Wednesday, June 6, 2012

The European Project Is Going Exactly As Planned

It should be mentioned in all the discussion of ECB's dithering on monetary policy that, in addition to the fact that the ECB only has a mandate to manage inflation as opposed to the Federal Reserve's hazy "dual mandate", one of the explicit goals of European integration has been to foist "market reforms" on much of the European welfare state. Having the ECB engage in tight monetary policy in order to extort periphery nations until they do what Germany wants is perfectly consistent with the aims of many of the original Europhiles.

EU integration has always been an elite-drive project that encountered populist resistance. It can succeed as long as elites are able to sell the project as a way to deliver peace and prosperity for everyone. To their great credit, the peace part seems to have worked out better than anyone might have expected as of 1951. The prosperity part, on the other hand, is starting to unravel.
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