Eventual United States of Europe?

Investment Analysis Clubs Macro Economic Trends and Risks
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I know much more about individual European countries than I do about the European Union. Here’s a good article with some explanations.

**Europe Is in Danger. It Always Is.Europe Is in Danger. It Always Is.**
**By Caroline de Gruyter, The New York Times, May 2, 2022**
**.**
**....**
**The European Union has a federal, statelike construction that should be strong enough to defend common European interests in the face of geopolitical adversity. It has an executive (the Commission), a parliament representing citizens, a senate representing states (the Council), an independent court of justice, a central bank and even a common border guard. This sturdy federal architecture is the bedrock of Europe’s stability.**

**In practice, however, it’s not like the federal structures in America or Germany. In Brussels, the de facto capital of the union, member states make most of the decisions. When European heads of state and government meet, they do so as national leaders. They are elected to act in the interests not of Europe but of their own nations. ... [** This sounds a lot like the U.S. under the Articles of Confederation after the Revolutionary War. – W]

**But the downside to this approach is that by seeking consensus on almost every issue, Europe becomes as strong only as its weakest link. Leaders regularly make half-baked decisions because some countries refuse to go further, with results that do not always meet Europe’s real needs....**

**...defense union...energy union ... fiscal as well as monetary union (ECB) ... Recognizing the need for bolstered unity, a group of European intellectuals last week even called for a United States of Europe....** [end quote]

It’s a pretty radical step to go from the EU to a USE. But it was a radical step to go from the Articles of Confederation to the Constitution, and there are plenty of “states rights” supporters (as opposed to Federalists) in the U.S. to this day.

Time will tell.
Wendy

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https://www.nytimes.com/2022/05/02/opinion/european-union-ma…

Wendy

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I’m English and voted to leave the EU.

It was started as an economic unit (The Common Market) and the underlying aim was always a political one - the United States of Europe. We were lied to by our politicians (nothing new there then). The main problem with the EU is its single currency, the euro. This does not suit many countries.

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This would require that the individual nations overcome nationalism. Methinks it is unlikely. France & Germany continually jockey over primacy/leadership in the EU. And populism has a hold upon some Eastern European nations*.

*https://www.neweurope.eu/article/understanding-populism-east…

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Divitias
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I’m English and voted to leave the EU.

It was started as an economic unit (The Common Market) and the underlying aim was always a political one - the United States of Europe.

The main problem with the EU is its single currency, the euro***. This does not suit many countries.

IIRC, there was a considerable row about EU members such as Greece being over the top profligate in their spending, and expecting thrifty economies like Germany to fund their excesses.

Haven’t heard much about the disagreement lately; have the Greeks been reined in???

(Again, IIRC, there was a group nicknamed “PIIGS”. Portugal, Italy, Ireland, Greece, and Spain. Haven’t seen that acronym in the news for some time, tho.)

(***The Euro: The Swiss retained their Franc and the UK retained their Pound Sterling. I wonder why they didn’t jump on the German/French Euro bandwagon??? Others, including Denmark, Sweden, and Iceland likewise declined.)

Ah, the theory of money. On the long list of things that can make one’s head spin.

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It’s a pretty radical step to go from the EU to a USE. But it was a radical step to go from the Articles of Confederation to the Constitution, and there are plenty of “states rights” supporters (as opposed to Federalists) in the U.S. to this day.

I think there’s a pretty decent argument that 1789 wasn’t where the radical step occurred that really changed the character of the United States - at least, not in any way that made the country much more like the modern US than the modern EU. Certainly the new Constitution afforded a lot more authority to the federal government than under the Articles - but in practice, the federal government wasn’t the dominant jurisdiction in most matters governmental. State governments were vastly more active in actually governing in domestic affairs. Other than militarily (and even then, probably not until after the Mexican-American war in the mid-19th century), the relationship between the federal government and state governments on the ground would have been more analogous to national governments in the modern EU than state governments in the modern US.

The real radical change arguably came in 1909-1913, with the adoption of the 16th and 17th Amendments. The former gave the federal government a brand new taxing authority, by allowing an income tax without apportionment. The latter mandated the direct election of Senators.

