Eurozone Integration

ECB’s Draghi: Euro Zone Not in Danger of Breakup – Business News – CNBC.

In previous posts, I wrote that Merkel was attempting to create a full political union with the Eurozone countries. Mr. Draghi is her ally. The European political and business classes seem intent on euro unification regardless of what the citizenry think.

Nationalist parties are growing more powerful in Europe by the day,  because of their distrust of the euro and European institutions. This is an appealing message to voters who seek an alternative to austerity and German supervision of their budgets and economy.

A political union is not a magic bullet anyway. The U.S. has had a full political union since 1789. The poor, rural states tend to stay poor and rural while the rich states endlessly transfer money to them. There is even European precedent for political unions which do not bring the poorer states out of poverty but rather condemn them to eternal transfer payments and lower standards of living. Northern Italy and Mezzogiorno (the South) have been part of the same nation since the 1860’s. Guess what: the South still relies on transfers from the North. In Germany, the poorer, rural and former communist East is still poorer than the West. This situation goes back even further than communism to the original unification accomplished under Bismarck in 1860’s.


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