By Francesco Canepa
FRANKFURT (Reuters) – Unelected bureaucrats, rather than politicians, should be put in charge of the euro zone’s fiscal policy, Nobel prize laureate Eric Maskin said on Thursday, arguing they would be in a better position to decide for the public good.
Despite mounting calls from economists and international institutions, cash-rich euro zone governments such as Germany have been reluctant to loosen the purse strings, fearing they would end up subsidizing their indebted neighbors.
Maskin, winner of the 2007 Nobel prize in economics, said election-seeking politicians tended to pander to voters, who “have a hard time” understanding complex issues that play out over a long period of time, such as fiscal or monetary policy.
The Harvard professor said that was particularly true in the euro zone, where most policy makers are elected nationally but make decisions affecting the whole bloc. He cited German chancellor Angela Merkel’s involvement in Greece’s bailout negotiations as an example.
His comments come amid a widespread backlash in Europe against technocrats accused of imposing self-defeating austerity on Greece and other bailed-out countries, and criticism of the European project in general seen by skeptics as favoring elites.
Maskin said fiscal decisions should be outsourced to a non-elected body modeled on the European Central Bank, whose executive board is appointed by the European Council of heads of state or government.
“What there should be is a non-political body, like the ECB, that has the power to set binding spending and revenue targets,” Maskin told an ECB conference.
“This body should also be able to make fiscal transfers when necessary between countries.”
Elected governments would then merely choose how to achieve those targets, Maskin said.
“It’s up to the countries to set tax and spending policy to meet those targets. But if they don’t, the non-political body has the power to go after them.”
Maskin said politicians may welcome being relieved of the responsibility of making unpopular decisions.
“It may be an enormous relief to them to say ‘look this is out of our hands. These non-political people are making these decisions, we have to do what they say’,” Maskin said.
(Reporting By Francesco Canepa; editing by Ralph Boulton)