In the EU nations, there is a simultaneous transfer of power away from national governments both upwards to the EU and downwards to regional authorities.
I'd usually welcome any localization of power, as a step in the right direction towards anarchy. But this is part of the EU's 'divide-and-conquer' strategy, so I'm in two minds about it. Will full secession of a city, community or sub-region be easier if it has to go up against a) a regional government and a powerful EU, or b) a powerful national government and a weak EU?
Just wondered whether other people here had any thoughts on this...
Government Explained 2: The Special Piece of Paper
Law without Government
trulib: In the EU nations, there is a simultaneous transfer of power away from national governments both upwards to the EU and downwards to regional authorities. I'd usually welcome any localization of power, as a step in the right direction towards anarchy. But this is part of the EU's 'divide-and-conquer' strategy, so I'm in two minds about it. Will full secession of a city, community or sub-region be easier if it has to go up against a) a regional government and a powerful EU, or b) a powerful national government and a weak EU? Just wondered whether other people here had any thoughts on this...
The EU doesnt mind so-called local sovereignty movements for exactly that reason. Under normal circumstances, I would have loved to support the independence of my ancestral Scotland, but all that will do is weaken the UK's ability to resist rule from Brussels.
The EU shall not remain weak for much longer. I give it about 20 years before they have unified armed forces and even perhaps a single foreign policy/minister. Dont think they'll hesitate to use force against a seceding nation.
I too would prefer stronger Countries and a weaker EU, but that isn’t going to happen. So, at this time, localist devolution movements are to be seen as e good thing. After all, should Scotland secede as an independent region within the EU, when the EU breaks down, Scotland will be left free as a nation, not be back into the UK. The more local autonomy do regions have, the more countries we’ll end up with when the inevitable fall comes by. Thus, even under such circumstances, I believe devolution movements are good.
It has nothing to do with some diabolical scheme to weaken Nation-States to strengthen the EU.
Nation-States as a system entered a steady decline after WWII: they were doomed well before the old CECA came into being. What they are doing right now is trying to make concessions to buy themselves more time by "regionalizing". The EU, whose members undersigned the Helsinki declaration as a whole, is a strong opponent of secession inside its own borders, even if the secessionists are not likely to leave the Union. I know by direct experience.
Allow me to say a thing. You are overestimating the EU: like the USSR is much frailer than the monolithic image and aggressive propaganda give away. It's basically yet another attempt by Germany to become the hegemonic power in the Continent, this time using banks and currency instead of warplanes and cannons. Like the previous times their resources are becoming overstretched as they have to keep the French happy by bribing them (guess who's the first recipient of EU funds and who's the first contributor) and now they have to prop up faltering members of the so called Club Med while the euro is already giving signs of weakness after the first decade. The German taxpayers are becoming tired and disillusioned and their rulers are not going to risk their cushy jobs to keep bailing out Spain or propping up an artificial currency.
Kakugo: It has nothing to do with some diabolical scheme to weaken Nation-States to strengthen the EU. Nation-States as a system entered a steady decline after WWII: they were doomed well before the old CECA came into being. What they are doing right now is trying to make concessions to buy themselves more time by "regionalizing". The EU, whose members undersigned the Helsinki declaration as a whole, is a strong opponent of secession inside its own borders, even if the secessionists are not likely to leave the Union. I know by direct experience. Allow me to say a thing. You are overestimating the EU: like the USSR is much frailer than the monolithic image and aggressive propaganda give away. It's basically yet another attempt by Germany to become the hegemonic power in the Continent, this time using banks and currency instead of warplanes and cannons. Like the previous times their resources are becoming overstretched as they have to keep the French happy by bribing them (guess who's the first recipient of EU funds and who's the first contributor) and now they have to prop up faltering members of the so called Club Med while the euro is already giving signs of weakness after the first decade. The German taxpayers are becoming tired and disillusioned and their rulers are not going to risk their cushy jobs to keep bailing out Spain or propping up an artificial currency.
