This started out as a comment to Jonathan’s post below, but became too long, so I’m putting it here:
The most important point to remember here is that Europe’s problems are almost exclusively the work of the individual members, and not that of the European Union, which is not a huge disembodied entity, but an organization that can make only such decisions which are approved by all of its members’ governments.
Take the example of Italy: Whenever they ran into problems in the past, they devalued the Lira to make their products more competitive. At the same time imports, especially imports of raw products, and parts the Italian companies need to buy abroad to make their own products, became more expensive. The result was a double-whammy: Increased demand for Italian products and an increase in prices for imports drove up inflation, which in turn led to higher wages and therefore higher inflation. To compensate for these problems, the Italian central bank again devalued the Lira etc, etc, ad nauseam.
This vicious circle led to ever higher inflation, and also ever higher interest rates. Italy gained two benefits by joining the Eurozone: Their inflation was suddenly under control, and they had much lower interest rates. If they had reformed their ruinously expensive social systems, all would have been well, but they didn’t, so that the government now needs a scapegoat. As most governments here do, the EU and the Euro are first choice when it comes to that.
Now to the really sad truth: If Italy hadn’t joined the Euro, it now would be in the same situation Argentina is in – the high inflation and and high interest rates would have dragged it down by now. If they left the Euro, that’s exactly what would happen, only a lot faster – government debt of 106 % of GDP would see to that, if they had to pay the market interest rate rather than the interest rate payable by members of the Eurozone. And if they don’t change their ways, they might even get kicked out.
The problems of France, Germany etc are somewhat different, but these, too, aren`t caused by the EU or the Euro, but rather by the behaviour of the governments in Berlin, Paris etc. It also should be remembered that there are similar, and sometimes even greater, differences in growth and general economic cycle between different regions of the United States, without anybody calling for the abolishment of the Dollar.
Jonathan’s post isn’t about European constitution, but since the article in the Telegraph discusses it at length:
The constitution is much too long and generally a mess, but it isn’t an attempt to impose uniformity on European diversity. Rather it tries to repair the EU’s democratic deficits, in a misguided kind of way; then again, any attempt to write a new constitution would end the same way, including in America. There simply are too many special interests around now.
The EU also is liberalising force, with policies that are much more pro-market than those of the Continental members. The French voters who turned down the constitution because they saw it as a tool of the ‘neoliberals’ to open up their markets to outside competition knew what they were doing, for the EU has forced France and others to do exactly that in the past.
A lot of Europeans are afraid of globalization, and they lash out at the EU because they see it as a tool of globalization, for it tries to move the member states towards more competition, and also open borders for goods and services from the outside world. The protectionists sit in Paris, Madrid and lately Berlin. They blame the EU for the problems they themselves have caused, and that helped the anti-globalizers to have their views accepted by the mainstream. In fact, there seems to be a nascent Pan-European movement whose program is a noxious brew of anti-globalization platitudes, right wing isolationism and a primitive xenophobia.
In addition to this there are populist movements in every member nation, and the trouble with these populists is that they are trying to defend a status quo that is long gone, or never existed in the first place, and the EU is again blamed for the difference between present reality (or for whatever feverish hallucination they take for reality) and for what they think it should be. American observers should be wary, so that they won’t end up as suckers for this kind of nonsense.
Charles More is guilty of this kind of populism when he claims in the Telegraph that
“…that the “ever-closer Union” on which the European Union has been built from the beginning is one of these unreal schemes, since it believes in two falsities – uniformity where in fact there is diversity, and the primacy of government over people.
The European Union is, for all of its imperfections not an attempt to enforce “uniformity where there is diversity”, that is nothing but a strawman argument brought forth by those who have always been against a Union in any kind and shape. And the “primacy of government over people” is, as far as it is true, due to the fact that the opponents of the EU insisted on it (by, for example, preventing the European parliament from becoming more than a mere talking-shop), to make integration as unpalatable beyond a certain point as unpalatable as possible. And now they are complaining about the very defects hey have built into the whole project themselves.