Europe’s Authoritarian Response to Fiscal Crisis

After government has messed up the European economy, what do the Europeans suggest as a solution? You guessed it – more government. This story from the Buenos Aires Herald is so far the most elaborate English-language report on the pending expansion of EU powers over a continent already marred by excessive government powers:

When Jean-Claude Trichet called last June for the creation of a European finance ministry with power over national budgets, the idea seemed fanciful, a distant dream that would take years or even decades to realize, if it ever came to be. One year later, with the euro zone’s debt crisis threatening to tear the bloc apart, Germany is pushing its partners for precisely the kind of giant leap forward in fiscal integration that the now-departed European Central Bank president had in mind.

Amazingly, the EU constitution, i.e., the Maastricht Treaty, contains all sorts of bells and whistles when it comes to containing spending in EU member states. An EU finance ministry would have no more powers than the EU constitution gives it; the only way that it could have tangible new powers is if the EU changes its constitution so that the EU gets the right to seize legislative authority over member states’ budgets. That is a big leap, even for a continent marinated in statism.

Apparently, as the Buenos Aires Herald reports, Germany’s Chancellor Merkel is moving in that direction:

After falling short with her “fiscal compact” on budget discipline, German Chancellor Angela Merkel is pressing for much more ambitious measures, including a central authority to manage euro area finances, and major new powers for the European Commission, European Parliament and European Court of Justice.

This will of course have significant consequences for the independence of EU member states:

She is also seeking a coordinated European approach to reforming labor markets, social security systems and tax policies, German officials say. Until states agree to these steps and the unprecedented loss of sovereignty they involve, the officials say Berlin will refuse to consider other initiatives like joint euro zone bonds or a “banking union” with cross-border deposit guarantees – steps Berlin says could only come in a second wave. The goal is for EU leaders to agree to develop a road map to “fiscal union” at a June 28-29 EU summit, where top European officials including European Council President Herman Van Rompuy will present a set of initial proposals.

A short note from the EU Observer corroborates this story:

EU council president Van Rompuy and EU Commission chief Barroso are working on a eurozone reforms roadmap for the June EU leaders summit. Germany’s Welt am Sonntag says the plans could include EU institutions having more power over national budgets; harmonised fiscal and tax policies, social welfare reform.

This is not good news, because it means:

a) The EU is going to preserve the welfare state;

b) They are going to do it with the same austerity policies that have hurled Greece into fiscal and political instability; and

c) The response is authoritarian in nature: it further skews the balance between power and accountability is going to be skewed even further – radically strengthening the authority of unelected bureaucrats over people’s lives.

Bottom line: hard times in Europe are getting harder.