Dr. Dirk Ehnts:

On a global level, the biggest economic blocs are the US and probably then China next to the European Union. As far as I know, China has no such fiscal rules, which I guess is obvious because it is a Government-run development policy that they execute. The US has some strange fiscal rules as well but not deficit limits. I remember that Barack Obama, in 2010, watched over a public deficit-to-GDP ratio of 12%.

That would be outlandish here in the eurozone. He said, "No, that's okay, we're going to grow ourselves back to get it back to 3%", and that is what happened. The US also has the public debt ceiling. There has not been a lot of debate on that in the past, say, 20 years as they just raised the debt ceiling every time. When you hit the debt ceiling, you have to a have a majority in both Houses to raise it, otherwise you cannot spend more. They had this problem a couple of weeks ago in the US and the decision was taken to postpone the matter until December. I have not heard back on it. Normally, Wall Street uses all of its influence to make sure that there is no default on Government bonds, US Treasuries, so that should not be a problem. They have a pay-go system whereby when there is an increase in Government spending, an explanation is required as to how it is proposed to either raise taxation in the future or to cut Government spending elsewhere in the future or in the present to make sure that it is deficit neutral. They have different types of fiscal rules but mostly they are harmful because they cause Government spending to be lower than it would otherwise be.

On the international level, Canada, for example, does not have any of those rules. The Prime Minister, Mr. Trudeau, was elected about ten years ago. He campaigned on the promise of not enforcing austerity, whereas social democrats and conservatives in Canada were doing that. It gives more choice to have no fiscal framework. People like to think that the Government can help them solve some of society's problems. Government spending going up means that the private sector might be producing more but it does not mean that there are more public employees. It gives you more options. That is a good thing. As I said, the other countries more or less ignore these type of fiscal issues that we create. There are other things that are worse. For example, in Sweden the Government is supposed to have a fiscal surplus of 1% of GDP each year in normal times. That is much worse than in the eurozone. They have their currency such that they cannot run out of their own money so why would they do this? To some extent, I find it undemocratic to write up in your constitution that there is a limit to Government spending. Why would you want to do that? Do you not trust your democracy? Do you not trust your voters to make the right decision to vote for the right parties? I apologise if I carried on a little.