Europe’s crisis is fundamentally caused by governments that have grown to morbid fiscal obsesity. Welfare states have created entitlements and made spending promises that no taxes in the world can ever pay for. But instead of realizing what caused their crisis, Europe’s politicians are applying a solution that more than anything resembles the old practice of draining sick people for blood: more government to solve a problem caused by too much government. And since Europe already have the biggest governments in the world at the national as well as local levels, there is only one way to expand government – at the top. The EU Observer reports:
European Commission President Jose Manuel Barroso has said member states must agree to a big common budget, a future banking union and – ultimately – political union in order to save the EU. … Barroso, EU Council president Herman Van Rompuy, European Central Bank chief Mario Draghi and Jean-Claude Juncker – the head of the euro-using countries’ club, the Eurogroup – are drafting a joint paper on how EU leaders can stop the crisis. The text will be a political manifesto rather than a legal proposal, officials say.
Nonsense. That is how every expansion of government powers in the EU has started: as a political manifesto. The European Union itself was just “a political manifesto” back in the 1960s, when the precedessor of the EU was still known as the European Economic Community.
By writing “political manifestos” instead of formal legislative bills, politicians can always dismiss criticism with “it’s just some thoughts on a paper”. Then, as criticism winds down because, after all, it’s just some thoughts on a paper, they can quietly proceed to create the formal proposals needed for legislative action.
Perhaps Mr. Barrosso is aware of his own attempts to deceive voters – the EU Observer continues:
“I will urge the European Council to take concrete commitments towards a fully developed economic and monetary union and a process that maps out the steps how to get there,” Barroso told MEPs. He said countries must agree here and now to generous EU spending in the 2013 to 2020 period. He noted that 97 percent of public investment in Hungary and over 50 percent in Poland comes from EU funds. “What would the situation be in these countries without the contribution of the European budget?” he asked.
How convenient. First you create a spending program and lure countries into taking the money instead of funding their schools, hospitals and infrastructure themselves. Then you go to taxpayers and say: “Do you really want to leave these poor saps out in the cold? How greedy are you?”
The Hungarians and Poles are perfectly able to invest in their own education, health care and transportation systems. Countries in formerly Western Europe did it without help from other countries.
A major problem with this expansion of the Eurocracy and EU-level spending is that it does not provide any remedy for the fiscal trouble that EU member states find themselves in. On the contrary, all that will come out of this is an elevation of national welfare-state problems to the EU level. The EU Observer continues:
He also urged governments to “refine” the rules of the EU bail-out fund, the ESM, to make it easier to help struggling banks and to adopt last week’s commission proposal for EU banks to set aside more rainy day capital. He said the next step – which “might require [EU] treaty changes” – would be a “banking union.” The move would see EU-level bank supervision, a joint deposit guarantee fund and a new fund dedicated to bailing-out big banks which get into trouble. Barroso’s final step – fiscal and political union – would see EU countries issue joint bonds, co-ordinate tax policy and co-ordinate national spending on everything from healthcare to schools and social welfare.
There you have it. The Eurocrats have realized that the national welfare state is the problem, so they want to control welfare-state spending by elevating jurisdiction over it to the super-state level. This will of course not change anything in terms of government being able to pay for the welfare state.
This is going to lead to formidable problems. The Eurocrats will soon realize that they need to contain spending. But containing spending just after the EU seized control over member-state budgets is akin to triggering the same anti-EU sentiments all across Europe as we have seen in Greece recently. There, the EU-imposed austerity programs drove support for openly EU-hostile parties to almost victory in the election in May. So the Eurocrats have in all likelihood realized that spending cuts are off the table, at least for now.
The alternative then is higher taxes. But you can’t raise taxes on the poorer countries in Europe. That would be unfair, according to prevailing European statist doctrine. The only option, then, is to raise taxes on the “wealthier” EU member states. This will of course come on top of the 50-55 percent that the “wealthier” Europeans already pay to their local and national governments. When these new taxes cause a further depression of economic activity in the European Union, the EU will take to new austerity programs to force spending cuts upon the least wealthy countries, who are the biggest consumers per capita of welfare-state products.
In other words, precisely what they have been trying to do in Greece.
It is time for Europe’s politicians to realize that the welfare state is inherently unsustainable. There is only one way out of Europe’s fiscal quagmire: end the welfare state and unleash economic freedom!