As the Nobel-laureate George Akerlof together with his co-author Robert J. Shiller emphasised in the book Animal Spirits, the societal and economic development relies heavily on the trust infrastructure of the given country.
Trust and confidence exuded by citizens towards
state and governmental institutions are negatively affected by recent financial and
economic crisis (Chart 1).
Chart 1. Trust in National Governments and Parliaments and in the European Union: Trend
Chart 1. Trust in National Governments and Parliaments and in the European Union: Trend
Source: Standard
Eurobarometer 78, p. 14
This calls for pro-active states tailored towards two
objectives during their battle when the
concomitant weakening of economic growth in the era of austerity has also
become much clearer: (i) dampening
the sovereign risk through fiscal consolidations; (ii) while supporting as well as reinvigorating growth and not
triggering soaring unemployment.
As Stevenson and Wolfers
(2011) pointed out, every time when unemployment was in rise in economic
history, the trust level declined, that is to say, the democratic deficit just
deteriorated. This time is not different in this regard.
Chart 2. Trajectories
of unemployment rate (%, 2003-2012)
Source: Eurostat
The question how to stabilise and give impetus
at the same time remains a central issue of contemporary European studies. For sure, the role of the state is appreciating.
The question of „how to make the state to be a trust builder channel in a more dedicated way” can be
linked to the issue of public
sector innovation that may help to maintain the quality of service
provision, to reduce excessive expenditures while not imposing additional
burdens on labour and the economy as a whole.
This post features the author's personal view and does not represent the view of ICEG European Center.
This post features the author's personal view and does not represent the view of ICEG European Center.