The EU really is cracking at the seams, and Greece is the best illustration of this. With Grecians rioting in the streets over the unemployment, economic conditions and authoritarianism, the Greek government has its hand out begging for a bailout from the EU. The EU's response is, "fuck you." They're betting that Greece can't afford to lose the trade privileges that come with its EU membership... but it is the small countries like Greece that bear the brunt of the currency inflation since they are furthest removed from the inflationary source (per Austrian theory of the redistributive effects of inflation), so while they do enjoy benefits from the "reduced" trade barriers that come with being an EU member, it just might be in the best interest of Athens to leave. The very fact that the EU has to create sub-regions to manage its internal tensions is empirical confirmation of the fact that central monetary planning doesn't work. The more I study the matter, the more skeptical I am that the number of sovereign power centers in the world can be incessantly decreased, as has been the trend for several centuries now. At some point, the regional power centers will resist any further consolidation because there are just too many benefits to be given up and too few incentives can be produced by would-be imperialists to get the local sovereigns to give up their sovereignty. I think the smartest power centers will actually start playing the wannabe imperialists, taking the bribes for now, and then double-crossing when time comes for ceding sovereignty. I interpret the crack-up of what Lord Monckton said was supposed to be the founding of a world government at Copenhagen last year - complete with cancellation of a keynote AGW speech by the high priest of Gaia, Al Gore himself! - in this mold. Everybody has been taking the bribes, saying, "yes, yes, we'll go along with a global carbon tax/cap&trade, this is a great idea" but when it came time to sign binding agreements, the whole thing fell to pieces.
I think creation of super-currencies (i.e. Amero, Euro ... global fiat currency?) is easier said than done. The simple fact is that within each central bank are core players who really understand the scam. How do you scam the scammers? It can be done to a limited degree, but it's a pretty level playing field. It's one thing to dupe the economically and financially ignorant masses into accepting monopoly paper money. It's another thing altogether to scam other central banks into falling for their own scam! Ultimately, the banking cartel cannot rely on cleverness alone, it must rest on the foundation of a true, territorial monopolist of law and force (government). Unless central bankers throughout the world are secretly signing blood pacts enforced by some kind of secret, international hit squads, there's no way they just automatically continue conglomerating.
Clayton -
ClaytonB:At some point, the regional power centers will resist any further consolidation because there are just too many benefits to be given up and too few incentives can be produced by would-be imperialists to get the local sovereigns to give up their sovereignty.
There could be much truth in that. After all, perhaps there need not be a World Government before internal tensions inside large states lead to their division. Perhaps an “equilibrium” level of number of states (well above one) is achievable, or perhaps, just to get a little optimistic on this, perhaps the number of states is steadily increasing and will continue to do so for quite some time. Who knows such things…
ClaytonB:The EU's response is, "fuck you."
My poor nationalistic ears frown at that
Which makes the EU's doing everything it can in order to ensure Bosnia-Herzegovina has a centralized government all the more curious.
Spot on Clayton. Germany has been quietly bailing out the Baltic Republics for the past two years to keep Russia out. Greek bond yields will be warranted by the Bundesbank. I won't even talk about what's brewing up in the East or how bad is the Spanish situation. Everybody is lining up to be bailed out: if Berlin refuses it's bye-bye Maastricht Treaty.
Also remember that while the EU may fantasize about being the new USSR it has no power to impose its decisions. Technically speaking they fined pretty much every single government hundreds of time on every single conceivable issue but nobody ever paid a dime. That's how the system's supposed to work.
To get back to the issue at hand remember that failed Nation-States like Belgium and Italy have been fighting a decades-long battle with full EU backing to prevent their inevitable disintegration. While they succeeded in the short run (what politicians really care about: the next election) internal differences have increased dramatically and it's only a matter of time before both implode. Spain on the other hand has tried to make concession to prevent its inevitable transformation into a loose confederation. It worked until there was plenty of money to go around to bribe local politicians and their clients into complacency. Now the money's all dried up and Catalunya and the Comunidad Valenciana, the richest regions, are once again asked to tighten their trouser belts for the common good. Madrid will surely succeed in the short run but it will be in for a bit of a surprise in a few years time.
sicsempertyrannis: The EU shall not remain weak for much longer. I give it about 20 years before they have unified armed forces and even perhaps a single foreign policy/minister. Dont think they'll hesitate to use force against a seceding nation.
I don't think the European Union will last, as is, for twenty years. The debt issues are very grave in Spain, Greece, and now Portugal. These three countries (amongst others, such as Ireland) are very threatening towards the preservation of the bloc, and especially towards the strength of the euro. The European Central Bank has two different economic situations that it needs to cope with: the Central European export market (France and Germany), and the fringe debt bubbles (the above listed countries, in particular). The ECB has already declared that they will not risk the health of these central European countries for the health of the fringe nations, although this was probably partly an attempt to see if that would get get them "on the ball".
