Certainly it is possible, though actually deciding to do so is in the hands of national public opinion and politicians. It is in the realm of possibility for prosperous and rich societies, such as the French, Italian, Spanish, or even the Greek society to enact what are, in effect, important but limited adjustments in their economic and social structures. We are not talking of dismantling the European social model here—in fact, of all political orientations the Germans are the staunchest defenders of it. It is a critical condition for making structural reform possible, that the distribution of the burden of these adjustments be fair and transparent and also be perceived as such. Otherwise the social resistance would be overwhelming. We'll need the perennial triad of efficiency, stability and equity.
Germans look behind their shoulders and see that they have gone through a similar transformation in the last ten years or so. Around ’98 or ’99, if I remember correctly, The Economist put Germany on the front page calling it “The Sick Man of Europe,” right? You remember that. So at that time Germany was the sick man of Europe, partly because of reunification, which was a heavy burden, but largely for the overly rigid, inefficient, malfunctioning arrangements in the corporate sector, labor markets, and product markets of West Germany itself. Domestic reform was undertaken and pursued in a consistent way during more or less the first ten years of this century, facilitated by a bipartisan agreement between the Social Democratic side (in power until 2005) and the Christian Democratic side (since then, consisting of different government formations), with remarkable continuity and political resolve.
And, you know, to some extent this is already starting to happen in a number of our countries. There have been important changes made in Italy very recently. There were changes made in France even earlier than that, and in a number of other countries as well. So I would just stress the fact that this process is economically possible: to become politically acceptable, it needs to be fairly distributed, and it also needs to be presented to public opinions as a collective project, a common design that all can understand and whose goals will benefit all, including future generations. Austerity alone does not generate consensus let alone enthusiasm, but austerity can be accepted once its meaning and purpose are understood. It is also essential that national and European authorities cooperate and speak with one voice. The center of democratic control has shifted to some extent, over the decades, from the nations to Europe as a whole, as the continent became more integrated. But too often we see national politicians blaming Europe for unpopular domestic policies that would be, in fact, necessary in all circumstances.