Sunday, February 7, 2010

What European Centralizers Think

The New York Times publishes an article ”Is Greece’s Debt Trashing the Euro?”.

Here is an excerpt reporting a centralizer’s diagnosis and “quitte ou double” dilemma: does the euro survival now compels Europeans to merge their diverse polities into one?

“We have a centralized monetary policy, but we allow budgets and wages to move in different directions,” said Paul De Grauwe, an economist in Brussels who advises the president of the European Commission, José Manuel Barroso. “Without a political union, in the long run the euro zone cannot last.”

That was the hope of the federalists from the start. But the remedy would prove to be worse than the disease in this decentralizing, post-imperialist era. In a choice between creating a continental super-state and a return of some member states to an autonomous national monetary policy, the latter option is clearly the lower cost and higher welfare improving strategy. But centralization means more power for political decision makers, and better career prospects for bureaucrats. It is thus the preferred solutions of European elites, while voters, when clearly asked the question, tend to reject it.

No comments: