The European Union’s summit last week has produced a rough agreement on a firmer “fiscal union,” capable of imposing credible budget controls on Greece, Italy, and other debtor-countries. The details have yet to be worked out, and the markets are unlikely to repose any great confidence in the deal. The deeper problem, however, is that no version of a fiscal union can save Europe or the euro. The principal authority for this proposition is Alexander Hamilton.
Hamilton’s name is much in vogue these days in European capitals. Behold the bold visionary who talked a dysfunctional Confederacy into a closer union, assumed the states’ debts, and founded a powerful central bank: Europe needs his example and prescriptions. Alas, Hamilton’s admirers misunderstand him. He argued for a closer union of a particular kind — and against the kind of union they are contemplating.
You may want a league or alliance among independent states, Alexander Hamilton explained to his fellow citizens in Federalist 15. That would not be good for you, but at least “there is nothing absurd or impracticable in the idea.” Or you may want, as I do, a constitution and, under it, a government that governs you directly, as individuals, citizens, and taxpayers. What the sentient among you cannot want is the “political monster” of a “government over governments” rather than individuals; an “imperium in imperio.” Why is that so bad? Two reasons: democracy and the rule of law.
If you care about republican government and democratic accountability, you cannot have twelve states make rules for the citizens of a thirteenth. Unanimity is the only possible rule. That is the rule of the Articles of Confederation. However, it has rendered the central authority ineffectual and “imbecilic.”
If you care about the rule of law, a government over governments presents a nasty enforcement problem. “It is essential to the idea of a law that it be attended with a sanction,” and there are only two ways of inflicting it: “the magistracy,” meaning courts and their marshals, or the armed forces. The magistracy works splendidly vis-à-vis individuals. That is why individuals are “the only proper objects of government.” Governments aren’t. You cannot jail them, and the option of fining them also looks unpromising. (The States didn’t even pay the requisitions to which they agreed.) That leaves armed force — which a government over governments will probably lack, and which you wouldn’t want in any event.
By its very design, the EU presumes that all this is wrong. The EU is quintessentially a government over governments, and it relies, in a once-proud, now-suspect postmodern spirit, on mechanisms that fall outside Hamilton’s stark courts-or-guns analysis. Moral suasion, for example, informed by the urgency of a preventing a relapse into ancient, bloody rivalries. Intergovernmental processes, sustained by elite consensus. Cross-subsidies from German taxpayers to countries and constituencies that might otherwise fail to see the good sense of the system.