Just over thirty years ago Publius oversaw the publication of an analysis of the European Community. Years before the 1992 Treaty of Maastricht created today’s European Union, all the EU’s current problems unfolded for the research team to see. And to solve.
So why didn’t the member states do then what was so easy to figure out? Simple. As Tallyrand said of the Bourbons, the Euros learned nothing and forgot nothing.
When they were pulling together the EU, the EC only had to ask the one simple question Publius asked in the 1980s: Which large geographies have ever managed a peaceful, prosperous evolution? Whatever they did to make this happen, the EC must do also.
Answer: There are only two – Canada and Australia. These are the only large federations that have created a high standard of living over huge territories rife with economic, social and political differences without their people tearing each other to bits.
For the Euros, who have seen rather a lot of tearing each other to bits during the last two millennia, Canada and Australia are the perfect answer. Use one or the other or some mixture of both. And do not think for a second that you can stray from their models by so much as a nanometer.
The Euros did exactly the opposite and are now paying for it.
Take monetary union, for example.
You don’t have to know too much about the history of money to know that stable currencies require the backing of a unitary government managing a unitary fiscal policy. Carefully. If you try to manage a single currency over multiple states with unrelated fiscal and tax regimes, you find very quickly that you can’t. Defying monetary gravity doesn’t work.
So, Publius asks today, why did the Euros do what they all knew perfectly well cannot work on first principles? And what the federal system in Canada and Australia would never have attempted to do for this reason?
Both countries have a sophisticated distribution of powers over their vast federations that are carefully designed to manage the stresses of fiscal and monetary management. Anyone can learn how to do this. Just read a book. Then go talk to the folks. They will tell you everything you need to know.
There are no sensible answers to Publius’ question. Anyone with even a small amount of schooling in economics knew that the idea of a single currency with no common system of fiscal management was, to say the least, bizarre. And that it could only end in grief.
The Greek crisis, the end of which is still some time off, shows more than enough about why you can’t defy monetary gravity and expect to get away with it.
One possible answer is education. Rather the lack of it. The Euros may not have been educated enough to ask about Canada and Australia. To repeat Tallyrand, they learned nothing and forgot nothing. And went ahead anyway.
Political union too need not be as complicated as it became for the EU. Nations become provinces, end of discussion. If you don’t like it, don’t join. If enough of you don’t join to make the project viable, don’t do it. Stick to free trade and focus on growing your economies. How difficult is this?
There is the old saw about managing the many diverse cultures of Europe. Tell that one to the people of Toronto. Polite though they are, they will still laugh at you. Again, if you can’t stomach sharing the culture stage with others, don’t. Free trade is your answer. Make money; employ your people. How bad can that be?
Canada and Australia both learned how to manage expansion. Canada grew from a smallish territory to the second largest country in the world through a carefully managed process of territorial absorption. Has everything gone perfectly? No. But it has created one of the highest standards of living in the world and the people there are not at each other’s throats. Again, if you don’t like the program, don’t join. Stick to free trade.
A huge problem for the Euros, as we have seen with the dissolution of the Middle East into a seething mass of tribes, religions, mafias and terrorists, is managing large scale immigration. The last time the Euros saw the kinds of mass movement of people it is seeing today was when the Roman Empire fell in the early fifth century.
No one in the EU today remembers this, of course, and no one has the slightest idea of how to deal with it. Where we are used to endless floods of immigrants to keep our economy growing—and to prevent our population from imploding Japan-style—the Euros have no similar experience. Foreigners are, well, foreign.
Another huge problem is defense. Who defends the EU? NATO? But NATO includes the U.S. and Canada and other non European countries. And some EU countries, like Sweden, are not part of NATO. Again, the lack of definition plagues the EU. What is it? What does it stand for? What does it stand against? Without a clear understanding of its core interests, none of these questions are answerable. So it dithers as an imploding Russia becomes daily more unstable.
So, what is next?
The problems that the EU had, first with Greece, then with trying to negotiate a trade deal with, of all people, the Canadians when the Walloon community in Belgium decided to scupper the deal for the rest of Europe, and now with managing Brexit, show a system nearing its end.
The British, who always saw the EU as a free trade zone first and foremost, have decided to leave. The Hungarians and Poles are falling away. And the Italians, never strong, may soon buckle. Brexit is not the exception, it is daily the rule.
The EU is on its last legs. It may function for some time, increasingly in some nominal role. But its days are over. No one can take it seriously any longer.
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Sure enough, only days after this was published, an Italian referendum designed to stabilize that country's economic and political system so that it could continue to function effectively in the EU failed. With Brexit, Italy, the Walloon fiasco and Poland and Hungary looking more and more to Russia's neo-Mussolini system of state management, the EU is well and truly over. It is now just a matter of time. If France and Germany can muster the will to reframe the EU as a free trade pure play, then maybe something can be rescued.
Then, Margrethe Vestager, the EU Competition Commissioner, doubled down on her $14.5B tax penalty against Apple by launching an investigation into Facebook. The real question facing the Commissioner is not Apple and Facebook but where are the EU's Apples, Googles and Facebooks? What is it about the EU that is so messed up that the EU isn't a world dominator? What went wrong? Can it be fixed? How soon?
On December 20, Gideon Rachman, a must-read columnists for the Financial Times, predicted a "train-crash Brexit" with the most destructive of consequences for the EU. It is stunning to think that none of this was explained to the UK public before they voted to slit each other's throats.
The EU is getting real ugly, real fast.
For more Publius on Brexit, read Brexit: Vladimir Putin Wins Big!
Follow up
November 12, 2017
Catalonia reveals all the problems the EU has had because no one there knows anything about Canada.
When you are confronted with centrifugal forces that threaten your state as Canada was with Québec, you don't send in riot police to beat voters or arrest all the separatist politicians the way Spain did. You sit down and talk. And talk. And talk. Maybe for decades.
You find sensitive points and negotiate solutions. In this case the Catalonians want more autonomy. OK. But at what point does autonomy disrupt their market access? That's the point where people will cut deals. They want their language and they want their markets. So let's make it easy on them. Offer a winning deal and then offer elections.
May 30, 2018
So, here we are thirty years after Publius called down the Europeans for their attempt to defy monetary gravity and the Euro crisis has moved into its gravest state yet. As Jon Sindreu and Mike Bird reported in The Wall Street Journal, the Italian political crisis could undermine the Eurozone. The problem is that Italy is a much bigger economy than Greece. And Italy was a founding member of the European Common Market in 1957. Watching another southern European country tumble out of there Eurozone shows just how misbegotten the whole concept was.
Any university-educated kid could have figured this out as Publius did.
So why didn't they?
July 6, 2018
The EU is coming apart at the seams. Only eighteen months after Publius posted this, the EU is being torn apart by another immigration crisis, the endless mess that Brexit has become, the collapse of democracy in Poland, the looming withdrawal of Italy from the EU and the inability of leadership in the EU's strongest economy, Germany, to get its act together.
All this was so easy to foresee decades ago.
Publius will soon propose a solution. Don't expect anyone in the EU to act on it. These people are seriously dumb.