Federalizing debt was what united the states, but don’t expect the same effect from a European Recovery Fund.
Europe is boring. That is a great achievement.
Throughout the 20th century, Europe mass-produced history, most of it disastrous. The two most destructive wars in history began in Europe over obscure questions such as the governance of Bosnia-Herzegovina and the ownership of Gdansk (now in Poland, then the “free city” of Danzig). The most dangerous location in the Cold War was not Cuba but Berlin. If World War III had broken out, Europe would have been its principal battlefield. And let’s not forget that the most dangerous ideologies of the modern age — communism and fascism — were both of European origin.
So the fact that this weekend’s news is of a meeting in Brussels of 27 European leaders to discuss a bond-financed scheme to aid recovery from the Covid-19 pandemic, while not terribly exciting, is really a cause for congratulation. Even if the meeting’s inconclusive.
The fact that, despite an initial wobble between Feb. 26 and March 14, the European nations didn’t revert to sauve qui peut — every man for himself — as the novel coronavirus SARS-CoV-2 swept through northern Italy is another reason to be cheerful. And the fact that, in most European countries, right-wing populists have declined in popularity in 2020 is a huge relief for the continent’s political centrists.
Americans have reason to be grateful for European stability. The European Union is the biggest market for U. S. exports. Despite widespread fears of a crisis of globalization, cross-border flows of capital between the U. S. and the EU remain substantial. Until this year, European cities such as Paris and Florence were among Americans’ favorite overseas destinations.
Europeans like to give the EU credit for the fact Europe is no longer the world’s number one battlefield, but Americans understand that it has been the North Atlantic Treaty Organization and the presence of U. S. troops that have really kept the peace. They are rightly proud of that achievement.
Yet, at the same time, Americans don’t really understand Europe. President Donald Trump’s view is not mainstream, to be sure. “We’re in tremendous economic competition, including Europe, which has never treated us well,” he said at a press conference last week. “The European Union was formed in order to take advantage of the United States… I know that, and they know I know that, but other presidents had no idea.”
Most Americans also have no such idea. They are just happy that young Americans have not had to die in droves over Europe’s quarrels as they did in 1918 and 1942-45. And if Trump was alluding to the issue of NATO burden-sharing, U. S. presidents since Richard Nixon have been complaining that Europeans don’t pay their fair share.
The American elite misunderstands Europe in a different way. The working assumption has long been that the EU is essentially a first draft of a United States of Europe. They therefore interpret European politics by analogy, as the Chicago-born, Oxford-based political philosopher Larry Siedentop did in his 2001 book “Democracy in Europe.” The American Republic, he wrote, “provides the crucial point of reference for the attempt to create a European federal state today. Any evaluation of the prospects of that enterprise should begin with American federalism.”
The latest example of this misconception is the claim that in contemplating an ambitious 750 billion euro European Recovery Fund this weekend, Europe’s leaders are having their very own “Hamilton Moment.”
The deal, wrote the economist Anatole Kaletsky when it was first proposed by German Chancellor Angela Merkel and French President Emmanuel Macron in May, “might one day be remembered as the European Union’s ‘Hamiltonian moment,’ comparable to the 1790 agreement between Alexander Hamilton and Thomas Jefferson on public borrowing, which helped to turn the United States, a confederation with little central government, into a genuine political federation.”
“What is required is a policy leap guided by the Hamiltonian experiences at the birth of the American republic,” argued Pierpaolo Barbieri and Shahin Vallee in Foreign Affairs. That means “a common budgetary authority with democratic legitimacy… a truer, historically informed federal framework, not a patched-up union.”
The Hamilton Moment idea has caught on more because of the popularity of Lin-Manuel Miranda’s musical than because commentators have a deep knowledge of what exactly Hamilton achieved as the first U. S. Treasury secretary. “We need to handle our financial situation,” declares Miranda’s Hamilton. “Are we a nation of states? What’s the state of our nation?”
To give Miranda his due, he does a far better job of translating the early financial history of the republic into rap verse than I had any reason to expect when I went to see the show in 2016:
THOMAS JEFFERSON
But Hamilton forgets
his plan would have the government assume state’s debts.
Now, place your bets as to who that benefits:
the very seat of government where Hamilton sits …
HAMILTON
If we assume the debts, the union gets
A new line of credit, a financial diuretic.
