It’s the 1st of January, 2002. 12 European countries have officially began to use Euro notes and coins as legal tender. It was seen by some then as a sign, a sign of the peace and togetherness which being a member of the European Union engendered, and a sign of the success which the European Union was enjoying.
Oh, how wrong those people were.
Since the beginning of 2002, 7 more countries have joined the eurozone, Greece has gone back and forth from the depths of economic hell, and a refugee crisis has threatened the very fabric of what the EU stands for.
Oh, and there was that whole Brexit thing.
It’s not an exaggeration in any sense of the word to state that the past few years have been eventful for the EU. However, in truth, much of the blame for the EU’s tumultuous past lies squarely on the shoulders of the EU itself. From the sheer stupidity of the idea of uniform monetary policy for almost 20 countries to the EU’s resistance to compromise with member states on almost anything, it’s fair to say that the organisation has not done itself any favours recently. However, the Union’s death-knell has not come yet. It is possible that if the EU introduces key reforms in significant areas, they could snatch stability from the jaws of disintegration. However, these reforms need to be sweeping, and come sooner rather than later, starting with the abolishment of the eurozone entirely.
Essentially, what the eurozone is is a monetary union which currently comprises 19 of the 28 EU member states; intuitively, all of these countries therefore use the euro as their currency. The monetary policy of the eurozone countries is decided by a large organisation known as the European Central Bank (or ECB). You might already see what the problem with this is, which is that a one size fits all policy cannot possibly work with 19 different countries with completely different economic and financial circumstances to each other. Whilst globalisation has made these countries more interconnected than ever before, there still remain considerable differences; one wouldn’t liken the financial situation of Greece to that of Germany, for example. If one country’s central bank heads wanted to raise interest rates, they likely couldn’t get the ECB to; it has the interests of 18 other countries to think about as well. The result of this is lacklustre growth, accompanied by growing discontent within the eurozone directed towards the ECB, and each other for acting as barricades to collective success. Therefore, the EU is left with two possible choices: ditch the euro, and let each country’s central bank dictate monetary policy, or take control of the fiscal policy of each eurozone country themselves. Given the large political and diplomatic consequences which the latter would have, it would be wise, nay, essential for the euro to go, leaving each country to synergise their own fiscal and monetary policies, facilitating the increased growth and prosperity of these countries and therefore the EU as a whole.
Moreover, the arrogance of the EU in forcing austerity upon countries such as Greece to meet their budget deficit targets, when these countries are already in recession, is confusing at best and asinine at worst. Austerity during a period of recession simply dampens consumer confidence and spending even further, creating a negative cycle of economic contraction and reduced prosperity. Proponents of Keynesian thought here would say that what Greece and countries like it require would be large fiscal stimulus packages to help trigger a positive multiplier effect and bolster the economy through long run economic growth. Having not followed this route, Greek annual economic growth rates are still firmly negative, and showing no signs of changing anytime soon. Had Greece not gone down the road of austerity, it could have potentially trimmed its budget deficits during a period of growth, rather than shatter consumer confidence and therefore any prospect of economic growth in its short-term horizons. For the EU to not see this, even now, is hinging on delusional and suggests that they see their ideas as worth more than recent evidence; the last thing you want from a respectable political institution. This arrogance and blind faith in the powers of austerity needs to go, and soon.
Complementing this arrogance is a string of inefficient directives and rules that have misallocated funds and endangered key sectors of European economies. For example, the famous CAP (Common Agricultural Policy) regulates price levels of food, artificially inflating them and therefore resulting in an oversupply and wastage of food. Arguably, some EU legislation introduced such as this is counterproductive rather than constructive, and the EU member states would do better without it. Granted, almost all countries have that element of bureaucracy within themselves, but if the EU wants to go back to competing with the likes of America, China and India on the global stage, it needs to cut down on these regulations to ensure the most efficient allocation of resources possible within its borders. Compared to its euro and austerity problem, however, this is relatively minor, and should the EU change its policy stance drastically in the way outlined here, it could potentially live to see another day. If not? Well, let’s just say that the dream of EU economic prosperity could be just that, a dream, shunned from the gates of reality by its own stupidity and stubbornness.
The choice is theirs.