Yesterday afternoon, I had the pleasure of attending a stimulating panel at the American Enterprise Institute on the success — or otherwise — of the EU summit last week. You can see the video here, and I particularly recommend the contributions of Michael Greve and Alex Pollock. I was astonished that it took nearly an hour for someone (Michael) to mention the problem of democratic legitimacy, hence a question I asked at the end (it’s on the full video at 1:51 and a bit). The technocratic answer from the German representative on the panel was, I have to say, wholly unconvincing. Michael handled it much better.
As it happened, I had just written a handy-dandy quick guide to the crisis for American Spectator readers, which you can read here. An excerpt:
What Did the EU Actually Agree to at its Recent Summit?
Good question. The actual results of the summit were somewhat overshadowed by British Prime Minister David Cameron’s refusal to join in the Eurozone’s suicide pact. Indeed, that’s what was agreed — a suicide pact, not the advertised fiscal union. The heads of government that joined in the pact agreed that they would balance their budgets, which are to be policed by the unelected, unaccountable European Commission. This does nothing to solve the euro’s structural problems and rides roughshod over the entire principle of democracy (as I have noted elsewhere). The result will be a devastating, long-term recession in the periphery of Europe, and presumably popular revolt in several countries. Sadly, those popular revolts are more likely to be of the socialist variety than revolutions for liberty.
Was my opinion changed by yesterday’s panel? Not one bit…
I found your article interesting and informative but I am
confused by one point. You make note that...
The heads of government that joined in the pact agreed that they would balance their budgets, which are to be policed by the unelected, unaccountable European Commission.
However, Martin Feldstein yesterday in a WSJ Opinion...
The post-summit communiqué proclaimed that each euro-zone country will enact a constitutional rule to balance its budget, will take corrective action if its "structural" deficit exceeds 0.5% of its gross domestic product, and will face penalties if its actual deficit exceeds 3% of its GDP. Chancellor Merkel had hoped that these rules would be embodied in a revised version of the current EU treaty and therefore enforceable by the European Commission through the European Court of Justice. Yet Britain's unwillingness to modify the existing treaty without additional safeguards for the British economy means that the new rules would apply only to the 17 euro-zone countries and others that wish to join them, but that they don't constitute an official EU treaty and therefore cannot be enforced by the commission and other EU institutions.
So there really is no enforcement mechanism for the new budget rules, even if all of the euro-zone governments agree to sign a new accord. The result looks like a replay of the old Stability and Growth Pact that had similar goals and penalties but was soon violated by Germany and France and then watered down to be completely ineffective.
To pare the above text down to better illustrate my point of
confusion, please consider the following excerpt from the above excerpt...
Yet Britain's unwillingness to modify the existing treaty without additional safeguards for the British economy means that the new rules would apply only to the 17 euro-zone countries and others that wish to join them, but that they don't constitute an official EU treaty and therefore cannot be enforced by the commission and other EU institutions.
Feldstein goes on to say that the Eurozone countries with debt problems are better off left on their own. So, once again I am not making a criticism or offering a counterpoint, just asking for a clarification given my confusion over the above two seemingly (to me) inconsistent analyses.
Reply to this commentLinkReport AbuseWhere's my Schadenfreude?
Reply to this commentLinkReport AbuseAh, here it is.
Nyah, nyah, nyah. Sic transit gloria mundi.
This remains the most underreported story in the American press.
Once or twice a month, there's a brief blurb about a minor protest in Greece.
Reply to this commentLinkReport AbuseAsa far as I am concerned, the EURO crisis is Good News. The Socialist spenders have run out of Thatcher'ss OPMs. They cannot raise taxes any further, and so they turned to borrowing. Now no one will lend them any more money
Oh Woe is them !!
About time, I'd say.
The credit markets and banks will lend to private entities that can and will pay them back rather, then useless lying weasel politicians. Perhaps they will be forced to live within their needs. .
Reply to this commentLinkReport AbuseBad post.
If you don't produce for the credit you have taken the Recession is what happens. This is not a choice. It is a discovery. It happens every time.
That Recession can be only 2 things: Inflation or Less Money(lack of growth).
And that is the only choice: who/whom bears it.
Inflation: protects the Government and those that get money from it. Depending on seriousness it can mean that every person income - even those on Government payroll- pays much less production: Which means a Recession of Income even if the numbers show a hike.You get less. The most punished are those that have done savings, those that are unemployed.
Less Money(aka lack of growth): protects the savings and unemployed up to a point. It is harder on those that depend for the Government.
USA is kicking the can. Sooner or later the European choices will come there too.
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