Eurozone Blues

The European Union is, in my humble opinion, a very poor political system. This is surprising, because European stats usually have a political system that makes me drool at the mouth. Of course it varies from country to country, but the time that I’ve spent studying the German political system has left me impressed.

                In nearly every realm the European Union is a failure. The one exception that I would point out is that it has stabilized relations in the area and made a European war an impossible notion to consider. For this reason it does deserve its Nobel Peace Prize. Not even I would want to take that away. However, in the areas of foreign policy and economics, the EU has fallen short of its mighty goals.

                I don’t need to give examples to have you believe me that the past few years have been a rollercoaster for the Eurozone. Everything that happened here in the US was worse here in Europe. Banking crises in Ireland and Britain (including the run on Northern Rock, something that didn’t happen in the US), debt crises in Greece, crazy national elections in Greece and Italy, sinking economic growth even in the core countries, and more have led the European project on a detour nobody wanted it to go down.

                The problem with the Euro is that every country has their finger on the button to blow the whole system sky-high. This button can be pressed by incompetency, voters who decide to elect someone radical, or a naughty banking sector. If a nation is going to be a part of a wider currency union, there needs to be a strong federal government. The EU certainly does have power, but its power is mostly in regulations. National politicians like Merkel, Hollande, and Cameron hold the real power in the system. Just look at the President of the Council of the European Union. Don’t know who it is? I don’t blame you. The reason is that a person doesn’t hold the position, but rather a country – currently Ireland. The President of the European Council might have some power in the system, but he’s chosen by heads of national governments. Can you see why all the power hasn’t moved into the EU?

                The EU needs a new system of government. I’m not saying the United States is a perfect example, not even close. The two party system we have here in the US chokes off cooperation, conversation, and creates a rigid line in the sand. Whichever side you’re on is filled with angels, and the other side is filled with villains. Switch sides and you’ll find the same thing. The EU is still young, and there’s still time for a makeover.

                This new EU should have an expanded role and an expanded budget. It should be responsible for defense, welfare, and health care. If it can take these big issues it won’t be such a big deal if the government defaults. It won’t leave pensioners out in the cold or crash the banking system (because it will be smaller). The federal fiscal policy will be matched with a federal monetary policy instead of many national fiscal policies matched with a federal fiscal policy. The way the system is now, the small countries that find themselves in trouble are unable to do much but cut spending and let their economy bathe in the waters of reverse stimulus spending.