What is to be done now? We should put together a conference of eurozone nations on debt—just like those that were held in the postwar years, to the notable benefit of Germany. The objective would be to reduce public debt as a whole, starting with a system of allocation of payments based on the increases in debt that have occurred since the crisis began. In an early phase, we could place all public debts greater than 60 percent of GDP in a common fund, with a moratorium on repayment until each country has regained a trajectory of robust growth in comparison with 2007. All historical experience points in this direction: above a certain threshold, it makes no sense to repay debts for decades. It’s more advisable to openly reduce debts in order to invest in growth, even from the creditors’ point of view.

Such a process demands a new form of democratic governance, one that can assure that such disasters are not allowed to recur. In concrete terms, the interests of taxpayers and national budgets demand the establishment of a eurozone parliament composed of members drawn from the national parliaments, proportionate to each country’s population. (Such a parliament, of course, would be different from the current parliament of the EU, which includes EU members that are not part of the eurozone and is relatively powerless.)

We should also entrust each national parliament of eurozone members with a vote on a common eurozone corporate tax, otherwise the outcome will still—inevitably—be fiscal dumping and scandals like that of LuxLeaks, in which leaked documents revealed the use of Luxembourg in tax-avoidance schemes. Such a common corporate tax would make it possible to finance investments in infrastructure and in universities. To take one emblematic example, the Erasmus education program—which provides opportunities for students and teachers to study and train abroad—is ridiculously underfunded. It has a budget of two billion euros annually, against the 200 billion euros set aside every year for interest on eurozone debt. We ought to be investing heavily in innovation and young people. Europe has every right and every capacity to be able to offer the finest model of social welfare on earth: we must stop squandering our opportunities!

In the future, the choice of what level of public deficit the eurozone nations should carry will also need to be made in this new setting of joint action. There are many in Germany who would fear being placed in a minority in such a new parliament, and they would prefer to stick to the logic of automatic budgetary criteria. But it was the hindrance of eurozone-wide democracy by a set of rigid rules that led us to the brink of the abyss in the first place, and it’s time to be done with that approach.

If France, Italy, and Spain (roughly 50 percent of the eurozone’s population and GDP, as against Germany, with scarcely more than 25 percent) were to put forth a specific proposal for a new and effective parliament, some compromise would have to be found. And if Germany stubbornly continues to refuse, which seems unlikely, then the argument against the euro as a common currency becomes very difficult to counter.

Vir: Thomas Piketty, New York Review of Books