The problem is that these welfare states cannot readily curb spending without reducing the size, or eliminating parts, of their social insurance programs. I'm not sure any government, right now, is willing to do that. There are socialist parties in power in Spain and Greece right now. I'm not sure how long they will last, but even if a right-wing party was to enter power, reducing the size of the social insurance programs would be tantamount to political suicide. They would probably try to reduce spending elsewhere, but the real threat are the unfunded liabilities, and these cannot be taken care of, as those social insurance programs cannot be eradicated.
Taking Spain as a case study, it has only a few options:
I am currently in the process of researching for an article I mean to co-author with a Spanish economist, and he linked me to a document by the ECB which seriously considers the event of secession, within the context of bankruptcy. I don't think the European Union will last for long, at least as the entity it at this point in time, and I don't think that the euro will survive as a currency.
Jonathan M. F. Catalán:effects: (hyper)inflation (see Argentina) and the fact that unfunded liabilities go up in price, and so those cannot be inflated without bringing about a total collapse of the currency (hyperinflation).
Jonathan M. F. Catalán:and I don't think that the euro will survive as a currency.
Neither Spain nor any other country of the Eurozone can go back to their former currencies. Mises’ theorem of the value of money is clear on that: once a currency (especially a fiat currency) has left circulation, it can’t be brought back like that. It will take years of parallel use to get the economy used to its value. Spain is stuck with the Euro, as is everybody else. Other monetary stratagems can be implemented, but a return to the Peseta surely isn’t among them.
Merlin: Neither Spain nor any other country of the Eurozone can go back to their former currencies. Mises’ theorem of the value of money is clear on that: once a currency (especially a fiat currency) has left circulation, it can’t be brought back like that. It will take years of parallel use to get the economy used to its value. Spain is stuck with the Euro, as is everybody else. Other monetary stratagems can be implemented, but a return to the Peseta surely isn’t among them.
Even if this is true, the general point of the post still stands. And, well, parallel use is fine, as long as the government allows the debt to be paid back with the peseta. It's not a matter of having the peseta for private consumption, just an issue of paying for debt. If the government wanted to, it could even make the peseta redeemable in euros for a short-term, until the peseta gained wider acceptance. Returning to the peseta is not off the books. The only reason why this option is less likely than the other two is because the current administration is pro-European Union (Zapatero is currently the president of the EU, this year), and the IMF is willing to lend money to these fringe countries in an effort to bid them a bit more time.
But, in the case of Spain building its debt and the ECB unwilling to keep interest rates low and inflating the currency, then there will ultimately be no other choice than to change to a currency it can inflate (like the peseta) or declare bankruptcy.
It's not like the regional structures can overrule the national ones. All they can do is tax and regulate their residents over what the national governments already do, run huge deficits, and require bailouts.
The fallacies of intellectual communism, a compilation - On the nature of power
ClaytonB:he very fact that the EU has to create sub-regions to manage its internal tensions is empirical confirmation of the fact that central monetary planning doesn't work. The more I study the matter, the more skeptical I am that the number of sovereign power centers in the world can be incessantly decreased, as has been the trend for several centuries now. At some point, the regional power centers will resist any further consolidation because there are just too many benefits to be given up and too few incentives can be produced by would-be imperialists to get the local sovereigns to give up their sovereignty.
This. Wouldn't it be great if the current running up against this upper limit on the size of states precipitates a trend in the opposite direction?
ClaytonB:I think creation of super-currencies (i.e. Amero, Euro ... global fiat currency?) is easier said than done. The simple fact is that within each central bank are core players who really understand the scam. How do you scam the scammers?
And this! I don't know why that never occurred to me before.
Why anarchy fails
Merlin: Jonathan M. F. Catalán:effects: (hyper)inflation (see Argentina) and the fact that unfunded liabilities go up in price, and so those cannot be inflated without bringing about a total collapse of the currency (hyperinflation). Jonathan M. F. Catalán:and I don't think that the euro will survive as a currency. Neither Spain nor any other country of the Eurozone can go back to their former currencies. Mises’ theorem of the value of money is clear on that: once a currency (especially a fiat currency) has left circulation, it can’t be brought back like that. It will take years of parallel use to get the economy used to its value. Spain is stuck with the Euro, as is everybody else. Other monetary stratagems can be implemented, but a return to the Peseta surely isn’t among them.
