European leaders are struggling to keep plans for a single European currency on track. France, with its recently elected Socialist Government, has changed its tune. It now insists that moves to a single currency be linked to a European jobs program. Given France has an unemployment rate of 12.8 per cent that argument has some superficial appeal. However, it fails to take account of one of the reasons for chronic unemployment in many western nations is chronic overspending by governments.
It has been one of the great defects of western democracy in the past 25 years or so that governments have succumbed to the temptation constantly to spend their way out of economic trouble and to bribe voters with increased spending before elections, rather than adjusting budgets to surplus in a responsible way in boom times so there is money available to stimulate the economy in slumps.
Make-job schemes through increased public spending have rarely been successful, and there is little chance of a European scheme bucking the trend. The French priorities are sadly misguided. French unemployment is more likely to be reduced and French prosperity increased if France embraces the single currency and submits to the requirements of a central bank rather than squandering precious resources on make-work schemes.
The benefits of greater integration, greater trade and the single currency will come through the greater economies of scale in a larger market and the greater efficiency of not having impediments at borders. And these benefits are in addition to the obvious benefit that greater integration eliminates the use of force to resolve national disputes which has been the scourge of Europe for centuries.
True there is a price in reduced national sovereignty, but the reduction is in precisely the area where national governments have exercised that sovereignty so poorly in the past — over-spending.