There was a certain inevitability, considering the Federalists inability to go into reverse gear, about the green light for a Fiscal Union for Europe. Having, finally realised the fantasy of having a single currency with a single interest rate, without a combined monetary policy and fiscal control for so many divergent economies, there seems to be a bizarre irrational denial of accepting that the very concept of single currency, where there is significant economic divergence, is not the best currency model for Europe.
What is the best model? It is a Europe of nation states, with competing currencies so that they can control their interest rates, and learn from the success and failures of each others currency models, and currency related macro-economic policy.
Though the fiscal arm to the EU will increase its powers, it will never overcome, the distinct, unnecessary economic waste of the EU regulation. Further the first expenditure of reform should not be here. It should be to alter the EU's working framework to do away with the unnecessarily overreaching of harmonisation measures that drive up costs of cross-border services and goods that has been weakening the economic performance of the EU.
True to any conservative concerns regarding the EU, it is found that federalism is more important to the EU than economic performance. In the end it is quite possible that this is error of priorities will put an end to the federalist vision for the Europe.
Competition, one of the most important factors for a single-market, however, has always taken second preference over harmonisation or uniformity as far as the Federalists are concerned. The Federal model involves a single-market, albeit one that is not free. The single-market has become a tool for Federalism, and not for business. For the sharper and historically aware it is evident that this was always the case, illustrated by the preference for subsidisation that has always pervaded the EU, and its progenitor the EEC.
The intravenous feeding to maintain bad-economic policies is not just seen with CAP and other subsidies, but is now, worryingly, seen on the macro-economic fiscal level as the Euro subsidisation has shown. Last week’s £22 billion spent on Euro bonds by the European Central Bank is just the tip of the ice-berg of what has been going on. It is by no means clear how an increased bureaucracy of the ECB or the EU would be better able to control governmental expenditure centrally.
But this patronising oversight is what the Euro-bailed nations now face, their own fiscal irresponsibility has lured them further into the behemoth of EU control. When, in the not far distant future, provincial transport infrastructure in some small part of Greece is controlled by the EU, the loss of local’s liberty to choice and preference of where their tax money goes could potentially finally come home. Though I somewhat doubt it.
Very few nations have the spirit of freedom that would want to fight for choice for the sake of choice. Very few nations have freedom as so deeply an embodied idea in their make-up to intuitively and viscerally see the absence of choice as vulgar. And even those who do, in that most free and beautiful of Islands off the North Sea are constantly baited by the self-serving media-political machine that puts itself, advertently or inadvertently, above its country.
Britain, however, can guide European States to freedom. That is a Britain with a vision to put a free-market economic vision into the back of Europe, and strip away the self-proclaimed ‘social-democratic’ Lisbon Treaty.
The best working approach to free-markets is embedded in Darwinian economics. The worst companies collapse, not be revived or subsidised, to give way to better structures, administrators, products and services that the markets will enjoy. It is no different for underperforming nation-states, who never balance their books, whose Euro convergence impossibility with the economies of France and Germany has been overlooked for a Federal ideal.
The Federalist concern themselves little with the tax-payers who have to share the burden of bail-outs at a time of economic difficulty, nor those in Greece who have seen inflation related problems decrease their tangible wealth and, for the first time for many, shown the possibility of real impoverishment.
Their end-game is macro-welfarism for Europe brought about by, what is idiosyncratic to that end, spending policy. So if you want to know where this new found Fiscalism is to take Europe- in my view it is over the edge. Look at the Lisbon Treaty, and it is clear that the EU with such a power, with the aims in that Treaty in mind, will never be able to be adequately parsimonious with its use.
What is always vindicated in such follies but, the now lost, traditional Burkean Conservatism? The folly of pursuing an idea to its logical absurdity, irrespective of the destruction it creates, is obvious to all but the mad. But logic, as Burke pointed out over 200 years ago, is the first victim of those who pursue the folly of the absurd. We Brits know this, yet our Government continues to fail to act.
I, for one, would advocate the preservation of freedom at any cost, rather the endless pursuit for control. Whether we are familiar with Hayek, or not, we know where to the latter leads. We should find either the vigour for reform or the exit door now and leave, or we will be further bailing an economically doomed entity at the cost of only our own labours.
Copyright Abhijit P.G. Pandya August 2011.
