Naked Science Forum
General Discussion & Feedback => Just Chat! => Topic started by: CliffordK on 21/02/2012 02:53:17
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Well, the EU is back in the news with more debt, and more national bailouts.
Whether or not the EU survives the next 5 years or so, and the current crisis, without major changes, it will encounter additional crises in the future.
I was thinking. What we know as the United States of American is the second post-revolution government, with the first government, the Articles of Confederation being a loose association between member states. The major difference with the current governing body was a much stronger central government and government authority.
The current United Nations is also the second international governing body, with the first, the League of Nations, also failing due to lack of central authority, and member participation. Perhaps the two-tier approach of the current body based on WWII victors will eventually be brought into question, as well as the lopsided funding of the organization.
Nonetheless, I think the idea of the EU is solid, but perhaps it shares some of the faults of the Articles of the Confederation, giving far to much autonomy to the member states, and far too little central governing authority.
Hopefully our governments will eventually realize that growth requires monetary parity, domestic investments, and does not require multi-trillion dollar national debt.
What the Greeks need.... rather than just bailouts, they need to start building parts of the A380. Perhaps assemble some FIATs. Or, if they like shipping, they should have some of the premier shipyards. The Spanish have invested in year-around agricultural production. What about the Greeks?
The next crisis?
Inflation in the cost of Chinese Goods?
Looming Energy Crisis?
Anyway, what does Europe need to avoid crumbling? Could Europe approach a single unified government with member states? Something else?
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I don't think there is really too much wrong with EU. The major problem is that the Euro is a fantastic example of "The Emperor's Clothes". Implementing a single currency in the absence an agency that is fiscally responsible for that currency is, IMHO, completely bonkers, but that is precisely what the Eurozone members signed up for.
Put it this way, if there was no federal government in the US, how long do you think it would take for Oregon and California to have their own currencies? (Idaho would have already erected the "Cascade Curtain" and annexed most of Washington, so they'd be pretty much out of it.)
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I thought countries were supposed to control inflation and etc before joining the EU, but certainly one can't just give member countries a blank checkbook once they have joined.
Perhaps part of the problem with the EU is that individuals don't recognize themselves as being "European", but rather they think of themselves as being English, French, German, Greek, etc. And, even migratory workers around the EU are largely treated as foreigners. So, it is a unification of convenience (like a marriage of convenience), but there is no deep rooted cohesion.
In the USA, one might consider oneself being an Oregonian, but there is no significant differences from those living north of the Columbia river. Of course, we could do without the Lone Star State!!
With great sacrifice, Germany almost single-handedly paid for their own reunification.
I can imagine how they would be reluctant to pay for other countries fiscal irresponsibility. Of course, it wasn't that long ago that Germany had planned to annex the world!
Anyway, perhaps it is not as much of a government thing, as the people must start thinking of each other as equals.
And, of course, rather than handouts, they need to invest in local infrastructure.
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It was relatively easy for America to come together under a single government. Most of the people spoke the same language and could trace their roots back to the founding fathers of America with ease. Just one civil war and it was all over. The USA was born. Europe, however, is a collection of nations with at least 2000 years of independence, and a host of different languages, customs and histories. Most of Europe has been at war with each other over the past few thousand years. We have all been both enemies and allies. Bringing this lot together was never going to be easy.
We are now all democratic nations, but the EU is far from democratic. The European Parliament is an elected body, but it carries little weight. The European Commission is an unelected body which, to all intent and purpose, rules the EU.
It was, to my mind, a great mistake to introduce a single currency to various independently governed nations with differing prices and incomes, taxes, interest rates and a host of other differing economic conditions. The first move should have been to ensure that the cost of living in each nation was identical, the incomes comparable and taxes, interest rates, housing etc all matching. A loaf of bread must have the same cost in Germany, Italy, Greece, France etc. And a baker in each nation must receive the same wage and pay the same tax, receive the same benefits and so on an so forth.
My personal belief is that until the EU is fully democratic, there can only be a degree of harmony between member nations. But how can the EU become fully democratic if I cannot vote for a German or a Frenchman, Italian, Hungarian etc etc. Suppose Angela Merkel were to move from domestic politics to European politics, I cannot vote for her, because I am not a German resident. To bring democracy to the EU, the European Commission must become an elected body or hand power to the European Parliament and the electorate must be free to choose whoever they wish to vote for, be they British, German, French or whatever.
But, and it’s a big ‘but’, herein lies the root problem to European unification; LANGUAGE. Having MEP’s talking to each other through interpreters’, simply cannot work. They MUST be able to converse freely. And what of us, the electorate? I would gladly vote for Herr Von Munchen or Mdm de la Rouen, or Snr Don Madrid if I thought they best represented my idea of good government, BUT I need to hear them speak. Their ideas may well suit my aspirations, but an interpreter can only translate words, they cannot convey sincerity. I need to hear the candidate speak in order to gauge their sincerity. A Spaniard must be able to do likewise with a Dutch candidate and a Lithuanian with a Romanian. Only when we can all understand each other and judge the sincerity of MEP candidates and are free to vote for whoever we want to vote for, can the EU become truly democratic. Only then can Europe unify.
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A problem is that the motives differ as to why various nations are in the EU and even people within those nations may wish (or not wish) to be members for differing reasons. Strong motivations come from coalitions of people with very differing outlooks; Germany has a mix of post war angst desiring all nations come together with a more pragmatic view of being the industrial power house with a wide captive market for example. This combination of liberal left and the capitalist right also drives France and, to a lesser extent, the UK and other nations. This mix of views is not a bad thing but it is a fragile alliance, especially in the UK where there is a good deal of skepticism about the benefits for both group's extremes.
