Fiscal Discipline as an Institutional Equilibrium: Northern Europe, Southern Europe, and the Belgian Hybrid Case
Introduction The claim that Southern European countries are “less capable” of fiscal and financial discipline than Northern European countries is too crude if interpreted as a moral or cognitive judgment (frugal north/spendthrift south). It is more defensible if understood institutionally: some countries have historically developed political, administrative, and economic equilibria in which sustained fiscal consolidation is politically legitimate, administratively enforceable, and economically less damaging; others have developed equilibria in which the same discipline imposes sharper distributive conflict and therefore becomes harder to maintain. The difference is not effort but structure. This essay defends the following thesis: the North–South fiscal divide in Europe is best explained by the interaction of institutional trust, state capacity, welfare-state design, party-political mediation, economic specialization, and the constraints of monetary union. Northern European fiscal dis...