The European Union (EU) is a collection of over 27 different countries in
Europe united by a single currency (money) and other
institutions. However, today its members face financial trouble.
Greece's debt
may cause the EU's destruction by taking the other members with it through a
domino effect that will cause another economic collapse similar to what the
world saw in 2008.
History: The EU was birthed after WWII with the idea to
prevent any and all future wars in
Europe. To
do this, countries began linking industries that were directly linked to the
war industry such as mining for minerals to produce weapons.
France and
Germany were the first and soon
others followed. As it became more advantageous to link together in a free
market more countries joined and they created an environment from which people,
goods and services could move about freely. Soon, to further the cause, they
created a single currency (not all nations have the currency known as the EURO
yet). Governments of the EU used this new currency to unite the nations further
together. Overall, peace through trade was assured.
Current: There are still countries attempting to join the
European Union. They seek access to markets and trade that the EU countries
have access to. Mostly, former soviet block countries are attempting to join.
However, the EU or precisely the countries in the EU are facing economic
trouble. With the market crash of 2008 it revealed a weakness in the united currency
the EURO. Countries like
Greece,
Italy and
Spain made
sweat heart deals with their government workers, paying them very generously in
retirement. But when the market crashed the governments lost money and could
not afford to pay them. Riots ensued in some of the EU countries (some of which
continue to occur).
Greece
has received multiple bail outs with really no expectations of being able to
pay back any of their debt. The debt these countries are accumulating, not just
through their having to pay for their workers, but their populations various
welfare and old age benefits are causing strife.
Suggested solutions: It has been suggested in such
publications like the
Economist, and
The New York Times that
these nations must unite further to solve this problem. One idea was combining
the total welfare and benefits apparatus of all the members into a single body.
Thus, the EU governing body is responsible for taking care of all payments for
the elderly freeing up money in the local governments and communities to pay
for other needed expenses. Another more risk adverse idea is uniting all the
countries together with a single banking and monetary system. While most of the
countries use the same currency there is no leading body protecting its monetary
value, nor is there a body that works like Americas Federal Reserve system to
protect, maintain, print and back loans using the EURO. Essentially, there is a
call for a true bank of
Europe. This idea is
not as likely to happen though as all nations in the EU must agree and they are
fearful of giving up more of their nation’s individual power. The final most
extravagant idea is the united EU government taking on all the collective debt
from all the countries in
Europe. This would
make all of the countries debt free and make it easier to pay the debt through
a single party. The idea was used by
America in its founding to pay off
the debt incurred when the nation was founded. However, just as it was unfair
to the Southern States in
America
who had paid almost all of their debt, it would be unfair to countries like
Germany who
have little to no debt. It will have the big more stable countries paying off
the debt of the foolish less fiscally responsible countries.
Conclusion: The European Union is ultimately a success. War
in
Europe is almost non existent with most
countries scaling back their militaries. They have eliminated trade barriers
and provided opportunity to their citizens. Only one negative has set them back
and that is their national debts that they allowed to go out of control. Pros
are out weighing the cons and
Europe has a few
solutions to solve this problem, if and only if they can get to the negotiation
table long enough to fix the issue and make the hard choices.
No comments:
Post a Comment