Riffing On Scott Sumner: German Membership In The Euro Is Preventing The Advancement Of The Poorer Countries
The eurozone excludes Norway, Iceland, Sweden, Denmark, Britain and Switzerland.
…Germany is one of the few northern countries that’s actually in the eurozone…
And it seems to me that here you have a massive adverse selection problem. Because of Abraham Lincoln, affluent states like Massachusetts can’t suddenly decide they want no part of our fiscal union, and would rather just reap the benefits of our large single market. But Switzerland, Norway can and did make that choice. Britain almost certainly would, and both Sweden and Denmark might as well. In contrast, Bulgaria, Romania and Croatia would like nothing more than to join such a union. And all the likely future expansion of the EU is into areas further east, and much poorer than even Greece and Portugal. Places like Armenia, Georgia, Ukraine (a country nearly the size of France) Belarus, Serbia, Macedonia, Bosnia, Moldova (the saddest place on Earth—even the name is depressing.) And did I mention Turkey? Indeed why not Russia at some distant point in the future?
People often compare Europe to the US. That’s wrong; the eurozone is sort of like the US, although a bit poorer. But Europe as a whole is far poorer than the US, far more corrupt, backward, inefficient, whatever other pejoratives you want to apply. Even America at its worst (say the treatment of ethnic minorities) isn’t as bad as the treatment of gypsies in Eastern Europe.
My point was not to predict the future, but rather to provide a warning. Once you start down that road [to creating a united states of europe], there will be constant pressure to go further. Quite likely at some point the northern European taxpayers will rebel, and we won’t end up with a United States of Europe. The policy will collapse.
The eurozone really only has two options; a more expansionary monetary policy or a breakup. There’s no point in looking for alternative solutions.
The argument I consistently make, is that of course Germanic Protestant northern tax payers will rebel. And likewise, so will germanic northern european americans rebel. Which is what they’re doing today. We call it polarization.
Germany, Austria and the Netherlands, should leave the eurozone and germany should reissue the Mark. (Belgium is already divided between french and german cultures, and they despise each other as much as the french and english canadians do.)
The success of the euro then, will be as a vehicle for poor countries to unite, and possibly (I say with uncharacteristic hope) focus on group improvement, rather than transfers from the north to the south.
In fact, the most important and valuable strategy that the United States could adopt for the world today, is to dismantle the empire both domestically and internationally. The anglo people have succeeded in spreading consumer capitalism. We’ve modernized the planet. But it’s one thing to invent and evangelize a technology. It’s another to try to control it.
Europe doesn’t need one federation. It needs two or three. Because germanic, latin, and byzantine europe are different cultures if not different civilizations. They always have been. They always will be.
And multiculturalism is impossible.