Economics

Una ruta hacia la desunión de Europa

Oct 23, 2012 Hans-Werner Sinn

MÚNICH – El lema de los Estados Unidos de América es “E pluribus unum” (de muchos, uno). El de la Unión Europea es “In varietate concordia”, cuya traducción oficial al español es “Unida en la diversidad”. Es difícil expresar más claramente las diferencias entre Estados Unidos y el modelo europeo. Estados Unidos es un crisol de razas, Europa es un mosaico de pueblos y culturas diferentes surgido como resultado de una larga historia.

Esta diferencia suscita dudas respecto de la conveniencia de luchar por la creación de unos Estados Unidos de Europa. Muchos se niegan a aceptar esta idea, porque no creen que una identidad europea unificada sea posible; recalcan además que para crear un sistema político único, como el de Estados Unidos, es necesario que haya un idioma común y una única nacionalidad.

Tal vez tengan razón quienes piensan que la idea de los Estados Unidos de Europa (el sueño de muchos niños de posguerra como yo) nunca se podrá llevar a la práctica, pero yo no estoy tan seguro. Después de todo, profundizar la integración europea y crear un sistema político único conlleva ventajas prácticas innegables, para las que no hacen falta una identidad o un idioma comunes. Algunos ejemplos son: el derecho de cruzar las fronteras con libertad; el libre movimiento de bienes y servicios; garantías jurídicas para las actividades económicas transfronterizas; una infraestructura de transporte paneuropea; y lo que no es menos importante, un sistema común de defensa.

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Hans-Werner Sinn

Writing for PS since 2002
110 Commentaries

Hans-Werner Sinn, Professor Emeritus of Economics at the University of Munich, is a former president of the Ifo Institute for Economic Research and serves on the German economy ministry’s Advisory Council. He is the author of Casino Capitalism: How the Financial Crisis Came About and What Needs to be Done Now (Oxford University Press, 2010).

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0 Comments on this paragraph, 19 Comments on this article

Stamatis Kavvadias Nov 1, 2012

EU from the start is based on wrong principals, which, to say it clearly, are *undemocratic*. No democracy makes rules and laws it has to follow "for ever". This is the problem with a eurobond, and also the problem of EU institutions --all of them! The problem originates from the ill basis of occident law practice, which pretends the need to avoid elected representatives favoring vested interests, can be removed by heritable law. In fact, what it does is to trust justice to an oligarchic elite of law bureaucracy.

The rest of the article uncovers the parts of German society that did not want the EU to be anything more than a free-trade area --mostly its bankers. The hypocrisy of the statement about "the creation of a single european state" and of "the dream" of the author of a United States of Europe, are uncovered very easily when he does not accept the need to redistribute wealth. The implication that this is not the case in the US, since it is not in the role of the FED to do it, is false, provided the federal budget is taken into account. Any kind of "united states" would do that, the same as countries do it among their provinces.

The ECB's actions by no means is the correct way to handle redistribution, but they gave time to weak-spirited and unmotivated european leaders. The claim that ECB's actions (buying short-term debt of Italy and Spain or OMT, and buying troubled country bonds called SMP) constitute a "massive redistribution of wealth," is at least untrue. They are given under a memorandum, which is supposed to address conditionality concerns and moral hazard. In fact, blackmail is taking place for each tranche, so that debt (including to ECB) is serviced with priority over domestic needs. Further, OMT transactions are sterilized, which can have some cost for the ECB, payed as interest to banks buying ECB securities. That cost will be eventually distributed to the national central banks. And still, before OMT takes place, the country has to apply to the ESM, which can shrink the need for ECB intervention. So please Mr Sinn, explain us where is the "massive redistribution of wealth"? Isn't all that a lie to cover the "moral hazard" argument of euro-skeptics, with which they attack democracy and the european peoples, to protect the profits and solvency of banks?

