Endless Government: EU May Resurrect Gosplan

When a person is ill from smoking cigarettes you don’t tell him that he’ll get well if he continues to smoke. Likewise, when an economy is ailing from too much government, you don’t prescribe more government as a remedy. But that is precisely what they are doing in Europe, and under Obama what has been done here in America as well. But while it looks like we are going to make a right turn in November, the Europeans are still heading in the wrong direction. A telling example is the new push for centralization of fiscal powers in the hands of the non-elected Eurocracy. In other words, not just more government, but more government that is accountable to no one but authorized to run the lives of everyone.

And the method that the Eurocrats are using to grab this new power is beyond the pale. Reports the EU Observer:

Eurozone states need to give up more sovereignty in order to fix the construction flaws of the euro, with the bailout fund possibly turning into a budget authority further down the road, European Central Bank board member Joerg Asmussen has said. “We have construction mistakes of Economic and Monetary Union and it is time to correct them.

So here we have the starting point of the power grab. What is so startling about this statement is that it is made by the same type of super-statists who, back in the ’90s when the euro project was constructed, raised the idea of a currency union to the skies. We who lived in Europe back then were told that the model on which the euro – and the entire economic integration as designed in the Maastricht Treaty – was founded had been developed by the sharpest minds around. The research came, first and foremost, from Nobel Economics Prize winner Robert Mundell.

They told us that the economic integration and, especially, the currency union were so ingenious that they would prevent all sorts of future economic problems in the EU. If you listened to the biggest Europhorics, the currency union might even cure grandma’s Alzheimer’s.

Now the tone is totally different from Europe’s super-statists. Why? Well, the reason is perhaps even more sinister than the reasons they used to defeat euro-skeptics in Germany, France, Italy and other countries back when the euro was created. Now the entire European integration project is in mortal danger, placed on fiscal intensive care by the very same Eurocracy that only a few years ago assured aspiring new eurozone members that the euro was going to outcompete the U.S. dollar as the standard currency of the world. Today the europhoria is gone and the Eurocrats are now openly admitting the flaws in that very same currency union – in order to use those flaws as a reason why they should now get even more political power.

As the EU Observer reports, the European political elite has even invented a new term for this their new power grab – a term that would make good old George Orwell spin in his grave:

It is clear that the core of the current debate has a name: further sharing of sovereignty,” Asmussen said Tuesday (17 July) at the European Policy Centre, a Brussels-based think tank.

Sounds nice and cozy and friendly, doesn’t it? “Sharing of sovereignty” could not possibly hurt, could it? And who could object to such minuscule technicalities as…

Part of the vision – which the ECB is shaping in a report drafted by EU council chief Herman Van Rompuy – is a cap on how much debt countries can issue, intervention in national budgets and fiscal corrections imposed if a country deviates from the deficit and debt limits imposed in the eurozone.

This would all be funny if it wasn’t for the fact that it has all been done already – with consequences clearly visible throughout Europe. The first part of the current EU constitution, the Maastricht Treaty, actually imposed strict debt limits on member countries. That treaty was ratified in 1992, years before the currency union became a reality. In its Article 104c, the Maastricht Treaty restricted did precisely what the Eurocrats are now trying to do again: it imposed a cap on how much debt EU member states could issue, and it mandated certain fiscal corrections to member state budgets by forcing them to cut government spending and/or raise taxes. The Maastricht Treaty also gave the EU sanctioning rights against member states that deviated from the deficit and debt limits imposed by the treaty.

In other words: the first constitutional document of the modern European Union provided everything that Mr. van Rompuy and the EU Council now want, except for one crucial detail: the Maastricht Treaty did not outright give the EU the right to seize control over a member state’s budget.

That little policy instrument was intentionally left out 20 years ago. The reason was not necessarily a devious one: quite frankly, most of the Europhorics who pushed through the Maastricht Treaty misguidedly believed that it was a “more perfect” union. They naively thought it would work smoothly and without requiring much, if any, corrections along the way. One reason was, again, that highly regarded economists had put their careers and reputations behind the project. Another reason was that the Europhorics of the early ’90s all came to political maturity during the Cold War. They had all seen the wall that split a city in two parts and the Iron Curtain that drew a thin line between freedom and totalitarianism.

