Reinforcing Economy and Monetary Union and Welfare State Policy

• Author: José A. Nieto Solís
• Position: University Complutense of Madrid, Spain
• Pages: 115-128

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T EA U R, V. 1 N. 0/2014

Reinforcing Economic and Monetary Union and

Welfare State Policies

José A. Nieto Solís*

Abstract. This Paper raises three arguments to reinforce the economic and social aspects of the

Economic and Monetary Union. First, the Welfare State is not responsible for the crisis and its

effects on fiscal deficits and unemployment levels. Second, the reduction of public deficits cannot

be based on more cutbacks in social policies. Third, if analysts and citizens would better perceive

the incentives and costs of public policies, governmental actions should gain in efficiency, stability,

equity and stimulus of economic growth. These arguments are developed from three perspectives:

the Welfare State as a public expenditure, as a framework of social policies, and as a sustainable

common investment. In conclusion, by opposition to the neo-liberal paradigm and its insistence on

reducing the size of the State, academic debates should focus on theoretical, methodological and

empirical aspects that would aid to analyze more rigorously the various effects of Social Market

Economy as a model to reinforce the Economic and Monetary Union in Europe.

Key-words: Economic and Monetary Union; Welfare Policies; Social Market Economy

1. Introduction

e idea behind European integration was a desire to create a pragmatic utopia.

And I think that one way to reinforce this original idea is to focus on the

importance of the Social Market Economy model, even if it sounds like a dream.

If we leave to one side the recent events in Europe and the resulting spending

cuts, the debate nowadays appears to focus on quantity rather than quality: a

wider or narrower role for the Welfare State, greater or smaller spending cuts,

yes or no to public provision - given the assumption that markets are ecient.

* University Complutense of Madrid, Spain