European unification: a new proposal

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European unification: a new proposal Bruno S. Frey

Published online: 16 November 2013  Springer Science+Business Media New York 2013

Abstract My contribution presents a possibility to unify Europe based on newly emerging political units focused on solving problems rather than on historically given nation states. These Endogenous Political Entities (EPE), as they shall be called, are better suited to reach the goals of European unification as they strengthen the fundamental European values of variety and freedom. I make three propositions: to base the unification of Europe on nation states is unfortunate as the latter are responsible for the political disaster of the two World Wars; the unification must proceed in a problem-oriented manner. The constitution of Europe must allow and promote EPE to emerge specifically to deal with particular problems; the new political units can be introduced in marginal steps. Over time, a flexible and dynamic net of political entities will arise taking care of the large economic, social and cultural diversity in Europe. Keywords

Europe  European Union  European integration

JEL Classification

F5  P16  P48  B52  D02

B. S. Frey (&) Zeppelin University, Friedrichshafen, Germany e-mail: [email protected] B. S. Frey Center for Research in Economics, Management and the Arts (CREMA), Zurich, Switzerland B. S. Frey Department of Economics, University of Zurich, Hottingerstrasse 10, 8032 Zurich, Switzerland

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1 Unification by nation states The European unification, which led to the formation of the European Union (EU), is firmly based on territorial nation states. This statement is obvious and taken as a matter of fact. The foundation on nation states applies not only to how the present institutional arrangements work but also to how the future development is envisaged. Thus, in September 2012, the ‘‘Future of Europe Group’’ of eleven foreign ministers of the EU promulgated ‘‘A New Vision of Europe’’. It issued a report suggesting that the future European integration be achieved by strengthening the Union relying on existing nation states (Sikorski and Westerwelle 2012). At the same time and in a similar vein, the President of the European Commission, Jose´ Manuel Barroso, publicized a ‘‘Plan for a Federation of Nation States’’ (EU Commission 2012). To outsiders, such plans appear surprising because the EU is currently in its deepest crisis since the Treaty, or rather the Constitution, of Rome was signed in 1958. The creation of the euro—which is considered an essential element of the European integration1—has led to huge fiscal deficits in various nations, in particular in Greece and Cyprus. Only the extreme increase in the money supply by the European Central Bank, which buys government bonds in an unprecedented scale, has up to now (June 2013) been able to prevent the bankruptcy of several EU member countries. One would have expected a discussion of alternatives to the present construction of the EU. Yet neither politicians nor (with few exceptions) schol