They still had some understanding of the virtues of parliamentary democracy and classical European liberalism.

Now, a generation later, all of that is gone. The modern Europhoric is no longer a naive integrationist who believes that more cooperation across national boundaries will solidify freedom and peace. The modern Europhoric is not even euphoric anymore. He is a cynical, power-hungry Eurocrat who is trying to wield more non-elected, non-accountable power. He is ready to abuse the current, government-created economic crisis in Europe to institute new, authoritarian instruments of power that were never intended in the first place, and that if put to work will pour boat loads of salt into Europe’s open economic and political wounds.

In fact, the EU Observer story pinpoints well what this new power is all about:

A common budgetary authority could also be formed, Asmussen said, with the upcoming permanent bailout fund, the European Stability Mechanism, a “starting point.” “The ESM is a fiscal authority by definition because it deals with taxpayers’ money,” he explained, adding that it would have to be put under the scrutiny of the European Parliament – or a subdivision of it pooling MEPs from eurozone countries only. The €500bn-strong ESM is yet to be set up, pending a ruling of the Constitutional Court in Germany due on 12 September. Under current rules, the Parliament has no say over the ESM. Asmussen said this needed to change and that the ECB itself should be under more scrutiny from the European Parliament, as it will acquire new supervisory powers of banks in the euro area. “Deeper euro area integration can only be sustainable if there is progress on democratic legitimacy.

To an outside audience, this all sounds fine and dandy. After all, the European Parliament is the bedrock of parliamentary democracy in the EU, isn’t it?

Nothing could be further from the truth. The reality is that the European Parliament, according to the constitution of the European Union, has no real legislative power. Even after its role was somewhat augmented in the Amsterdam Treaty, the European Parliament is still, by and large, a token institution when it comes to governing the EU. It is mostly a sounding board and at best a joint decision maker, having to share its legislative ambitions with the non-elected European Commission. The Parliament allowed virtually no legislative sovereignty. Some have compared it to the lower half of a two-chamber parliamentary system, but even that is a generous description.

It would be as though we here in America would replace every state governor with an executive board appointed by each state legislature, then replace the President with a board appointed by these new state boards, and then have this new national executive board be involved in every bill introduced in Congress, before Congress even passed the bills.

It is important to understand what the European Parliament is, because when the Eurocrats suggest that it be given some sort of overseer role for this new EU budgetary authority, then all that can happen is that this authority becomes autonomous. Its oversight body has no legislative powers and therefore  no ability to sanction whatever policies it disapproves of. If the new EU budgetary authority intervenes into a country’s budget – which is what it is being set up to do – and the European Parliament disapproves of the intervention, then what can the Parliament do about it? Can it fire the executives of the budgetary authority? No. Those are apparently going to be appointed by the EU Commission. Therefore, they are beholden to the non-elected Commission, not the elected Parliament.

This may all sound very technical, but it is not. As the citizens of Europe’s economically troubled nations have learned over the past three decades, fiscal policy – and thereby budgetary authority – is a more formidable instrument of power than anything short of the military. If you have an elaborate welfare state, as they do in most EU countries, the majority of the population depend on government one way or the other. By regulating people’s access to the goodies that government provides, you as a politician can exercise considerable power over the lives of your citizenry. You have the authority, by means of taxation, spending and regulation, to pick winners and losers and thus to reward and punish people.

Doing this at a national level is more than many politicians can handle. The prospect of controlling the budget of every euro-zone member state through one single EU authority is an overwhelmingly intoxicating experience for power-hungry, Eurocrats. It gives un-elected appointees authority to dictate member-state budgets, thereby taxation, spending on welfare programs and other entitlements, spending on health care, education, income security, retirement systems, even police and military.

And it puts the real power over that office in the hands of the un-elected EU Commission’s Eurocrats, granting again symbolic oversight to the elected European Parliament.

This centralization of fiscal powers starts a new, darker chapter in Europe’s history. Two decades after the dismantling of the Gosplan, the history-blind Eurocracy is prancing with its wings of wax as it soars to ever higher altitudes of political arrogance.

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