The United States of Europe or Bust

With Greece on the verge of collapse and the EU project in serious trouble — trouble that threatens not only Europeans but the rest of the world — it's time for seriously new thinking from our friends in Europe. Not damage control and band-aids, which have been the preferred responses by EU officials so far.

Evidence is now clear that the EU policy rests on seriously flawed assumptions, resulting in some monumental unintended consequences. The way forward has to start with facing up to those:

Profligate government spending got us into the current fix.That's simply not true. The so-called GIPSI countries (Greece, Italy, Portugal, Spain and Ireland) — whose economies are most at risk and whose governments are considered most profligate — had, in fact, steadily reduced not only deficit spending, but also their total debt levels right up to the financial crisis in 2008. Spain ran a surplus in 2007, and its total debt to GDP ratio was lower than Germany's.

What got Europe into its current mess was pretty much the same thing that slammed the US economy: a real estate bubble financed by profligate private banks. And the resulting economic slowdown and rise in unemployment — along with bank bailouts — were the causes of exploding government debt.

The way to growth is through austerity and balanced government budgets.Reputable economists, such as Nobel Prize winner Paul Krugman, have warned from the get-go that austerity measures — in which EU governments are more or less ordered to cut spending and balance their books— would only exacerbate the crisis. As a matter of simple logic, when unemployment is rising, and businesses aren't hiring, what do policy makers expect to happen when governments cut back too? Obvious answer: more unemployment, fewer customers with money in their pockets, increased likelihood businesses won't expand.

But economists' projections aside, the facts are pretty much in. Austerity hasn't worked, and is in fact, turning the crisis into a disaster.

Political union is out of the question.That leaves us with unelected, unaccountable EU officials in charge, who are focused on the past and on avoiding its catastrophes, and thus can't adequately address the current needs of the people their policies impact. And when a growing number of those people are out of work and living in collapsing economies — that is a dangerous brew indeed.

The continent's different languages, vastly different cultures, its long history of wars, resentments and distrust preclude political union. Or so the thinking goes. The core problem is that this assumption creates glaring internal contradictions and anomalies in the EU project. For example:

Economic contagion. Under the EU's system, a tiny country's economic woes (Greece) can threaten the economy of the entire EU. When states in federal systems such as the US — even large ones — run into financial problems, it's a blip on the economic radar.

The collapse of the safety net. When national economies contract in the EU, funds for unemployment, welfare and bank bailouts dry up. That's because the currency is controlled by the EU, while responsibility for the safety net remains in the hands of the individual countries. Thus, you have true Great Depression-like conditions when economies contract in the EU — a potent environment for extremism to flourish. That wouldn't happen in a truly federal system.

Backdoor autocracy. We now have Germany attempting to force Greece to do the impossible: balance its budget while its economy is tanking and unemployment is high and rising. That will likely force Greece out of the Euro, meaning Spain and Italy could well be next. Germany forcing impossible policies on non-Germans who have no say in such decisions? That's an outcome no one wants — and yet that is precisely what is happening.

Finally, could it be that the idea that "political union is impossible," far from being "true" in some theoretical sense, is simply a case of self-fulfilling prophecy? EU leaders are deeply afraid of concentrating power, for fear of creating conditions that would allow for another Hitler. They're afraid of repeating history. But democratic systems aren't built on culture or peoples' histories — and in fact, democracies often repudiate those elements when they threaten the system. Democracies are built around shared ideas and ideals, along with common interests. And Europeans have those: preventing wars, increasing trade and cooperation, fomenting economic expansion, and above all, strengthening democracy itself. But the EU, sans political union, is creating decidedly undemocratic and unintended results. Along with deteriorating economies, you have the ingredients for fueling extremist nut cases. And no one wants to see that element on the rise in Europe.

The EU project isn't officially dead yet. But the evidence is in that the assumptions on which it is built are deeply wrongheaded. What they add up to is that either the EU must make the transition to the United States of Europe, or discard the Euro.