24 June 2015

The Problem with the EU in a Few Sentences

I strongly suggests that you read Katharina Pistor's essay on how the EU is betraying its ultimate goal, a unified and peaceful Europe, in their dealings with Greece in her OP/ED, The Problem With a Small Europe:
News headlines notwithstanding, the fundamental challenge facing Europe today extends far beyond Greece. The real question is what kind of European Union Greece’s creditors want: a “small” one, comprising only the countries that are prepared to live by their exacting standards, or a “big” one that heeds the Treaty of Rome’s call for “ever-closer union.”


European integration was built on the ideal of a united Europe working together to uphold peace, generate prosperity, and advance democracy. At first, cooperation centered on the creation of a common market, with European technocrats, led by the European Commission’s then-president, Jacques Delors, pushing for a common currency, despite deep structural differences. The assumption was that political integration would follow.

That did not happen. Indeed, the approach was tantamount to putting the cart before the horse – with serious consequences, exemplified in the eurozone’s enduring crisis. Yet the technocrats are back, now advocating a fiscal union to support the monetary union, with political union nowhere in sight.

Perhaps European leaders still believe that the needed political integration will eventually occur. But, even in the unlikely event that it does, a political union that emerges from desperation to save the common currency will be very different from one built purposefully, as the Treaty of Rome envisioned, based on shared values and goals. And, in the meantime, a fiscal union without a political union is an anti-democratic nightmare.


In this context, it is perhaps understandable that the creditor countries are increasingly promoting a “small” EU that includes only those that are willing and able to meet their high standards. But, while this might make for a stronger euro – and even a stronger EU – it would carry a huge cost, as it would effectively force members to abandon their democratic ideals. Meanwhile, the excluded countries would be forced to engage in competitive currency devaluations and other beggar-thy-neighbor policies. The dream of shared prosperity in Europe would be dead.

This outcome is not inevitable. A common currency is a means to an end, not an end in itself. If European monetary union is not leading toward the desired end, it – not the goal of ever-closer union – should be altered. And, in fact, most Europeans favor a different means, based on greater flexibility for domestic preferences and a bottom-up approach toward further integration. In such an environment, Greece might not only survive, but thrive.
I would note that the founders of the Euro currency said that their goal was to create a uniform standard of living across Europe.

It appears that they may get their goal, but it will be lowering living standards of more prosperous nations, not raising up their less fortunate neighbor.

Not surprising when one understands that Robert Mundell, the "father of the Euro", is also considered by many to be the "Father of Reaganomics."

Impoverishing ordinary people is a feature for people like Mundell, not a bug.


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