I doubt that Professor James has the answer, but he does ask the right question: Will a proposed political union work better than the monetary union?
Project Syndicate
Europe’s Next Great Mistake
Harold James | Professor of History and International Affairs at Princeton University and Professor of History at the European University Institute, Florence
9 comments:
I just don’t see Germans being willing to work in factories till the age of 67 while subsidising Greeks who retire ten years earlier and sit in the sun drinking wine.
But as soon as you try to level that playing field, i.e. raise retirement ages in Greece, they start rioting. So bringing political union will be an uphill struggle.
I think that this is perhaps a "simplification," but it cuts to the heart of it: Is Germany going to rule the EZ and eventually the EU, and set the standards, or not.
The other aspect of this is whether the Western plutocracy is going to be able to set global (non-Western) standards for Western labor to make it globally "competitive"?
These are social and political issues as much as if not more than economic.
The only type of political union that might work (economically, at least; wether it could be made to work politically is an entirely different subject) is the one currently not on offer: a truly Federal State with a substantial (say, 20% of the eurozone's GDP) Federal Budget.
That would mean a European wide minimum wage, European pensions, Federal education and health programmes, etc.
Of course, the Germans and other rich countries would have to foot the bill in net terms, something they are absolutely not willing to provide, perhaps wisely.
What is not so wise is the Eurocrats' current master plan for dominating the continent through the workings of the single currency and of central institutions both unaccountable to the public at large and fully devoted to neoliberal, austerian recipes for the peoples of Europe.
Let us make no mistake. The austerity now being imposed on the periphery is but the first, trial stage for implementing the very same policies and principles on the whole of Europe. Witness yesterday's statement by Mr. Richard Branson praising the harsh, brutal fiscal cliff now being introduced in Portugal - according to him, these measures show the way of the future in order to make the Union "more competitive" vis a vis the U.S. and Asia. At fhe same time, Branson warned Britain against leaving the EU.
It's clear that the political union now being debated isn't the Federal version. The Eurocrats will simply create a couple of more centralized mechanisms to keep the continent's economies - especially, but not exclusively, those of the periphery countries - under their boots. New "political union" policies for growth and full employment? Not on their roadmap.
@ José
Right, this is the European haute bourgeoisie strategy for creating a new global privileged class along the lines of former aristocracies in which the succession was by "blood," but really inheritance of power and wealth. Same here through inheritance of wealth and the social position that comes with it, which gives power.
The EZ is fashioned to be able to take on the US, China, India, and Russia for global leadership in the future, and by that I mean under the de facto leadership of Germany.
May Oswald Spengler had something after all.
@Tom
The weakness of the EU will always be the military side of the equation, since Germany remains for the present and the likely future for all purposes a country militarily occupied by the U.S.
Sometimes the German leadership makes shows of opposition to U.S. policies - as was the case with the Iraq invasion - but it's all essentially for internal purposes. German public opinion was strongly against the war and SPD leader Schroder shrewdly positioned himself and his party on the antiwar side.
That very popular stand helped him win the reelection.
Of course, such opposition to the war was mainly cosmetic. Schroder never thought of real opposition - for instance, preventing the use of American bases on German soil in logistical support for the invasion.
That would have been a confrontational step that no German leader could dare to take. So he spoke against the invasion. The German public was pleased. And then the Americans shrugged their shoulders and went ahead with their military plans, including the use of the German bases in support of the attack on Iraq.
This was a plain demonstration of the limits to European leadership in world affairs.
@ José
Shortly, the US is going to have to decide between empire and the domestic economy unless it is willing to either run huge deficits or else not fund non-govt saving desires. Come the next crisis, this is going to hit big time and that will be the beginning of the unwinding down of the Empire.
Osama Bin Laden set out to "bankrupt the US" and he has been successful so far because the US is convinced that it can run out of money.
Now the US is having to choose between its military empire and domestic economy. So far, the military has been spared but when it actually comes to cutting benefits and services to meet "unfunded liabilities" that we "cannot afford" we will see what happens politically.
@Tom
I don't want to sound too cynical, but maybe that would provide an opening for MMT on the conservative side of the political spectrum.
As you rightly say, the American elites seem to be suffering from a kind of Hegelian alienation. They've come to believe their own ideological fantasies about the U.S. being close to running out the money.
However, MMT can demonstrate that said situation will never arise. Money has zero cost of production and as such all politics comes down to choosing among alternatives for spending.
MMT is thus ready to become a marketable product for consumption by the military-industrial complex - who could quickly become a natural ally, once it realizes there is a credible theory that neatly demonstrates how America can always "afford" its military spending (indeed, any spending within the full employment boundary) abroad or at home.
I know this would run contrary to the political options of most MMTers. But once this first battle for influence is won, the newfound visibility of MMT could be used as a lever to promote other types of policies, including non militaristic ones - public spending for infrastructure, education, the environment, you name it.
The genie would've come out of the bottle and who knows where it would stop - the sky would be the limit.
Jose, the genie was out of the bottle some time ago. The person that Warren Mosler first surfaced Soft Currency Economics to was Donald Rumsfeld. The pragmatic wing of the GOP already knows this. It's the fiscal conservatives and Libertarians reacting to the Bush administration that don't get it.
Well, I guess that in case the pragmatic, MMT- compliant wing of the GOP does not ultimately prevail American hegemony may well go the way of its Spanish predecessor of the 17th century :)
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