France and Germany would like to see a European Federation with more power to a European Government. The strength of Germany economically and the heady political mixed views of France do not sit easy with the UK's long standing parliamentary system or with the concerns of some of its industrial leaders. It is also a difficult "sell" to the people because of hostility from a largely parochial populist media that still promotes the feeling that the UK is still some great colonial power. However, even from a more reasonable position, it is clear that France and Germany have tried to grow the EU too fast and without waiting for sufficient economic convergenge prior to introducing a common currency. I think this is because the political desire has outrun the economic common sense.
I very much agree with Don's comments. I don't see anything changing much very quickly even after these current problems go away. It seems clear that the UK was right to have not joined the Euro although I don't remember any argument being used that predicted the recent problems.
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Keep in mind that most countries are divided into some form of progressive local governments.
In the USA: Nation > States > Counties > Cities.
And, to a large extent, states, counties, and cities can levy local taxes, and make local laws. And, obviously local elections are "local". Certainly both wages and values of property can vary tremendously from place to place. Prices of goods also vary, but perhaps not as much.
The USA also technically does not have a national language, although some people believe that English should be made a true national language.
In the EU, the differences between member "states" is much more accentuated, with far more local control, and far less central control. It wouldn't be a bad idea to declare a National Language. In much of the world, English is already the de facto second language so it wouldn't be a bad choice. However, German and French should also be considered. Spanish is also a widely spoken language.
Once a "national language" is chosen, then require all schoolchildren to not just study, but to truly learn the "national language". I don't see the local languages dying out quickly, but over about a century or so, there would be an approach to a universal language.
A uniform currency certainly has many benefits for both commerce and travel, but I agree that it must also come with some amount of fiscal responsibility, and cross-country uniformity.
I realize that many former Soviet block states have been trying to join the EU. Perhaps there needs to be a phased integration of new territory. However, I suppose it could be pointed out that the former Soviet block nations aren't the ones with severe national debt crises.
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As I said, I don't think there is too much wrong with the EU, but I've always been amazed that nobody seemed to understand that, unless there is a central fiscal authority with teeth, a single currency is likely to collapse.
The US federal government has enormous leverage to control the individual states, but as far as I can tell, there was no such thing in the Eurozone, so there really isn't much to prevent individual countries from gaming the system so that they get the advantages of the Euro without the responsibility. Until that really get's fixed, I believe the Euro will just stumble along from one crisis to the next.
IMHO, the Euro was an example of everyone saying what a great idea it was while everyone was assuming somebody else actually knew how it was going to work. The modern term for it is "groupthink", but I prefer "The Emperor's Clothes."
Mind you, as Graham says, I suspect that really was not the main reason the UK stayed out of it.
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Well, Greece has managed to convince bond holders to take a 50 cents on the dollar debt swap deal, and it is being hailed as a resounding success.
I suppose that I can imagine that keeping the nation somewhat solvent for a little while longer would be considered a success, but I still have to wonder if any time a nation can't pay back 100% of its debt, it should be considered an abysmal failure.
Of course, interest rates have gone through the roof over these last few years, so perhaps the investors are not truly loosing much dough.
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In the beginning of the EU, when there were only 12 members and the flag was first created, there was lots of debate about how to grow: horizontally or vertically. I believe there even was a vote for this and obviously horizontal growth came out as a winner.
More and more countries are joining the EU, but sooner or later, all European countries will be member states. This moment in time will be the starting point for more vertical growth I believe, and we will start to see more and more radical changes from then onwards..
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As I see it, the problem with Greece, regardless of what has happened in the past, is that to allow Greece to fail, kick it out of the Euro zone, or for Greece to leave the Euro zone (whether of its own accord or pushed) would be seen as confirmation of the failure of the Euro. This might result in the Euro being sold wholesale on the money markets in favour of the US $. That would put other Euro zone nations, such as Ireland, Portugal and Spain, currently teetering on the brink, in much the same position as Greece is now. It could also lead to Italy needing the same sort of help that Greece is receiving and the ECB simply doesn’t have the resources to bail out an economy the size of Italy’s.
Should all this happen, France might be forced to rethink its position and that would leave Germany out on a limb as the only viable economy in the Euro zone. The Germans are already unhappy with the current situation. ‘Why must Germans pay the price of failing economies?’ is the question on many a German’s lips, and quite rightly so. Even the UK appears to be helping in the support of the Euro, and we aren’t even a part of it.
I think the whole thing is an absolute shambles and many wonder if the Euro can survive. But it seems at the moment, the powers that be have deemed that the Euro must be maintained, whatever the cost. What seems to go over their heads’ is that it is the ordinary people who are paying the price of their single minded obstinacy and they can’t afford it.
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Well,
The Greeks have not decided that they want the bailouts.
But, don't want to pay for the loans, or have fiscal responsibility. What is the interest rate to the government? Perhaps it would be easier without crushing interest payments.
As I mentioned earlier though, the Greeks need INDUSTRY beyond tourism.
If they can't come to an agreement in the very near future, I foresee a Greek Bankruptcy (what does that mean for a government)?
Greece will be the first country to exit from the Eurozone.
The Greek Government will start printing the new Drachma.
However, the people for the most part will continue to trade in Dollars, Euros, Pounds, and just about anything other than the Drachma. Even if laws dictate the official currency being the Drachma, tourist trade will still be in other currencies.
The government, though, will print and pay in the Drachma which will see inflation rates in excess of 100% per year for the next 5 years or so.
It won't be kind to those individuals who's savings gets converted to the Drachma.
International trade, and buying things like new cars will be difficult as people's wealth is quickly devalued.
I did, however, see a note that tourism may pick up if Greece's prices get devalued on the par with Egypt and other poorer nations.