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.

8 comments:

Edmund In Tokyo said...

I'm not sure about blaming this on the elites. I mean, we're getting what we voted for, no?

France just picked a Socialist president, but apart from that nearly every country in Europe that has managed to actually elect a government has elected a right-wing one. They believe in balanced budgets and sound money and acting like a national budget is the same as a household budget and standard right-wing things like that.

If we all vote in anti-Austerians and they can't shift the direction of the ECB between them then that'll be the time to blame the elites. But right now the voters of Europe are getting what they asked for.

BruceMcF said...

Calling the EU integration project ~ that is, the European Union, Eurozone, and European Central Bank ~ an elite driven project is a simple statement of fact.

The original European Common Market program was also an elite driven program, but developed at a time when elites were worried that if they did not deliver better results than the Eastern Bloc, they might lose their status as elites.

Anonymous said...

"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."

If by "original Europhiles" you mean the likes of Adenauer, Monnet, or Schuman (or even Mitterand and Kohl) you are doing them a grave injustice. It's one thing to denounce current policies of the ECB, it's quite another to slander the whole European project. Then again, vile Europhobia seems to have become the preferred stance of U.S. American elites these days (equally among right-wingers and left-wingers, it appears), so I guess you are just pandering to your base.

Nicholas Beaudrot said...

To the contrary, I think EU integration is a good idea! But it's been faltering for a while now. Treaty referenda have been hard to pass or have failed several times in the past half-decade. There's the Greece situation. Immigration issues have become a political impediment to EU integration in many of the core countries.

One reasons for this is that EU integration is no longer delivering much in the way of rising prosperity for many Europeans. Middle-income native-born residents of France, Germany, etc., have not had a great time of things for the past five years. Periphery nations are being squeezed by a monetary policy by the ECB, of the ECB, and for Frankfurt. So as it becomes harder and harder for many people to see growth, it will be harder and harder for leaders to be elected on the promise of greater integration. No political leaders are willing to take the plunge of suggesting that the response to the crisis ought to be to increase political union and thereby enhance the democratic legitimacy of EU institutions.

Edmund In Tokyo said...

On the same day that Nicholas Beaudrot said:

"No political leaders are willing to take the plunge of suggesting that the response to the crisis ought to be to increase political union and thereby enhance the democratic legitimacy of EU institutions."

Angela Merkel said:

"We need a political union first and foremost. That means we must, step by step, cede responsibilities to Europe"

http://www.heraldsun.com.au/business/merkel-urges-political-union-spain-rating-slashed/story-fn7j19iv-1226388617922

Nicholas Beaudrot said...

Talk is cheap.

Nicholas Beaudrot said...

Also merkel only talks about "ceding responsibilities to Europe", which could mean enhancing the democratic legitimacy of the EU, or it could mean centralizing fiscal authority without any attempt to boost the democratic legitimacy of the EU. In other worse, let the ECB and "technocrats" in Brussels conduct fiscal policy for the whole continent.

Now, to an extent this anti-Brussels rhetoric sounds a bit like right-wing anti-Washington rhetoric. But at least we elect the SOBs who run Washington and try to oversee the bureaucracy. The EU bureaucratic process makes passing a bill through the House and Senate and then getting an executive branch agency to go through its rulemaking process look like a cake walk, and it's incredibly insulated from any sort of democratic pressure. Say what you want about, but the ability of elected certainly enhances democratic legitimacy, and there is much more direct accountability for economic results than in the EU. (within most European countries, there is better democratic accountability than in the US, since the governments in the EU are largely parliamentary rather than presidential. But the EU institutions themselves are sorely lacking on this score).

Neil Sinhababu said...

When Merkel talks about "ceding responsibilities to Europe", does "Europe" really mean "Germany"? Because that's what the ECB looks like to me -- a supposedly European institution that's actually dominated by anti-inflation German bankers.