Finally, qualified majorities do not protect minorities, but condemn them in advance. Veto and unanimous decision-making may protect minorities. But there notion that Germany is a minority of stable exporting countries in eurozone, does not mean that doing it without the euro can avoid enormous sacrifices in the standard of living in Germany. So strange, there is a price for everything!
- Aldo Dias Dec 20, 2012
  
  Carol Maczinsky - When were the perils of moral hazard and the absolute value of compliance with agreed rules invoked against Germany and France when, with utter disregard, they failed to meet the stability pact rules and no sanctions were brought on them? And if I remember correctly we weren't exactly in a bust scenario back then.
  
  Further, I'm sure I am not the only one that remembers that, although at the time in a merely consultive or facultative role, the commission reviewed national budgets, both prior and post execution. If it lacked independent economic assessment instruments of its own then that is brussels and all of our politicians faults. But the truth is that the political reality was created that there was a technical stamp of approval on all national budgets. Of course that the greeks full on lied and many other countries "debudgeted" is something everyone knew. But this, politically, irrelevant.
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- Carol Maczinsky Nov 5, 2012
  
  It is always the other nations to blame which are after the poor Greek victims, right? Compliance with agreed rules is not "undemocratic", it is the foundation of trust.
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chris cunningham Oct 28, 2012

Everything is exactly correct up to the point where it seems the author is pointing out that the ECB is somehow favoring a group of countries including Ireland.
Let's look at the evdidence shall we?
1. The executive board of the ECB does not have any Irish person as by a gentlemans agreement there must always be one from France, Germany, Italy and Spain on the 6 boards members. This agreement is a political agrrement against the statue of the ECB itself.
2. Ireland required higher interest rates during its boom periods, the ECB followed countries like Germany which needed lower rates in the early 2000s.
3. The ECB forced Ireland to make whole all Senior bondholders in bankrupt financial institutions against the advice of the IMF and common practice for example in the US. There is talk of Ireland taking the ECB to court over this. This amounts to 10s of billions of private investor losses pushed onto the Irish taxpayer.
4. The ECB has only reacted when Italy and Spain looked like they might be pushed out of the bond markets, they were not concerned about Ireland.
5. Germany recently appionted someone straight from their ministry of finance without a Phd, to the executive board, for political reasons, or to protect the German taxpayer, according to Der Spiegal itself.
Basically Dr. Sinn the ECB favored and favors Germnay over Ireland, this is why Irelands boom was too boomy and bust was too serios. The nationalised German lenders were the biggest creditor of the Irish banks. They have been made whole thanks to the threats of the ECB to the Irish government.
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Mark Pitts Oct 25, 2012

Fiscally, the US and European Unions are completely different as they stand today. Yes, US federal money paid by New Yorkers is used to help Mississippi, but the Fed has total control over how much is spent, and exactly how it is spent. Stated differently, Mississippi has completely given up its sovereignty in this issue (which is just what Germany wants in return for more spending in the Periphery).
Fiscally, Europe today is more like the individual US states. There is nothing in the state budget of New York to help Mississippi – nor should there be – that is a Federal issue.
- Stamatis Kavvadias Nov 1, 2012
  
  How exactly does Mississippi "lose its sovereignty"?
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Mark Pitts Oct 25, 2012

Didn’t every thinking person know from the beginning that you cannot have a currency union without a fiscal union, and you cannot have fiscal union without political union???
The whole idea of the euro is one of the tail wagging the dog – i.e. let’s implement the end result and hope the prerequisite pieces somehow come into being.
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Marten Klein Oct 25, 2012

I wonder how the present EU centralisation initiatives provide a model. In so far antitrust is concerned the EU is an enforcement joke, only second to the US.
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André Rebentisch Oct 25, 2012

The grounds of comparison is wrong. The United States federalism is not balanced enough to provide a governance model for Europe. It was the United States unability to regulate its markets which triggered the crisis.
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Francesco Pigozzo Oct 25, 2012

