Europe's Debt Solution is Forced Unification

In my column for the National Post I discuss how the solution to the European debt crisis is going to force a closer union between member states:

If the euro is not to bust up, it must be saved.

Friday morning, The Globe & Mail reproduced on its front page one plan to save the euro. It looked as complicated as the design for a nuclear reactor: Arrows running every which way, incomprehensible acronyms strewn about the page.

All of that complexity that is designed is so much chaff, thrown into the eyes of the public to conceal the hard reality of what is actually being proposed:

Europe is about to create a new central borrowing power to assume responsibility for the debts of the weaker borrowing countries. To service these assumed debts, the new central borrowing power must gain a new taxing power. To prevent the problem from recurring, the weaker borrowing countries must surrender some of their spending powers.

Does that sound too technical? OK, put it more simply:

Europe is about to create a new super-government - and Greece, Italy, Spain and the others are about to be demoted to provincial or state local governments, subordinated to this super-government.

What Europe must do to save the euro is very similar to what Alexander Hamilton did in the United States in the 1790s to create the dollar. The new federal government assumed responsibility for the Revolutionary War debts of the former 13 colonies. The new federal government also took control of what was then the most important revenue source: Customs duties. The states were relieved of their debts in exchange for surrendering some of their taxing power.

But there is one huge difference between Europe today and the United States in the 1790s. The new American super-government was elected. The new European supergovernment won't be. Americans went into their arrangement with their eyes open, understanding the implications of their choice. European voters, by contrast, are being told that they are making a merely financial decision. As with the original euro decision itself, the true implications of the rescue plan will not be revealed until it is too late to reverse them.

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