Comment on “Instability in Europe and Its Impact on Asia”

• DOI: http://doi.org/10.1111/aepr.12224
• Date: 01 July 2018
• Author: Soko Tanaka
• Published date: 01 July 2018

Comment on “Instability in Europe and Its

Impact on Asia”

Soko TANAKA†

Chuo University

JEL codes: F02, N14, N15

Accepted: 16 February 2018

Kaji (2018) explains in her introduction that three unintended consequences of European

integration became renewed sources of instability and crises. While the European Union

(EU) succeeded in economic integration, it has given rise to the following three unintended

consequences: (i) growing anti-integrationist movements and Brexit; (ii) skepticism about

the benefits of the free movements; and (iii) the burden of the welfare state, which brought

social exclusion and populism movements of unemployed workers.

The welfare state does not belong to European integration, but rather to each member

state of the EU. So, problems of the welfare state should be checked up not at the EU but

at the member state level. We saw in 2016 that the Brexit campaign led by populist politi-

cians was victorious and Mr. Trump was chosen as the president of the USA. Although

developed continental countries have guarded their welfare states, the UK departed from

itspostwarwelfaresystemfromtheMargaret Thatcher government era in the 1980s and

went step by step to a laissez-faire system of the Anglo-Saxon type similar to the USA. So,

it was not the burden of the welfare state, but rather the weakness of the welfare state that

strengthened populism and social exclusion.

Kaji (2018) grasps postwar European integration as a continuous unity. There were

qualitative changes at least twice. When the USA and the UK switched to neoliberal capi-

talism and financial globalization in the 1980s, the continental European Community

countries had to follow up with the single market integration which began in 1985. The

single market had to be followed up by monetary integration in the 1990s to avoid a possi-

ble breakup, which might have happened with attacks by hedge funds and investment

banks (mainly Anglo-Saxon institutions) under the free movement of capital. The second

change happened when the neoliberal global capitalist system broke down in the Lehman

crisis. The crisis dramatically worsened budget deficits in almost all capitalist countries.

The southern European countries fell into government debt crises, which developed into

the euro crisis from 2010 onwards. After the Lehman crisis, Europe has been living

in the era of the post-Lehman crisis. As Kaji (2018) explains in detail, Greece, Ireland, Italy,

Portugal, and Spain, the GIIPS countries, have endured tough times.

†Correspondence: Soko Tanaka, Institute of Economic Research, Chuo University, Higashinakano,

Hachioji, Tokyo, 192-0393,Japan. Email: tanakaso@tamacc.chuo-u.ac.jp

258 © 2018 Japan Center for Economic Research

doi: 10.1111/aepr.12224 Asian Economic Policy Review (2018) 13, 258–259