What’s going on in Europe economically is impossible to understand without getting your head around what’s happening in Europe politically.
And it’s virtually impossible to understand what’s happening in Europe politically without having some idea of the on-going European political project: the European Union, or EU.
Because while the European Union had its beginnings in the benevolent notion that free trade would give Europe the peace it has so rarely enjoyed historically—the idea best summed up by the great Frederic Bastiat as “if goods don’t cross borders then armies will”—it has in more recent decades been more interested in regulation than in trade, and more in political union than in economic prosperity.
This is one reason that everything in Europe looks upside down economically—overspending “cured” by more spending; over-borrowing “cured” by more borrowing; debt “fixed” by the creation of more debt, and IOUs “written off” by the creation of more IOUs.
Where other countries kick cans down the road, the European Union kicks whole kegs. And this is a keg that won’t take much to explode.
So the house the European Union has built is now incredibly fragile, both economically and politically. Which is why even the relatively tepid “No"!” flung in the face of Europhiles over the weekend by British Prime Minister David Cameron was enough to give them conniptions.
If you want to start understanding why, and to understand what’s been happening in Europe politically, might I suggest you start with Liberty Scott’s excellent primer on the subject, the first part of a series:
- What's going on in the EU? Part One: What's good. – L I B E R T Y S C O T T
[Hat tip Craig]