A Giant Reborn by Johan Van Overtveldt

Author:Johan Van Overtveldt [Overtveldt, Johan Van]
Language: eng
Format: epub
ISBN: 9781572847507
Publisher: Agate Publishing

Chapter 4

The Runner(s)-Up

THE 20TH CENTURY BELONGED TO THE UNITED STATES. During that time, it climbed to world dominance. Its massive, strong economy supported the buildup of military power beyond any in the history of mankind, considerably weakening the classic argument that empires always overreach in their ambitions and perceived duties.504 Its democratic system, popular culture, and open society attracted immigrants, making it dominant in terms of soft power as well. The underlying driving force behind this evolution was and is the American character, a blend of historical, institutional, economic, sociologic, and cultural elements. It is this American character that makes it well equipped to thrive in a demanding world of turbochange.

Yet tales of America’s coming decline abound. Today, the prevailing wisdom is that America’s stay at the top of the heap has come to an end, or at least that the end is nigh. Most of these arguments conclude that China will inevitably be the superpower, but I prefer to first examine the challenger that once seemed best poised to overtake the United States: the European Union.

Union Adrift

During the first years of the 21st century, several scholars, analysts, and politicians claimed that the EU was well placed to dominate in world affairs.505 The initial success of the monetary union and its euro fed speculations that Europe would become more and more integrated and that integration would fuel its rise to power.506 The initial success of the euro experiment, it was believed, powerfully countered the claim that “by the turn of the millennium, at the latest, it should have been clear that Europe was no longer on the road to superpower status, but that it faced an existential crisis.”507 An increasingly unified EU would become the largest economy in the world, drawing on massive reserves of human capital, a well-designed social welfare state, great educational systems, well-developed capital markets, and an impressive cultural heritage. And decisive political clout in world affairs would follow that economic power.

Of course, the euro crisis—an accident waiting to happen508 — dealt a severe blow to the prospect of a truly unified Europe. And why was it an accident waiting to happen? Some of the basic rules of creating an efficient and durable monetary union were violated from the very beginning. In hindsight, it’s quite surprising that it took 10 years for these failures to produce a major crisis.509 When the euro region faltered in 2010, Greece quickly became the epicenter of the crisis, and policymakers were not ready for the challenge. As a matter of fact, it took the most important policymakers as long as two years to accept the fact that fundamental reform was necessary. The chaotic and divisive crisis management that ensued crushed dreams of further European unification.

The details of the euro crisis can be found in another book (specifically, my 2011 book The End of the Euro), but I mention it for the purposes of this book because it highlighted the fundamental flaws of a truly unified Europe. A monetary union can only be efficient and durable if all its participants follow the rules.

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