.

Across Europe, then, we are experiencing a leadership crisis. Conservatives seem content to bury their head in the sand and place blind faith in calls for structural reform. The ‘Juncker plan’ is the latest example of this fruitless and failed path. Similarly, progressives seem incapable of mustering the intellectual rigor or the political will to design, propose and pursue a credible pro-growth alternative. In this vacuum, populists are pushing the romanticised ideals of Caracas and Porto Alegre rather than the hard-earned progress of Scandinavia.

The time has now come for progressives in Europe to take ownership of the current crisis: to carve out a political space characterised by realism, facts, and credible policies able to engender economic growth and business competitiveness, and promote social justice. Properly synchronised policies focused on social justice and economic competitiveness can help foster a virtuous circle of inclusive prosperity. Unfortunately in Spain, Podemos claims we can afford Scandinavian public services without the dynamism of their economy, while Ciudadanos warns that Nordic competitiveness is only achievable without its welfare.

The time has now come to move beyond these arcane and unhelpful dichotomies, to stop opposing welfare and competitiveness, or growth and structural reform. All the structural reforms in the world will not deliver growth, just as a massive demand stimulus or mutualising national debt will not improve the competitiveness of French and Italian industry, or make Spain’s social contract sustainable.

The issue is one of choreography and timing. Supply-side measures will only produce results if they are accompanied by the investment necessary to deliver productivity gains. Moreover, good jobs in a competitive economy are the best route to social justice, but they also require investment in innovation and research and development, education and skills, more effective institutions, and new infrastructure. This could not be further from the route Prime Minister Manuel Rajoy chose for Spain – internal devaluation achieved by axing wages and reducing welfare without any strengthening of capital investment. Today, Spaniards are being led in a race to the bottom, when with aspirations for investing in human capital, technology and innovation, and physical capital would could win a race to the top.

Spain, and Europe, needs a new deal, one based on coherent mix of supranational investment and domestic reform, accompanied by a better coordination of macro-economic policies. In the case of Germany, measures to increase Europe’s aggregate demand and mutualise debt must now proceed. This must move forward in tandem with concerted efforts at domestic reform. And these must be supported by greater action at the European level, which is why PSOE recently presented its own re-industrialisation strategy for Europe, focused on investment in human capital and skills.

For this balance to occur, however, European progressives need to rediscover their capacity to advocate a credible centre ground, and regain the courage to lead. Jacques Delors, was fond of saying the EU was like a bicycle: easy to ride as long as it was moving forward, likely to fall once it stopped. Europe needs a new sense of direction and greater balance if it is to survive. Only a credible pro-growth progressive voice can provide this. By moving forward Europe can escape the current crisis, but we should be under no illusions – time is running out for the European dream.