United States of Europe Transfers Northern Cash South
In theory, the European Union is grounded on a system of wealth transfer--the money of the better-off north in exchange for the human and resource capital of the poor south. The treaties and institutions of the EU were designed to bring poorer member states up to the same level as the wealthier members, resulting in greater prosperity for all. The banking crisis, however, has proved the old adage that he who pays the piper calls the tune. In the European case, the north pays and the south plays.
The European Union—often but not always in conjunction with the International Monetary Fund (IMF) and the European Central Bank (ECB)—has assembled loans for member states facing crisis. Despite the fact that any default would have catastrophic effects on the euro, the packages resemble dictates more than cooperative measures. In every case, Brussels, the seat of EU governance, has requested austerity measures, but total spending only continues to rise.
As edicts imposed from above with virtually no popular input, these measures have proven extremely difficult to pass. Almost always, slashing entitlements and raising taxes to pay more to banks means the packages are suicide pills for sitting governments. In Spain, Prime Minister Zapatero—a member of the Socialist party—cut wages for public employees, tampered with pension benefits and attacked union power. Although he stepped down before elections in 2012, it was notContinue Reading →
Programs often bring down governments saddled with the demands from Brussels, before elections are held caretakers technocrats enter with coalition support. But many caretaker ministers have intimate ties with the European bureaucracy, leaving one to wonder where their loyalties really lie.