COLUMN: Robson – An end to the Euro Zone, not a bad thing

- May 14th, 2012

EU’s cash crisis spawns break-away backlash

by John Robson

One side-effect of Europe’s financial crisis is the rise of fringe parties who want to dump the Euro and maybe the whole European Union. So it’s not all bad news.

As I’ve argued before, the EU is artificial because there isn’t a “Europe” in the same sense that there’s an “America,” a “Britain” or even a “Canada.” Despite the chronic irritant of Quebec separatism, resurgent Scottish nationalism and the bloody American civil war followed by a century of resentment, words like “un-American,” “Remember you’re British” or “Canadian values” meant something almost everyone understood even if they didn’t agree.

No one ever said “Remember you’re European.” And it matters. The EU’s virtues, if any, are practical not sentimental. But its practical benefits are hard to discern.

To be fair, the dream of men like Jean Monnet was to entangle the economies of France and Germany so another catastrophic global conflict between them was impossible. And while one may quibble about cause and effect, they did integrate them deeply and no such war happened and is now inconceivable. But precisely because a breakup of the EU could not now send Germans marching through the Ardennes again, preserving European peace is no argument for keeping the thing today.

As for its economic virtues, Europe could be at least as thoroughly integrated through free trade agreements as through its current bureaucratic patchwork of pseudo-deregulation coupled with overweening meddling in everything including the curvature of bananas. Without the dreadful fiscal problems this unaccountable, undemocratic half-federation causes.

In true federations, constituent units acquire both real rights and real obligations as sovereignty is delegated upward. In the EU that never happened.

Because its undemocratic political structure lacks both procedural and emotional legitimacy, membership brings privileges like demanding huge bailouts by threatening to hold your budget until you turn bust. But it brings neither real rights, like ability to elect legislators who can shape a European budget, nor real obligations like having to live within the fiscal and monetary constraints the EU supposedly imposes. Indeed, its rules about budget deficits were flouted not just by basket cases like Greece or Italy but by France and Germany.

There is a lot wrong with Canada’s system of equalization. But despite its baffling, lopsided generosity our provinces have no more ability than American states to extort money from the feds or their fellows by threatening to “go off” the dollar. European countries can. And it’s bad for everyone.

In his book, The End of Growth, former CIBC World Markets chief economist Jeff Rubin notes that Greece has been in default for more than half of the last two centuries. But it never before threatened to bankrupt France or Germany and no one gains because it now does.

Those who cling to the hazy European dream might still say turning Europe into a real federal state, with an elected head of government, a central bank and legislators who can tax and spend could protect wallets and win hearts and minds. Perhaps. But there is no argument for continuing the current bogus arrangement complete with bogus landmarks on its bogus currency.

The fringe parties attacking the Euro are, in various ways, unfit to govern and unfit for polite society. But they’re right that cutting Europe’s nations loose to seek their own fiscal salvation in fear and trembling would increase the solidity of the fiscally more responsible countries and rapidly sober up the others.

At this point, what have they got to lose?

Categories: Contributor Columns

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