Calling Herr Madison: The EU Needs to Take a Page from the Founding Fathers
2-6-12
David O. Stewart turned to writing after more than a quarter century of law practice in Washington, D.C., defending accused criminals and challenging government actions as unconstitutional. His first book, "The Summer of 1787," grew out of Supreme Court case he was working on. It was a Washington Post Bestseller and won the Washington Writing Prize for Best Book of 2007. His most recent book "Impeached," had its roots in a judicial impeachment trial he defended before the United States Senate in 1989, then argued to the Supreme Court.
As European leaders met in Brussels last week to address the long-running European debt crisis, their host city illustrated their problems: unions protesting crisis-related austerity measures staged a general strike.
The never-ending debt crisis poses the question whether Europe can move toward greater political integration. Since the 1950s, the European Union has nurtured that region's recovery from two world wars. Today's half-way integration, however, is not enough. Only greater coordinated action can implement the solutions needed, as evident from the striking parallels between today’s Europe and America in the 1780s: crushing debt, currency confusion, sectional jealousies, and a lack of political will.
For James Madison of Virginia, the American crisis demonstrated the need for a national government that could manage a continental crisis. To that end, he agitated tirelessly for the convention in Philadelphia that produced the Constitution and a new government.
It’s time for a European Madison to step forward.
Too Much Debt, Too Many Currencies
In 1787, thirteen American states had formed a loose confederation. Having a nominal GDP of only $187 million, the states and national government owed almost $80 million. That forty percent debt load seemed crushing at a time when tax rates often were only one percent of GDP.
Some states were trying to paying their debts, but others had not. The national government earned no revenue so it couldn’t help. It could impose a tax only if each member state agreed; that precondition was never met. Until the new government under the Constitution emerged in 1789, America’s debts went untended and its economy staggered.
Today, the twenty-seven nations in the European Union owe more than 12 trillion euros, or 80 percent of their combined GDP. Even with tax rates far higher than in eighteenth-century America, that burden is crushing. Greece and Italy strain to avoid default; the bonds of Ireland, Portugal, Cyprus, Slovenia, and Spain tremble; the prospect of a second recession in three years looms.
Through the European Union, Germany and France have feverishly organized bailouts on what seems to be a quarterly schedule. Markets doubt the recurring cycle of financial uncertainty, high-level conferences, and band-aid repairs. Each public bond issue in Europe has become a high-drama moment.
For long-term relief, the structural causes of the debt crisis must be addressed. European social programs must be scaled back to match economic resources, a bitter remedy that can be destabilizing, leading to general strikes like the one in Brussels this week.
Yet the EU includes the same one-state-veto provision that hamstrung the American union in the 1780s. Last September, in order to expand a bailout fund to forestall a Greek default, the EC needed a unanimous vote by the seventeen nations using the euro as currency. That bailout nearly failed when Slovenia refused to go along, though the Slovenian Parliament rescued the situation by removing its government. The unanimity requirement will always obstruct effective action.
Currency Conundrum
Multiple currencies also beset America in the 1780s. Congress issued several more, while six states printed their own currencies. Merchants disdained them all, preferring to do business in stable foreign currencies.
In today's EU, seventeen nations use the euro but ten do not, adding complexity to an already a daunting multi-variable exercise in governance.
Political integration is fiendishly hard. In 1787, many Americans feared that the Constitution would destroy their states, converting the problems of one region into the problems of all. Several state ratifying conventions barely approved the new plan. The first government under the Constitution, formed by George Washington in 1789, included only eleven states; North Carolina and Rhode Island were still thinking about whether to join.
European integration in 2012 will be more difficult. Europeans speak many languages, have divergent histories and cultures, and spent millennia slaughtering each other. The last continental war ended less than seventy years ago.
Yet the decision they face resembles the one that confronted Madison in the 1780s. Madison insisted that the nation needed to decide “a most awful thing”: “no less than whether the thirteen states shall unite freely, ... for the security of their common happiness and liberty, or whether everything is to be put in confusion and disorder.”
When will a statesman in Hamburg or Nantes or Birmingham issue a similar call to action?