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Centuries
of conflict in Europe precipitated the need for co-operation between
nation states in order to create an environment of peace and prosperity.
Fifty years ago, six countries (France, Germany, Italy and the Benelux
states) established the European Economic Community (EEC) to guarantee
free and open trade between them. Today, the European Union embraces 15
European nations. Citizens of these countries, with different languages
and traditions, have reached agreements on a wide range of matters which
have facilitated trade, travel, employment of EU citizens across borders
and reciprocal rights to reside in any Member State. Twelve of the Member
States use the Euro as their common currency. A further ten countries will
join the EU in 2004, adopting the Euro and making the EU a union of 25
nations. This is a great achievement that Europeans can be proud of.
Can
such an achievement be sustained given the old rivalries, continued
socio-economic diversity and the exceptional challenge of a single
currency for so many Member States? Can the EU be compared with the USA?
Can it compete as effectively, globally?
From
1776 to 1865, most Americans referred to their country in the plural –
the United States “are” not the United States “is”. Americans were
loyal to their State and their region – particularly in the south and
the west. The “institution” of Slavery, its practice and eventual
abolition, highlighted the deeply divided American “nation”. The rural
and agricultural economy of the south depended on cheap slave labour
whilst the more urban and industrial manufacturing economy in the north
needed infrastructure and a pool of readily available labour.
It
took Senator Henry Clay (“the great compromiser”), numerous
compromises (Missouri Compromise of 1820 and the Compromise of 1850) and
the death of almost 600,000 Americans in the Civil War (1861-1865) to
achieve unity. The US Constitution did not specify if any State could
secede. It has been suggested that if it had, the US would have
disintegrated on a number of occasions in its first 100 years. It was not
until 1862 that the US adopted a single currency – 86 years after
independence! Andrew Jackson had opposed a national central bank seventy
years before and so there was no real central bank until the Federal
Reserve Bank was created in 1913. Even to this day, each State has its own
requirements for establishment of any Bank on its territory – American
or foreign.
The
US, with a population of 280m , European and ethnic, continues to invite
and settle 500,000 immigrants a year from all over the world. It has
established the North American Free Trade Area (NAFTA) with Canada and
Mexico who preserve their political sovereignty and national currencies.
The US economy outperforms that of the EU because it is managed more
competently on the basis of an open competitive single market where
capital, goods and labour are fully free to move. The US economy thrives
on entrepreneurship sustained by financial and tax incentives.
The
EU, with 380 million people today (475m in 2004 after enlargement) will
also need time to exploit the potential of its diverse geography, people,
languages and traditions, yet it continues to strangle its economy with
unnecessary legislation, high taxes and bureaucracy. The EU must establish
a truly single, open, competitive market for goods and services, including
financial and labour. It must attract captains of industry with a track
record of successful management of private sector corporations to manage
its institutions. Only then, will the European Union be able to compete
and compare with the United States.
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