At one level, the Fiscal Treaty is quite a limited shift in European fiscal arrangements, especially relative to the already-agreed six pack. (This short guide is a handy reference, while the sixpack details are here.)
The headline on today’s IT op-ed by Terrence McDonough suggests that it is riskier to vote yes than to vote no. Since controlled macroeconomic experiments are not possible, there will inevitably be differences in such assessments across economists with different economic models of the world.
McDonough’s evaluation of the balance of risks is consistent with his broader analysis of the European crisis. For instance, as reported in the Irish Times in July 2011:
AN IRISH big bang involving debt default and withdrawal from the euro is needed to take the economy out of depression, the United Left Alliance national convention was told at the weekend.
Terence McDonagh, an economist from NUI Galway, told more than 400 delegates from around the country who attended the convention in Dublin on Saturday that five measures implemented simultaneously over a 48-hour period would reinvigorate the economy.
The alliance’s forum focused on its future and how it might develop into a national party.
Formed before the last general election, the alliance comprises the Socialist Party, the People Before Profit group and the Workers and Unemployed Action Group as well as some independent members.
Prof McDonagh said he wished to propose a radical economic programme to address the economic “depression”. He said the country should default on its debt, leave the euro, build a single public bank, provide a jobs guarantee for all workers and nationalise the Corrib gas field.
By 2014, the State would owe €200 billion, €80 billion of which was to bail out the European banking system, he said.
A further €80 billion was attributable to “the elite’s refusal” to tax itself. “Irish working people and poor people cannot pay, shouldn’t have to pay and sooner or later won’t pay,” he said.
Arguments against default suggested there would not be any money in ATMs or to pay nurses or bus drivers; the solution to this was to leave the euro and print our own currency. This would take us out of the “euro madhouse” and allow us to reinflate the economy.
The creation of a new public bank, taking with it assets of existing banks, would leave behind a bad credit bank owned by shareholders, bondholders and the European Central Bank.
“If the ECB believes the bondholders should not be burned, they can pay them first,” Prof McDonagh said, to a round of applause. The Government should provide a jobs guarantee and “command unused labour resources for the common good”.
It should also purchase and develop domestic energy assets, including the Corrib gas field, he said.
I imagine that voters that share this analysis will indeed be inclined to vote No.
The set of potential No voters is of course far wider than this cohort, just as the set of potential Yes voters surely encompasses a wide range of views on the prevailing economic model and the future of Europe.