It’s fascinating to watch the unfolding shambles in Europe, rather like observing, from a nearby lifeboat, the Titanic slowly but inexorably slipping under the water. "Expert" predictions are either gloomy or non-credible; either the EU will break up or its currency will collapse, or both. The dominoes are poised to tumble. But recently, a whisper has been heard about a rather different possible outcome. Conspiracists will leap at the chance to say the crisis was planned for that purpose.
Instead of just bailing out the PIIGS with money stolen from German and other taxpayers, the idea is being floated that to prevent any recurrence, at least, a central European authority should control the budgets of member states.
The ultimate blame for the mess there is the institution of democratic government. As Bastiat famously noted, "Government is the great fiction through which everybody endeavors to live at the expense of everybody else" and in this context the parasitic voters of Greece and elsewhere became able a few years ago to live not only at the expense of other, taxpaying Greeks but also at that of other, taxpaying Europeans; those vast -loans were handed over to the Greek government on the nave assumption that it could be trusted to pay it back with interest. It and others cannot. Hence the crisis. I said the assumption was nave, but really it was founded on the fact that while all governments are always ultimately bankrupt they have no assets, for those they seem to have were all stolen they do have the power to tax. It’s no more a legitimate asset than the Mafia’s power to collect protection money, but in practice it normally works. It isn’t working now, because large parts of the respective populations are rioting and striking; not only are they unwilling to pay more taxes or suffer the loss of government handouts like sinecure jobs, they are unable to do so, for the heavier the tax burden the less can be produced to furnish a tax base. The Laffer Curve is triumphant. So has the much-vaunted "power to tax" encountered its limit.
So the option of a Continental bailout is deeply unpopular with the bailers, the option of a disintegrating Europe is deeply unopopular with the political class that has spent six decades glueing it together (and will not in any case avoid all the pain because the more productive economies depend in part on trade with the PIIGS) so the third option is now being floated: not to let the Union fall apart, but screw it more tightly together. Create a United States of Europe, a U.S.E. The key words came, so reports the New York Times, on Monday from Angela Merkel, Germany’s Chancellor:
It is now the task of our generation to complete the economic and currency union in Europe and create, step by step, a political union."
There is a rich irony at work here. Germany is today a very different place from the strident, arrogant bidder for world domination of the early 1940s, but the core values of hard work and thrift that have long characterized its people are now leading to just such a prominence, at least in Europe, but without bloodshed and because people in the rest of the Continent are lazier and less thrifty. If a "political union" were to take place, Berlin would be its center. It’s hard not to wonder whether those boasts of a "thousand year Reich" may have been buried prematurely.
Of course, it’s by no means a done deal. As Nicholas Kulish of the Times remarked, "many countries already using the euro are concerned about how rigorous the fiscal controls could be under German leadership." Seldom was penned a more profound masterpiece of journalistic understatement.
A U.S.E. would be a dreadful idea, and it may be dead on arrival. From the perspective of individuals seeking freedom, it would be yet another layer of government, always the destroyer of freedom. It would be a supra-national parasite, forming a superpower to compete, in the coming decades, with the emerging Chinese and Indian superpowers as well as the declining American one; and rival powers have always, sooner or later, shed massive amounts of blood. From the perspective also of the member governments, however, it would be as welcome as a skunk at a garden party; for all of them consist of people intoxicated by power, and Merkel’s "political union" would take away some measure of that power; she may favor it only because she hopes to lead it. Indeed, some of the EU governments have declined to adopt the common currency, the Euro; the British Pound, the Swedish, Norwegian, Icelandic and Danish Kronor, the Swiss Franc and the Estonian Kroon, for example, are still well under the control of those respective governments, to print at will. Not only did some of the Pols (eg Margaret Thatcher) refuse to surrender that counterfeiting power, referenda of the people they rule also said "no thanks" to the Euro and to a European Constitution. Nationalism, in other words, whether rational or not, is alive and well and stands firmly astride the road to a U.S.E.
The victorious American States formed such a political union in 1788 because they saw no alternative way to defend themselves against the dominant military power of the time; they collectivized defense, but not much else. The States supposed they could not do without it and that they could control it. They were wrong on both counts, as we now know; they were foolish even as governments, to surrender even that much sovereignty. The lesson of the founders of the USA may not be lost on the potential founders of a USE.
The last vote I ever cast in a public election was in 1975, in a UK referendum on joining what Edward Health mendaciously promoted as the "European Common Market." At the time I appreciated neither the real nature of a market, nor the immorality of voting, nor yet the routine mendacity of politicians, but it still made sense to me to abolish customs barriers and passports. Not long after that endorsement, all the Eurocrats phased out the name "market" and set out to build the skeleton for a supra-government and instead of a free market we have a Europe riddled with labyrinthine trade regulations and heading for financial chaos. Government is a truly terrible idea, but small ones are less ugly than big ones, any day of the week.