Guest lecture Dr. Bernhard Heitzer
People who cut corners will never arrive at home
State Secretary Dr. Bernhard Heitzer puts his guest lecture at the Viadrina under this motto. Dr. Heitzer gladly accepted the invitation of Viadrina professor Georg Stadtmann and met the Frankfurter student body in the fully occupied Audimax. Right at the start he promoted a continuation of the consolidation course in Europe even if it involves a lot of hardships and restraints for many people at the moment.
As the cause of the Euro crisis Heitzer states a permanent violation of the Maastricht deficit criterion, even Germany and France took hand in hand a stance against a deficit procedure. Furthermore, a homogenous monetary policy in Europe leads to low interest rates, so that wrong incentives were set and a misallocation of resources occurred. For example, the investments in the Spain real estate sector can be mentioned in this context. The confidence crisis in the sustainability and the actionability of the Euro states can only be solved by further consolidation. For example, debt caps should be anchored in national constitutions and an improvement of the supervision of macroeconomic developments should take place.
First visible successes of the consolidation process can be seen in the decrease of the current account deficits of Ireland and Portugal and a significant reduction of unit labor costs in Ireland and Portugal. This path should also be continued in the future. A joint liability for public debt in the form of Eurobonds was, however, clearly rejected because this measure would only lead to further wrong incentives. The future of Europe depends – as it was already emphasized by Walter Eucken, the founder of the Freiburger Ordoliberal School – on the following set of framework conditions: Stable money, private property, principles of liability and constancy in the economic policy. The administered medicine would take effect in the end therefore the therapy should not be interrupted prematurely, otherwise the public will only get to know the negative sides of the consolidation without benefiting from the positive effects in the future.