A quite-revealing speech about the future of the European Union was given in Brussels on April 16, 2024 by Mario Draghi, who at one time had been slated to become the next president of the EU Commission, replacing scandal-ridden Ursula von der Leyen, who recently was confirmed for another term. Draghi, the former Italian prime minister and former head of the European Central Bank, gave policy recommendations for the future directly to members of the EU Commission. In light of this year’s elections to the EU parliament, the content of this speech should be exposed because it epitomizes so much of what is wrong today with the political direction of the European Union.
The speech was called “Radical Change—Is What Is Needed,” an understandable title considering the dismal path the EU is currently on. It would indeed be a “radical change” in the current political environment to allow more freedom, less regulation, less redistribution, and less taxation in order to jump-start Europe economically. Not surprisingly, that is not at all what Draghi has in mind since he is a statist through and through. What he proposes is even more of the same interventionist diet.
Wrong Solutions to the Lack of Competitiveness
Draghi laments the difficulties the EU has had to manage competition, despite what he calls a “deliberate strategy of trying to lower wage costs relative to each other.” The results of this deliberate strategy are unconvincing since even EU statistics conclude that “within the euro area, hourly labour costs increased in all EU Member States.” It should be recalled that a free market (i.e., not the EU) tends to naturally erase wage and price differences over time through the flow of capital and labor; when government tries to force this process, it only leads to additional costs.
Draghi also complains about the dire situation of EU competitiveness in cutting-edge technologies. Yet it is clearly the suffocating regulatory and fiscal conditions in the EU that is stifling innovation. Draghi is also wrong to generalize; there are big regional differences within the EU for precisely these reasons. Areas with blooming start-up environments should be rewarded simply by letting them attract capital and talent according to free-market principles.
However, instead of linking innovation and investment with the free market, Draghi noted that
the EU has very high private savings, but they are mostly funneled into banks deposits and do not end up financing growth as much as they could in a larger capital market. This is why advancing the Capital Markets Union (CMU) is an indispensable part of the overall competitiveness strategy.
According to the EU, the capital markets union is an “initiative to create a truly single market for capital across the EU” that is to be used, according to former Italian PM Enrico Letta, “to pull trillions from the bloc’s collective couch cushions by offering savers an easier way to invest in stocks.”
This proposal is not surprising as the current high-spending and money-printing European institutions are shamelessly looking, even publicly, for ways to access personal savings across the EU. As if on cue, the fully EU-aligned French president Emmanuel Macron’s office declared that “household savings should be enabled to fund more directly the massive investments we need to boost our competitiveness.” Also, as one EU-friendly think-tank put it: “The European Union is sitting on €33.5 trillion in household savings, or one quarter of its collective GDP, yet much of this money is stuck in banks because households prefer cash over market investments.” The loaded words “sitting on” and “stuck” tell of institutions that not only want to eventually get rid of cash for increased control, but that first want, shockingly, to use household savings to compensate for failed and rigid EU policies that have been stifling investment and competitiveness for decades.
Even the Financial Times recognized that “competitiveness and capital markets union—are the well-worn boilerplate of EU communiqués. The emphasis on competitiveness is a reflex of the daunting geoeconomic environment. Promising capital markets union sidesteps the question of common EU borrowing.”
Draghi is clearly just preaching to the converted to ingratiate himself with the EU Commission that he might soon head. Because of his political agenda in favor of concentrating power in Brussels, he disregards the fact that, as Ludwig von Mises noted, “money is never idle.” Deposits not only reflect individuals’ natural and varying inclinations to save, but as Mises explained in Human Action, “If the individual saver employs his additional savings for increasing his cash holding because this is in his eyes the most advantageous mode of using them, he brings about a tendency toward a fall in commodity prices and a rise in the monetary unit’s purchasing power.” Thus, in a free society (i.e., not the European Union), savings fulfill an important and naturally calibrating role that should be not incumbent upon any government institutions to create or destroy.
Blaming the Geopolitical World
These political proposals to improve competitiveness were framed by Draghi in the context of a great three-party power struggle between the United States, the EU, and China. Yet such a geopolitical competition cannot be in the interest of European consumers, who would then see further restrictions on free trade with companies from these two nations. The only natural competition is economic—not political—and exists between enterprises and individuals in the free market. Is the goal of the EU to enter into a great power rivalry with the US and China, or is it to allow Europeans to thrive in peace? It seems clear that for Draghi and the EU Commission, it is the former.
The state of the increasingly moribund European project is thus implicitly blamed by Draghi on outside forces—on China, in particular, but more and more also on the United States. Yet it is first and foremost the rampant statist interventionism in almost all areas of economic and social life in the EU that is at the root of the problems. Draghi states that “other regions are no longer playing by the rules and are actively devising policies to enhance their competitive position.” This is just the pot calling the kettle black as government support for national industries has been a preferred policy tool of Western governments for many decades, not to mention that the EU is hardly innocent of undermining “rules.”
The Goal Is Concentrating Political Power
The underlying globalist agenda of the European Union, constantly underpinned by the Hegelian idea of the “homogeneous universal state,” is glaringly obvious in Draghi’s speech. Signs of this agenda are all over it as when he urges for “the standardization of the EU patients’ data” or “to agree to a common approach” in energy, or when he pushes the “joint borrowing capacity of the EU.” His proposals all tend toward the centralization of power in the EU and the further weakening of the sovereignty of the member states. This is clear when he talks about the need of “enabling scale” and when he complains about “lack of scale” and that “fragmentation is holding us back.” These proposals and others are used by Draghi to justify concentrating more power into the hands of elected bureaucrats in Brussels.
The success of Europe does not depend on such policies. On the contrary, they will only drive state spending and administration but do little for the real entrepreneurs that are the backbone of the European economies. There is indeed a need for more competitiveness in Europe, but this can only be achieved if the EU and national states start loosening their stranglehold on the European economy.
It is obvious that the EU has gone beyond its original goal of securing the four freedoms across European nations. Today, after the arguably undemocratic ratifications of the Maastricht treaty of 1992 and the Lisbon treaty of 2008, Draghi confirms that the EU is pushing ahead with its agenda of globalist control. This is really what the EU parliamentary election of June 2024 should be about.
The EU project and the European governments that have supported it have wreaked havoc on the entire European civilization through decades of coercive policies. If Europe is to rise again economically, scientifically, and culturally, the political weights that are holding its economy down must first be removed.
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