The euro stays until Germany thinks it's worth the effort and/or all the rest of Europe decide it's worthwhile: fiat currencies can be canceled as easily as they can be created. It hasn't to be the old peseta or franc or lira: it can be called any name you want. It can even be a a "debased euro" versus a "strong euro". But this topic isn't truly about the euro so we must move on...
Jonathan M. F. Catalán: I don't think the European Union will last, as is, for twenty years. The debt issues are very grave in Spain, Greece, and now Portugal. These three countries (amongst others, such as Ireland) are very threatening towards the preservation of the bloc, and especially towards the strength of the euro. The European Central Bank has two different economic situations that it needs to cope with: the Central European export market (France and Germany), and the fringe debt bubbles (the above listed countries, in particular). The ECB has already declared that they will not risk the health of these central European countries for the health of the fringe nations, although this was probably partly an attempt to see if that would get get them "on the ball".
Then how do you, as a European, see the union changing to adjust for these problems? Frankly, I cannot see your own home country doing any of those three options you gave - although option 1 may happen whether they like it or not - the smaller European countries (and now Iceland) are all banking on the EU saving them. I admit to near total ignorance of European politics, but from what I have read there is no question that the EU *could* become a superstate and it does appear to be going down that road. I do not see it as a nefarious plot as one other poster has suggested.
AJ: ClaytonB:I think creation of super-currencies (i.e. Amero, Euro ... global fiat currency?) is easier said than done. The simple fact is that within each central bank are core players who really understand the scam. How do you scam the scammers? And this! I don't know why that never occurred to me before.
The thought came to me after reading this brilliant article by Hoppe on monetary imperialism. Looking at what the Bilderberg's accomplished with the ECB and the rumors surrounding the Amero and NASPP, I began wondering if there is something inherent within inflation that leads to ever greater scales of conglomeration with a terminus in a single inflationary source. As Hoppe points out, there is an inherent conglomerating force within currencies in that it is always less expensive to calculate and trade with one currency unit than in multiple currency units. So, as currencies cross national boundaries increasing the inflationary base on which the currency rests, it also reduces transaction costs, providing an offsetting "cost reduction" which can be used to sell the conglomeration. Again, while that works for duping the masses, it doesn't work for convincing a peer central bank to join your monetary union since they understand that they will be handing over inflationary primacy to you, while only retaining a secondary inflationary power themselves. Just like US states cannot tax at Federal levels because the Feds have already taken the lion's share of the taxes that the taxpayer will bear without open revolt, so the union central bank (e.g. the ECB) will perform the lion's share of the inflating, leaving only scraps for the regional central banks to inflate without risk of collapsing their local economy completely. I think this is what the smaller nations in the EU are dealing with right now. They are trying to inflate at their usual pre-EU rates, but that means their citizens are bearing twice the currency devaluation rate they were bearing before. All I can say is that the regional central banks were duped... or, more likely, bought off.
But buying off peer central banks becomes prohibitively expensive as you begin dealing with larger and larger units. Could the ECB ever succeed in duping the Fed or Bank of England or vice-versa? No way! Even if the Fed, Bank of England and ECB could be merged into one, single pan-Western central bank, you still couldn't get the Asians (who have a much longer history with paper money and inflation than we do), Arabs, Indians, et. al. who are even less amenable to Western-style bookkeeping chicanery to sign on to some global central bank. There are a lot of stupid people in the world who can be duped with paper "wizardry" - the vast majority of people - but in every region, the "natural elites" at this fraud are as undeluded as the "natural elites of fraud" in every other region. Peer central banks are on a relatively level playing field with respect to their capacity for defrauding one another.
sicsempertyrannis: Then how do you, as a European, see the union changing to adjust for these problems? Frankly, I cannot see your own home country doing any of those three options you gave - although option 1 may happen whether they like it or not - the smaller European countries (and now Iceland) are all banking on the EU saving them. I admit to near total ignorance of European politics, but from what I have read there is no question that the EU *could* become a superstate and it does appear to be going down that road. I do not see it as a nefarious plot as one other poster has suggested.
