OPINION:
European leaders are among those gathered this week in Davos, Switzerland, to talk about what they can do to extricate their nations from the economic mess they created. The chatter at the World Economic Forum meeting reinforces expectations that global stagnation will continue.
Eleven eurozone nations on Tuesday proved their intention to continue on the familiar road of big spending and big taxes by approving a levy on financial transactions that the United Kingdom has loudly opposed, fearing the devastating impact it would have on London’s financial market. On Wednesday, British Prime Minister David Cameron called for an in-or-out referendum for his country’s continued membership in the European Union by 2017.
Mr. Cameron is right to consider escaping the regulatory grip of Brussels. Eurocrats continue to assume more and more decision-making authority on matters better left to individual countries, putting power in the hands of the unelected. Mr. Cameron, instead, seeks to restore the European Union’s original purpose of establishing a single market, a shift in focus that could help in the Continent’s debt crisis.
Despite Panglossian claims of stabilization, Europe is still heavily in the red. While no country is facing imminent default, none has resolved the systemic problems plaguing Continental finances. Austerity in Europe has taken the form of higher taxes instead of lower spending, and the inevitable consequence has been a second year of recession, with little hope for the substantial growth in the near future needed to reduce unemployment that’s hovering at 25 percent in some countries.
Wealthy people and entrepreneurs are fleeing Francois Hollande’s France, where marginal tax rates now exceed 75 percent. According to French media sources, even former President Nicolas Sarkozy is packing his bags for London, thereby avoiding the big hit to his paycheck. He’ll be joined by several fellow millionaires whose retreat will further diminish France’s tax revenue.
Demographic reality, in the form of low birthrates, makes overly generous social-welfare programs unsustainable. Still, not one European country has the courage to embrace change. Instead, all cling to the bogus concept of “stability” while expecting the European Central Bank to bail them out of every short-term difficulty. With interest rates near zero, there might be very little that a central bank can accomplish, since monetary policy cannot fix a fiscal imbalance that comes from overspending.
Mr. Cameron has offered a different vision of the European Union from the current pursuit of greater fiscal integration and reliance on Germany and other thrifty nations to bail out the rest. This is a debate worth having, because more of the same is not an option. If the European Union can’t get its act together, England ought to accelerate its plans to withdraw before it finds itself sinking with the Continent.
Nita Ghei is a contributing Opinion writer for The Washington Times.
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