CITIZENS TRUST

and the
INCOMPLETENESS
of the MONETARY
UNION
European Economic Policy –
Crises and completing EMU
J. Max. Espiritu Ventocilla
11.07.2022
Given the incompleteness of EMU and the euro, European
Policy Makers envisage its further deepening. In how far is
citizens trust in the governance behind EMU and the Euro an
important prerequisite for such a deepening?
 What is the nature
Trust : of confidence?
confidence in or reliance on someone
Standart economics:
closely related to belief and faith
Pure rational

Confidence :
Animal Spirits’
etymologically: trust or full belief perspective:

NOT just rational

“Many decisions are made
because they feel right.
Sometimes important decisions
came straight form the gut”
Confidence multiplier: Butterfly effect :
a small dip in confidence creates greatly magnified
effects on consumption, investment, government
≈ Small changes produces large
effects
expenditure. (Arkelof & Shiller, 2009)
 ❖ The lack of the DEEP VARIABLE:
➢ The core of the Eurozone’s fragility
remains in its incomplete construction “a strong national sense of common
purpose and an intense feeling of
➢ How to complete it? → transfer of belonging to the same nation”
power (sovereignty) Paul de Grauwe (2018)

▪ Problem: lack of willingness

EUROZONE SHOULD → Europe remains a fragile construction
❖ GERMANY as an example of unification:
“a strong national sense of common purpose and an
Political Union intense feeling of belonging to the same nation”
Paul de Grauwe (2018)
Monetary
union
 “much of human motivation comes from living
through a story of our lives, a story that we tell
to ourselves and that creates framework for
motivation(…) The same is true for confidence
in a nation, a company, or an institution”
“The confidence of a nation, or of any
large group, tends to revolve around
stories”
Arkelof and Shiller (2009)
➢ Stories shapes our understanding of the
world
➢ Stories and storytelling are fundamental
to knowledge
Stories and Confidence:
➢ High confidence are related to
inspirational stories
➢ Stories are like epidemics in terms
of spread
▪ If a significant amount of EU’s
citizens, feel themselves as part of a
common narrative then the trust in
the union will grow and the political
integration may be possible.
Freude! THE ANTHEM OF EUROPE
Freude!

Freude, schöner Götterfunken

Tochter aus Elysium,
Wir betreten feuertrunken,
Himmlische, dein Heiligtum!
Deine Zauber binden wieder
Was die Mode streng geteilt;
Alle Menschen werden Brüder,
Wo dein sanfter Flügel weilt.

Wem der große Wurf gelungen,

Eines Freundes Freund zu sein;
Wer ein holdes Weib errungen,
Mische seinen Jubel ein!
Ja, wer auch nur eine Seele
Sein nennt auf dem Erdenrund!
Und wer's nie gekonnt, der stehle
Weinend sich aus diesem Bund!
 Summary Questions

1
Trust or confidence creates a domino
effect on the main variables of economy
. Are you agree on that a strong eurozone
depends only on political unification?
(Confidence multiplier)

2
Europe lack of a political union which
reflects a lack of a common purpose
. What are other ways to enhance trust in
citizens?
(Omited deep variable)

3 Stories have the power to create strong

bonds through time (feeling of belonging)
. How to remedy future euro-
nationalism in case it appears?