Vaclav Klaus (Czech president) at Hillsdale

http://www.hillsdale.edu/news/imprimis/archive/issue.asp?year=2011&month=07

"The post-World War II reconstruction of Europe was a success because the war eliminated, or at least weakened, all kinds of special-interest coalitions and pressure groups. In the following decades, Europe was growing, peaceful, stable and relevant. Why is Europe less successful and less relevant today?"

His comparison of the Europe's post war economic success and post ECU failure is interesting. Ignoring his ignoring of the Marshall Plan aid Europe received, the changes made by the ECU are similar to the changes made in the US by the US Constitution.

"They also very often accept the conventional wisdom that the weakening of nation-states, and the strengthening of supranational institutions, is a movement in the right direction."

Under the Articles of Confederation the USA was a confederation of nation-states and the Constitution created a supranational institution, the federal government.

"A positive evaluation of developments in Europe over the past 50 years can be explained only as an underestimation of what has been going on recently. In the 1950s, the leading idea behind the European integration was to liberalize, to open up, to remove all kinds of barriers which existed at the borders of individual countries, to enable the free movement of goods, services, people and ideas across the European continent."

The US Constitution also did this.

"But European integration took a different course during the 1980s, and the decisive breakthrough came with the Maastricht Treaty in December 1991. Political interests that sought to unify and create a new superpower out of Europe started to dominate. Integration had turned into unification, and liberalization had turned into centralization of decision making, the harmonization of rules and legislation, the strengthening of European institutions at the expense of institutions in the member states, and what can even be called post-democracy. Since then, Europe’s constituting elements—the states—have been consistently and systematically undermined. It was forgotten that states are the only institutions where real democracy is possible."

Lincoln's Revolution did this to the USA.

Klaus blames the establishment of the euro.

"The most visible European problem today is the European monetary union, which was presented as the most important unification achievement following the Maastricht Treaty. The realization of this monetary union has not delivered the positive effects that—rightly or wrongly—had been expected from it. It was intended to accelerate economic growth, reduce inflation, and protect member states against external economic disruptions or so-called exogenous shocks. It has not worked. After the establishment of the euro zone, the economic growth of its member states slowed down relative to previous decades, thus increasing the gap between the rate of growth in the euro zone countries and that in other major economies. The internal disequilibria—such as trade imbalances and state budget imbalances—became larger, not smaller. And there is no indicator pointing towards a growing convergence in the euro zone countries. During its first decade of existence, a common currency has not led to any measurable homogenization of the member states’ economies.

"It should have been clear to all, as it was to me, that the idea of a single European currency was essentially wrong—that it would create huge economic problems and lead inevitably to an undemocratic centralization of Europe."

When the Constitution established a single currency all the states had comparable economies. The difference between the poorest and the richest state was much less than the difference between, say Germany or France and Spain or Greece. Say the ECU and the euro had been establish while all of Europe was rubble and starving. Might not Europe be as stable as the US?

"Most economic commentators were satisfied by the ease and apparent inexpensiveness of the establishment of Europe’s common monetary area. In recent years, however, the negative effects of the straightjacket of a single currency have become more and more evident."

Should we also have state currencies?