Letters by a modern St. Ferdinand III about cults

Led by German Chancellor Gerhard Schröder and French President Jacques Chirac, EU member countries agreed to radically revise a proposal aimed at opening Europe's €7 trillion ($9 trillion) services market -- 70% of its economy -- to cross-border trade. Though the proposal was touted as something that would create 600,000 jobs, many Western Europeans feared it would undermine their countries' social-protection standards by letting companies from Eastern European countries with lower standards undercut their high-cost rivals. Ergo it was rejected – the threat from the East is too much for Germany and France.

This is perfect ‘EU-nomics’ and comes as no surprise. The EU has never supported free trade – only selective trade that benefits industrial interests that support the state. Reforms are not to be expected in a 6-layered socialist contraption. The EU is the world’s largest economic bloc with a common external tariff. Recent actions against various US mergers, Microsoft, Boeing and the US export tax regime – all the while violating many of the same WTO principles – makes the EU an unreliable economic actor.

The EU was always a political concept rooted in economics. Economic integration through the Single European Market [SEM] and the various protocols in the Maastricht treaty on debt and deficit controls, were nothing more than the means to the political unification of Europe. With a freer market, more dynamic economies, greater wealth, more transparency and less corruption, the EU would become a dynamo using its economy as the precursor to political unity.

But in the past 5 years the EU economy has performed very poorly. Labor rigidity, constrained money supply, poor investment returns, ridiculous taxation, innumerable social programs, corruption and kickbacks, and immigration integration problems, are reflected in negative GDP numbers and very low productivity rates [contrary to what the Economist believes]. Without rising productivity the EU, which now has a standard of living at least 30% below US levels, will continue to become poorer. In fact the Timbro Institute of Sweden recently reported that if the EU members were US states, they would be the poorest members of the USA.

Europe is failing. Its weak economy reflects its greater society. It has an insipid foreign policy based on using the UN to free ride off the US. It is pro-Arab and anti-Semitic. EU foreign affairs are informed by export generated kickbacks [see Chirac] and not realism, liberalism or moralism. The EU is now arming Iran and China for instance, much as it armed the Soviets during the 70s and 80s and the Arab world and various dictatorships around the globe from 1970 to the present. Yet even given the sundry social, political, constitutional, moral and military issues, the EU’s most pressing concern must be to resolve its economic malaise. Indeed a freer economy might help the EU resolve these other issues.

Yet the Europeans do nothing and eschew, as good statists do, any notion of far reaching economic reform. There was established the principle of the free movement of services across borders as long ago as 1986. But since then, individual firms that have found their trade obstructed by other nations' rules have been forced to seek redress at the European Court of Justice in Luxembourg, which enforces EU law. The proposed services directive essentially sought to remove all issues in one sweeping change, rather than waiting for court cases to resolve them one by one. Now the path to implement the 1986 agreement is in doubt and an opportunity to stimulate the EU economy missed.

By not accepting the challenge of liberalizing its services market the EU only reiterated its commitment to statist ownership and mediocrity.
CraigRead.com ©