Thursday, November 18, 2010

The Dream of Europe

As central bankers huddle in Dublin, trying to "stave off an Irish debt crisis," as the Times put it yesterday, I ponder the ongoing project of European integration. I find it very interesting that across the political spectrum only a few cranks and bond speculators are advocating what many economists think is the obvious solution for Greece, Ireland, Portugal, and Spain: withdrawal from the Eurozone. The experiment in having one currency controlled by one central bank across sixteen countries with quite different economies and political systems is not going smoothly. As long as the European economy was growing, the problems were masked, but the financial crisis and the recession have shown how potentially destructive it is for a cumbersome debating club of governments to try to run an economy. Over the next decade Europeans are likely to pay a stiff price for political integration, paid in foregone economic growth and higher taxes.

So far as I can tell, most Europeans are ok with this. The citizens of Greece and Ireland seem to place more blame for the situation on their own national governments than on the EU or its German bankers. There have been demonstrations against fiscal policy from Greece to Liverpool, but I have not noted any signs advocating withdrawal from the EU or demanding a looser monetary policy in Frankfurt.

This tells me that most Europeans believe in a European future. They may be suspicious of bureaucrats in Brussels, but only in the way that Americans are suspicious of bureaucrats in Washington. People are committed to increasing union as the way of the future, and they really don't want to go back to changing currency all the time. The bankers and finance ministers working on the crisis don't talk about interest rates or growth rates or bank failures, they say things like "the union is fighting for survival." And they seem to mean it; the don't consider that breaking up the Eurozone is an option, because that would mean the failure of the political project to which they have devoted their whole careers. There is, so far as I can see, no competing vision for the European future, or the Dutch or German or Greek future. People support the EU because they don't know what else they would do. Whatever the economic cost, people will stay with the vision they have rather than live without one.

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