This question is avout the impossible trinity 1 If mass poli

This question is avout the impossible trinity.

1) If mass politics is combined witht the nation state why does the provision of international public goods suffer?

2) If provision of International public goods (e.g., a single currency like euro) is combined with independent nation states (as in the euro zone) why is it likely that the desires of mass politics (e.g., \"we want full employment\") could well be thwarted?

Solution

Impossible Trinity

In the long-run, a Central Bank hopes to conduct independent monetary policy should choose between allowing a free movement of capital, and, maintaining a fixed exchange rate. Loose monetary policy for increasing the total money supply cannot be balanced with a policy to support foreign exchange value of its currency. One option is to restrict the sale of domestic currency in the currency market. This comes from Robert Mundell, and, Marcus Fleming\'s work.

1) An innovative approach is required for European integration. For public goods, it is a combination of economic theory, and, politics. Global public goods - financial stability, climate change, threats to health, security and peace are major global challenges. Solutions are elusive in case of public scepticism of institutions, and, rising nationalism. These have costs, and, benefits for citizens across the world. Therefore, these are seen as Global public goods.

2) An individual\'s consumption of a public good does not subtract from others\' consumption of a public good. Those living in a community cannot be excluded from consumption of a public good. European public goods impact European citizens. Employment is not a public good. Consumption by one individual does influence consumption by others. European public goods affect all European nationals. As trade has increased, globalization has led to the existence of global public goods, and, a global environment. European public goods have been generated by political, and, economic integration. European policies are also public goods. Providing public goods has its own costs. Individuals must pay for the benefits. There should be efficiency in, and, an incentive for collective action. As the size of EU increases, efficiency is decreasing in providing public goods. In a large group, with the burden, or, benefit only on a few members, collective good is not provided without inducement, or, coercion. EU has tried binding rules, and, peer pressure.