Pernicious way of upholding old national sovereignties in Europe, as if European States really had some effective sovereignty in the globalized world: Germany should not deceive itself, being part of the same destiny. A two-speed Europe would not undermine Europe's unity, it would enhance it on the contrary since it would mean a concrete recovery of effective european sovereignty. The problem is not wether the USE would have to start with fewer member-states than the EU, but if the non-willing EU member-states will allow the willing one to go on and if the willing one will go on nonetheless, keeping the USE's doors wide open to successive memberships. In the USE framework, that is to say in a federal State framework, Sinn's contradictions would immediately disappear: we would have a democratically elected government, with a Treasury, and the ECB could behave like other Central Banks in the World. The "transfer union" would't only be between richer and poorer regions, but above all between richer and poorer social strata. For the sake on the entire community. That's not utopia, that's the only way out of the structural crisis the Europe-of-little-national-egoisms is living: the financial and economic one being only one of its many facets.
- Francesco Pigozzo Oct 25, 2012
  
  You're partly right, in my opinion, but is it a real obstacle? Italy's unity was achieved several decades before italian citizens could really speak the same language and understand each other (dialetti). I'd reverse your idea: without statehood and democracy, there'll be no real supernational education and debate - we don't have a real supernationa education and debate, nowadays, but a struggle for linguistic hegemony (and, paradoxically enough, an english imperium even at the heart of the political discourse about European political unity in the Eurozone...)
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- Jorge Simao Oct 25, 2012
  
  The very first step for a democratic elected government was not make sure that every 18th year old European spoke/understood 1-3 non-native languages. It could be done, but is was not done yet...and it is not even in political-developmental discourse in EU. This "tiny" issue just give on more prove how EU top-level policies and discourse are so far-fetched and away from real world issues.
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Deb Palmer Oct 24, 2012

Globalization cannot be undone. Our interconnection is tighter than ever. Therefore, moving forward, each country needs to negotiate and find common ground with the others. Ultimately we will be pushed toward this, as global circumstances continue to decline.
And when we are pushed, suddenly we find we can agree. Its been done many times before. Remember the push toward a country's unity when it goes to war. When it comes to survival, we stick together, rise above our silly differences, and get on with it.
Well, we're finding that while we are not at war with another country, we are at war with our very nature. We're resisting change, all because we don't want to learn how to rise above and think of the welfare of the whole. When we figure that our current way works, we'll see how we can survive and thrive by us all thinking about and contributing to the whole.
In the end, we will have to think about the 'whole' as nature intends. By stubbornly resisting, it'll lead to greater global unrest, war, and then humanities' chance to start over again - with the few remaining people left on the ashes of this planet. At that point people will have to stick together just to make a go of it.
Either way, the path points toward unity and learning to rise above our differences.
- Edward Ponderer Oct 25, 2012
  
  Quite right Ms. Palmer.
  
  The globalization of the 21st century is an organic reality, and is about as romantic an issue as the "love story" between the brain, hearts, and kidneys.
  
  But yes, we remain egoistic -- evermore so now than in the past. And this brings on the true romantic mythology of the 21st century, that business as usual -- growth or austerity -- is going to do it for us. In this fast defacing ball we live on, where will you grow, where will you get resources, and just who shall your market be? And as to that -- you need some level of trust in economics for who guards the guards? And as we keep seeing, none can be trusted in terms of the old framework.
  
  No, it will be looking at our differences in the face, overcoming our prejudices, and realize that we are desperately intertwined. We either reach a commonality above it all and seek balance -- to become reborn as a single United Humanity, or we will strangle in our umbilical cord. But Humanity is certainly being driven towards the birth canal by Nature in an unstoppable manner.
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- Jorge Simao Oct 25, 2012
  
  Appealing to romantic integration doctrines did not work in the French revolutions, did not work in XX century with the socialist tendencies, and will not work even less in the XXI century of productivity, continues innovation, and sustainability. Only bottom-up business dynamics and job creations in mutual intrapreneurships can create a economic and demographic growth and a truly united Europe. Pin-points individual rich countries such as Germany, or troubled countries such as the ones in the south, as the cause of the problems and eventual split is to go back to the old discourse that the EU was meant to cure. Apparently, it could cure this mind set and it even risk making it come back even stronger. EU is not Europe, and only very marginally represents the majority of Europeans.
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Jorge Simao Oct 24, 2012

