The depth of the European problem is starting to get attention

Posted on July 7, 2015 by radiofreemarket
From today’s Open Europe news summary:

William Hague: Greek crisis could be only the beginning

Writing in The Daily Telegraph, former UK Foreign Secretary William Hague argues that “this is not just about one country. It is in Greece that the fundamental tensions created by a single currency have first broken through, because Greece is a particularly indebted and less competitive country. But the same tensions will ultimately surface in other nations facing a less immediate crisis but a similar prognosis.” He adds, “There is a clear risk that the economic performance of the south will diverge from, not converge with, the north. Unless this is averted in the coming years, it will bring problems to Europe for which Greece has only been a minor rehearsal.” His comments resonate with an op-ed written by Open Europe Co-Director Stephen Booth for The Daily Telegraph last week, in which he argues that the Greek crisis shows the need to redefine ‘ever closer union.’

Hague believes that the problem is the old “north-south” issue, whereby the northern countries supposedly are industrious and productive and the southern countries are not. But this is not the case, because productivity is a relative term. The problem is the structure of the European Union, which gives an implicit guarantee by all members to honor whatever profligate debt any of its members may incur. Greece is just the tip of the iceberg, the canary in the coal mine. No one in Europe quite yet seems to be willing to admit that it is foolish to place entire nations on welfare. The real instigators of this problem are the European socialists, who just cannot bring themselves to recognize that socialism will not work, even if practiced on a grand, continent-wide scale with the ability to print fiat money in vast quantities. I humbly disagree with Mr. Booth that the Greek crisis shows the need for an “even closer union”. It shows just the opposite. Each sovereign nation must balance its own books and live within its means. No collective of nations will be willing to tax its own citizens to support the lifestyle of the citizens of other nations for long, which is what the “ever closer union” implies.
Pat Barron
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