Sunday, November 27, 2011

One Intervention Leads to Another...and Another...

From Open Europe's news summary of November 22nd:

In an interview with FTD, EU Commissioner for Economic and Monetary Affairs Olli Rehn argues for “the functioning of the eurozone to be improved through better coordination and tighter fiscal surveillance”, which would include having to clear national budgets in Brussels in order to ensure that rules on budgetary stability are adhered to. According to a draft copy of the Commission’s legislative package seen by Süddeutsche Zeitung, member states would have to submit their draft budgets to Brussels by April 15 in order for the Commission to provide comments and suggestions. The budget would then be discussed nationally and resubmitted by October 15 in order to get the Commission’s final approval. Rehn argues that the Treaty changes urged by Germany would not be necessary to achieve this, although he added that the Commission did not exclude this possibility. Handelsblatt reports that a source close to German Chancellor Angela Merkel has said that her goal is a Treaty amendment which allows for similar budgetary intervention and an enforcement role for the European Court of Justice, and according to experts, such a change can be achieved through a protocol added to the EU Treaties.

The crisis in Europe is a textbook example (Austrian economics textbook, that is...) of how the adverse consequence of one failed market intervention leads to another and another until the state, or in this case the European Union super state, controls all economic life at the expense of personal liberty.The failed attempt at establishing a common currency has created a tragedy of the commons (see Philipp Bagus' excellent book The Tragedy of the Euro), whereby the most irresponsible nations are rewarded for their irresponsibility. Now, instead of simply abandoning the failed project and considering something with a real track record--dare I say "gold standard" or money freely chosen by the market?--the elitists of Europe plan to move to the next step of trying to run the supposedly independent and sovereign countries that comprise the European Monetary Union from their cushy desks in Brussels. Here in America we would ask the rhetorical question "Are they smoking dope?". But since this is Europe, with more refined continental tastes, perhaps the question should be "Are they drinking supermarket wine?".

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