Iceland just shattered the EU illusion - Yanis Varoufakis & Wolfgang Munchau | The Econoclasts

The Icelandic referendum rejecting EU accession negotiations signals a broader disillusionment with the European Union, which has shifted from a beacon of 21st-century success to an institution struggling with stagnation and anti-innovation regulation. Beyond the Icelandic case, the North Atlantic liberal consensus on monetary and fiscal policy faces fundamental challenges. While interest rate hikes are often proposed to contain inflation and restore central bank credibility, such measures risk further damaging industrial bases already hollowed out by rent-seeking behavior. The persistent inability of European and American markets to channel savings into productive investment—rather than rent-yielding assets—highlights a structural "rent trap." This dynamic, exacerbated by how big tech applies AI to maximize cloud rents, necessitates a shift toward collective agency or public investment to revitalize material production and move beyond the current economic malaise.