Harvard history professor Niall Ferguson: The European Union has lost its legitimacy

This morning there are probably a number of Brussels eurocrats in need of a cure after celebrating Europe Day with too many glasses of champagne. Reading professor Niall Ferguson's excellent article should at least wake them up:

I’m absolutely certain that Lord Mandelson and Daniel Cohn-Bendit will tell you that the European experiment has succeeded because there has been peace in Europe since it began in the 1950s. Can we just knock that on the head? European integration has had absolutely nothing to do with peace in Europe since World War II; that has been the achievement of NATO [the North Atlantic Treaty Organisation]. The creation of the European Union was not about war and peace, otherwise there would have been a European Defence Community, and that was vetoed by the French National Assembly in 1954.

Europe has to be judged in economic terms, since its own terms have always been economic. And how did it do? In the 1950s the economy of integrated Europe grew at 4 per cent. In the 1960s, it was about the same. In the 1970s, growth was 2.8 per cent; in the 1980s, it slid to 2.1 per cent; in the 1990s, it was only 1.7 per cent: and so on, down to zero.

As European integration has proceeded, its growth has declined. The share of Europe in global GDP has fallen since 1980 from 31 per cent to just 19 per cent. Since 1980 the EU has grown faster than the United States in only nine out of 32 years. Never has its unemployment rate been lower than the US unemployment rate.

Are any of you investors? What were the worst equity markets of the last 10 years? They were Greece, Ireland, Italy, Finland, Portugal, the Netherlands, and Belgium — the worst in the world. And on top of all of this, we have monetary union — the ultimate experiment gone wrong.

We warned them, ladies and gentlemen. We said, if you have a monetary union without labour market integration and without any fiscal federalism, it will blow up. I predicted that in 2000. It is happening in real time, in a chemistry lab, on the other side of the Atlantic.

But this was also a political experiment gone wrong. Do you know what that experiment was? The experiment was to see if Europeans could be forced into an even closer union — despite their wishes — by economic means because the political means failed.

And when the European peoples voted against further integration, their respective governments were told to try again. It happened to the Danes in 1992, and to the Irish twice: in 2001 and again in 2008. Their citizens gave the wrong answer in the referendum, so the governments just held another one. This tells you something about why this experiment has failed — it has failed because it has lost political legitimacy. And we see this not only in Greece but in government after government across Europe. Thirteen have fallen since this crisis began two years ago, and more will follow in the months to come.

Read the entire article here