People in Europe basically want jobs and good living condition that come with good and predictable salary. The details of the governing model at national or European levels are not so important, unless your are engaged in the building and discourse of Europe (e.g. as a elected MP).
Unfortunately, Europe as been enable to generate this for many countries and people. Moreover, central "guidance" by EU preempts serious, intellectual, and real democratic discussion inside the troubled countries -- since governments can use the EU to govern in certain prescribed ways, rather than by emergent local discussion.
So what the EU is really doing is the same thing that old Europe always did best over the centuries -- maintain rigid class structures, where only affection or a job with/in public institutions can give sense of security.
Lets face it, the EU model of regulate and tax to govern is at odds with the productivity and sustainability demands of this century. Often, is mostly used to preempt natural competition between countries and let "business selection" to operate.
Only private intrapreneurship with limited state regulation can bring the expirations the people in line with reality. A unite EU model can only hypothetically exist if its build bottom-up, and this means being built by business and common interest relationships.
The organization model being pursuit by the EU is a "canonical country with specificities" model applied to a full continent. While the free open market and mobility were great innovations brought by the EU, because it removed or reduce the power of pre-existing institution in member states -- e.g. border control and taxes -- the new institutions being build start from the same erroneous assumptions that create previous national ones.
The EU will not success without home grown business and innovation, and consequent job creation. This is not appending, and the money that was available to make it happen was already (badly) spent. And after the EU -- Europeans will still be around to make happen again -- just better.
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Zsolt Hermann Oct 24, 2012

The comparison between "Out of many One", and "United in diversity" is very acute and precise.
The truth is one of them is an illusion, a lie that is slowly falling apart, while the other one is the truth, which is more problematic, requires greater work, but that is the only reality for humankind.
The "Out of many, One" is just as much an illusion as the "American Dream".
Even the people of the same family are completely different from each other, and any long term relationship, marriage, friendship, work relationship in business, commando in an army or a successful sports-team requires compromises and building bridges over the differences, specialities of the members of that association.
Thus Europe should not abandon the process of building a deeper unity, a deeper integration just because the members states, or even parts of the same countries are so diverse in their mentalities, cultures, colors and sentiments.
The only thing they need is a common center point they can unite around, a common goal above their differences that can sustain a cooperation, union, while the differences, characteristics, even rejection, hatred can provide the tension making the union much more powerful, like a resistor in an electric circuit actually performing the work.
There are no Hollywood type perfect couples, relationships, "hero nations" fighting as one man with one heart in reality.
There is only hard work of accepting the other, working together towards something dear, mutual for all.
Humans perceive reality in contrast, even Hollywood movies need the conflict, drama in the middle to make the happy ending sweeter, a good long lasting marriage is built on arguments, disagreements and then resolutions above them, rather then pretending that everything is calm and perfect. When people know exactly where they stand, understanding their differences, rejections clearly, that is when they are capable of building bridges over them sustaining the relationship.
Today the motivation is getting clearer by the minute. Humanity has evolved into a global, interdependent network, we have interconnections that are unbreakable, but at this moment we still try to use them selfishly, only for our own sake. This is exploding now in the form of the global crisis.
Europe is at a historical crossroad, if the decisions are made wisely within the next year, leading to a true unity, deep integration in a mutually considerate format, the old continent can supply the proper template for the rest of the world, so our species can survive the changing conditions of the ongoing evolution.
The only adjustment they could do is to modify the motto: Uniting in diversity is truly not possible, but Uniting above diversity is our future.
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Michael Heller Oct 24, 2012

Great article. The madness of the agenda for joint debt liability could destroy the dream of political, regulatory, and economic union, which I also share. It's also good to reminded of a practical distinction between the one-country and one-region federalism of USA and Europe. Unlike ECB credit to Spain, the Fed cannot give credit to bankrupt California. They have similar Mediterranean climates, but live under different institutions.
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Margaret Bowker Oct 23, 2012

Very interesting and informative article. It's reminicent in some ways of William Hague's speech today, October 23. It all seems to depend on what sort of EU people are looking for. Hans-Werner Sinn examines the value of deeper integration and a single political system and yet don't these assume the distribution of resources he believes harmful? He dislikes the idea of a United States of Europe based on the Eurozone. So would he prefer a fully rounded EU, based on its motto, flexible, the single currency working efficiently, and aware that essentially, member states are sovereign? So far, but no further.
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