Those two amendments had enormous consequences. The former allowed the federal government to expand in practice well beyond what it could have done if funded only by tariffs and excise taxes. That didn’t really take off until the 1930’s and the New Deal - but those measures would never have been possible without the federal government having the taxing authority that previously had been permitted only to states. For the first time, the federal government had the resources to be larger by orders of magnitude than most state governments.

The latter completely removed the ability of states as states to exercise direct control over the federal government. Prior to the 17th Amendment, state governments had a direct role in national politics, as they - and not the voters - selected Senators. That gave Senators a role that was more analogous to national ministers or representatives of a country, creating enormoous political incentives to have the US operate functionally as a republic. Senators jealously guarded the prerogatives of state legislatures as institutions, not as mere divisions of a national government. With the 17th Amendment, that changed.

These are, I think, two of the very important things that make the EU the EU, and not like the US. The governing bodies of the EU have very limited (perhaps close to zero) taxing authority, which imposes a very strict practical limit on the importance that the federal governing bodies can have. Not only is that vastly important governmental function reserved solely to individual states, but it also limits the programs and policies that the federal governing body can really implement. And the more senior institutions of the EU (the Council and the Commission) are still populated by representatives of the nations as nations, not by directly elected representatives (contra the EU Parliament).

So structurally, the US circa the turn of the 20th century was very much like the modern EU - and it wasn’t until the progressive changes in 1909-1913 that the groundwork was laid for us to have a lot more power move up from the individual states into a federal government. Adopting the 1789 version of our Constitution probably wouldn’t change things in the EU very much - giving the EU taxing power and cutting out all the member state representatives would.

Albaby

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I wonder why they didn’t jump on the German/French Euro bandwagon???,

Gordon Brown, the then Chancellor, decided (quite rightly) that it wouldn’t work.

The PIIGS have the ECB in a bit of a bind. They are in too much debt that the rising interest rates could push on or more of them into sovereign default. More euros flow out of these countries than flow in due to trade imbalances. This imbalance is then rectified by what is know as Target 2 – basically Germany shovels money back to indebted euro countries. The amounts are large and Germany is unlikely to get it back.

https://www.ecb.europa.eu/ecb/educational/explainers/tell-me…

Interest rates are going up then this could also impact on Germany’s largest bank, Deutsche bank. It is highly exposed to Treasury bonds in the derivatives market and rising interest rates could cause problems here as well.

I suspect that the next financial crisis will start withing the eurozone and quickly spread

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These are, I think, two of the very important things that make the EU the EU, and not like the US. The governing bodies of the EU have very limited (perhaps close to zero) taxing authority, which imposes a very strict practical limit on the importance that the federal governing bodies can have. Not only is that vastly important governmental function reserved solely to individual states, but it also limits the programs and policies that the federal governing body can really implement. And the more senior institutions of the EU (the Council and the Commission) are still populated by representatives of the nations as nations, not by directly elected representatives (contra the EU Parliament).

So structurally, the US circa the turn of the 20th century was very much like the modern EU - and it wasn’t until the progressive changes in 1909-1913 that the groundwork was laid for us to have a lot more power move up from the individual states into a federal government. Adopting the 1789 version of our Constitution probably wouldn’t change things in the EU very much - giving the EU taxing power and cutting out all the member state representatives would.

Reasonably accurate but the EU is moving in one direction, The USE, all done by stealth.

Increasingly tax rates are being set by the EU and eventually nation states will become tax collectors for the EU. It’s all done by stealth, as they say;

“boil your frogs slowly”

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The real radical change arguably came in 1909-1913, with the adoption of the 16th and 17th Amendments.


couple that with the FED and IRS.
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More euros flow out of these countries than flow in due to trade imbalances. This imbalance is then rectified by what is know as Target 2 – basically Germany shovels money back to indebted euro countries. The amounts are large and Germany is unlikely to get it back.

https://www.ecb.europa.eu/ecb/educational/explainers/tell-me….

Yup, Germany has accumulated a 1 trillion Euro balance … a bit like China buying US treasuries … can only be repaid by China being allowed to buy US companies and real estate … likewise Germans buying up Greece and southern Italy … that’s maybe when it becomes a bit too obvious to the locals …