The European Central Bank has to face two very different economic issues. Countries such as Germany, France and Italy, which are mostly export-driven economies, draw the ECB to decide monetary policy based on their needs. Spain and Greece are classic cases of hyperinflation-prone countries, but the ECB cannot risk debasing their currency at that rate, for the sake of the first three countries mentioned. The ECB has already said that they are not willing to keep interest rates at current rates perpetually, and increases in the interest rate will make it that much harder for Spain and Greece to fund debt through borrowing from private investors. The IMF has already offered loans to Greece, but this doesn't really solve the issue (too high of spending). The IMF also lent to Argentina, and what occurred was hyperinflation and bankruptcy. This seems like a possible option.
I am currently researching for a piece on an article on Spanish debt, to be co-authored with a Spanish economist. I'll link to that when it's done.
ClaytonB: I think this is what the smaller nations in the EU are dealing with right now. They are trying to inflate at their usual pre-EU rates, but that means their citizens are bearing twice the currency devaluation rate they were bearing before. All I can say is that the regional central banks were duped... or, more likely, bought off.
I think this is what the smaller nations in the EU are dealing with right now. They are trying to inflate at their usual pre-EU rates, but that means their citizens are bearing twice the currency devaluation rate they were bearing before. All I can say is that the regional central banks were duped... or, more likely, bought off.
It's not as if a regional central bank can inflate the euro to effect just that reason. The euro is the euro, and if the euro is hyperinflated in Spain, it will lead to hyperinflation for all euro-nations. A Spaniard whose euro is worth nothing in Spain will simply buy from France, leading to hyperinflation in France. Monetary expansion of the euro in one region is equal to monetary expansion in another region, as long as the legal tender is the same.
Jonathan M. F. Catalán: ClaytonB: I think this is what the smaller nations in the EU are dealing with right now. They are trying to inflate at their usual pre-EU rates, but that means their citizens are bearing twice the currency devaluation rate they were bearing before. All I can say is that the regional central banks were duped... or, more likely, bought off. It's not as if a regional central bank can inflate the euro to effect just that reason. The euro is the euro, and if the euro is hyperinflated in Spain, it will lead to hyperinflation for all euro-nations. A Spaniard whose euro is worth nothing in Spain will simply buy from France, leading to hyperinflation in France. Monetary expansion of the euro in one region is equal to monetary expansion in another region, as long as the legal tender is the same.
True. Do you know how this is managed? My understanding is that each nation can issue its own Euro currency but, surely, there must be some regulatory body within the ECB who controls this. I doubt they would allow each nation to just issue as many Euros as it likes because then each nation would have the incentive to issue more Euros than the other nations leading to hyper-hyper-inflation.
In practical terms I don’t believe that the ECB will allow fringe countries to manage their own euro coins (although it is praxeologically possible), for that would undermine its power. What I’d try to do is
1) step up the enlargement process and try to get Turkey in as soon as I can. Turkey is a growing economy, with a growing capital stock. And by sheer size it would bail out the EU for at least an other decade. I begin by reaching a pegging agreement with Turkey, with a percentage of shares in the ECB transferred to the Turkish Government.
2) try to negotiate with Russia to get some kind of agreement on Ukraine. In no case proceed to get an unilateral agreement with the Ukraine. Russia is more liberal than the EU and a potential war would cost dearly to Brussels.
3) stay away form the UK. It’s a bankrupted state. Get an agreement for the UK to allow the joint circulation of both the Pound and the Euro, without any pegs. Allow London to fund it massive liabilities by overprinting the pound. It will disappear from circulation and at least some UK liabilities will be destroyed.
4) The only long-term survival strategy would be to allow Free Economic Zones: sell sovereignty of few square miles to some development company, and ask for 45% of the shares. In time, dividents will provide more funds that taxes, and of course there will be plenty Hong-Kong’s in the EU.
ClaytonB: True. Do you know how this is managed? My understanding is that each nation can issue its own Euro currency but, surely, there must be some regulatory body within the ECB who controls this. I doubt they would allow each nation to just issue as many Euros as it likes because then each nation would have the incentive to issue more Euros than the other nations leading to hyper-hyper-inflation. Clayton -
Similar to the United States, there are several mints; monetary policy, however, is driven by the Governing Council, at the ECB. The Governing Council includes representatives from each of the national central banks, which the ECB replaced as the monetary authority in those respective countries. The Bank of Spain, for example, can issue legal tender, but is handicapped by the ECB in regards to the volume it can issue (rates are provided by the ECB); really, national banks are there to provide financial advice for fiscal policy to national governments. They have lost their roles as monetary policy setters outside the ECB.