Europe: A Sum of Negatives Is Still Negative

This last week the leaders of the member-states of the European Union gathered together to come to agreement concerning dealing with the debt crisis. Again. No news there, they have been doing it almost every week for the last two years. And the debt crisis gets worse after every such meeting. In fact, it only got better in the weeks when they didn’t meet to talk about it. If historical statistics means something, they should stop meeting at all. Or may be even dissolve their own governments. No governments, no government debts. It is that simple.

This time, though, there was something different. So far the “agreements” always presupposed that every individual country will take care of its own government spending and debt, and thus the whole situation will improve. But this last week 27 countries took a step further: The decided – at least on paper – to proceed toward integration of the individual national budgets. It’s not just a currency union, or a political union anymore. It is going to be a fiscal union too. In other words, there is going to be a central authority that will harmonize and control the budgets across the continent and thus deal with the euro debt crisis.

The question is: Who will be that central authority? The answer is: The leaders of these same European countries that couldn’t manage their own individual budgets. In other words, the leaders of the European Union have a problem with many small individual negatives. (Now, I know, “small” is a relative term here; many of these countries’ government debts amount to $75,000 per capita. Oh, wait, the US government debt is now about $45,000 per capita. Never mind.) And the solution to these many small negatives is to add them. May be when we add them, the result is going to come in the positive.

It won’t. The same politicians who created the massive debts of their countries will only create even more massive debt when Europe becomes centralized fiscally. The only difference will be more centralization but not less debt. The Soviet Union was perfectly integrated and centralized fiscally; even more than that, it had a central economic planning agency that decided who will produce what and how much. And it collapsed. As the French poet and political activist Lamennais said about 160 years ago, “Centralization induces apoplexy at the center and anemia at the extremities.” Europe is not going to be different.

The only hope this time is that four countries declined to join the new agreement. This, of course, is of itself a new development – so far there has never been major dissent in the Union, and no deviation from the central political course set by the bureaucrats in Brussels. A small dissent like this is new and may have the effect of a full-scale secession. If the European Union is moving towards a fiscal union, even the disagreement of one country may torpedo the effort. And this is the only hope for Europe now, just as it was the hope for the Soviet Union: dissent, disagreement, secession, and ultimately decentralization.

Just as it’s the only hope for the United States as well.