In the last part of this series I gave a reason why Europe is being so unsuccessful in attaining its goals. I will now conclude the story.

The main reason for Europe being so sluggish and so out of control is that there is no central leadership with sovereign control of the European Union, because it is not ruled like a nation while economically it is functioning like one to a high degree.

I would like to elaborate on that a bit more before continuing on what a possible solution might be.

In the last part I discussed that a lack of leadership is one of the main causes. I still think it is the main cause but there might be some other factors which aggravate the consequences of this problem.

First of all I’d like to elaborate a bit more on what I’ve discussed in the last part. There has been quite a bit of backlash in developing a common European mindset among the citizens of the European Union. This has led to a mindset among the politicians of European member states where they accentuate what they do in contrast to what the European leadership asks member states to do by issuing directives. These directives are usually framed as the demands from an ‘evil’ European Union in order to gain support among the voters they are representing.

In essence the European Union consists of member states who have not accepted their obsolescence when it comes to these matters. National pride is still strong and somehow cannot be disconnected from being part of a greater hall which is more effective when it comes to getting things done internationally. In combination with the power of individual member states’ ministers to set the agenda and determine the overall course of what is to be done within the European Union this leads to a lack of central control. This throughout central control is not always necessary, but I think it is when it comes to solving problems for a common currency. And the common currency is what binds is at the moment inputs is in this dire situation.

Economically it seems that Europe has not been on the forefront of developing in the right direction for quite awhile now. Europe used to be quite a productive region of the world. With the rise of low cost production in other countries where there is no social welfare state in place and where wages are extremely low. These countries are now producing most of our consumer goods, as well as many industrial goods. Europe try to counter this by becoming what politicians call a ‘knowledge economy’ where the emphasis was on creating ideas and products which were hard to copy and/or produce with the knowledge present in those low-wage countries. This is a fallacy. The fallacy lies in that there is no barrier to knowledge transferring from our economy to theirs. At some point those countries will be able to matches and eventually they might very well be able to outthink us leaving us with nothing. The real solution would of course have been to lower wages in the face of stiff competition. However this would have been politically unviable and therefore politicians have chosen to think of something which would delay the inevitable. However this is great, Scott consequences because in the mean while national debts will be increasing without any prospect of paying off these steps in the future. The knowledge transfer problem has been worsened by opening up the borders and letting those countries develop themselves up to our standards by admitting their students to our schools and universities.

Knowledge is only one of the two factors in this problem. The other one is that most of these countries do not have an extensive welfare state. This allows them to keep taxes low because they don’t have to pay for injured workers or people getting old. The people of Europe has have become used to the standard of living which is unrealistically high given the economic output of the average worker. Europe tried to solve this by introducing reforms in the educational system, trying to increase the output of universities in order to increase the rate at which we can invent new things. As I explained earlier other countries have massive output of students every year far exceeding that maximum theoretical capacity of European universities. These reforms have failed. It was inevitable though. You cannot magically increase the percentage of people within your population who are smart, this is more or less a steady figure. Education only increases the capabilities of those who are smart. It is therefore impossible to outcompete countries which have larger populations in the whole European union combined once they have a good university system in place.

So what might be a solution for a problem like this?

First of all: If we not do not regain capacity to produce our own goods we will lose our capacity to spend because we do not earn any money ourselves. We will not have anything to trade with these countries and at some point we will not be able to keep up our welfare states nor will we be able to afford such high wages like those most Europeans are earning right now. We either cut wages and cut back on social spending or European nations will go away Greece has gone: bankruptcy. It is probably better if this is done in a European setting where is rich countries can cover for poorer countries for a while while they reform. This will allow poorer countries to become the producing areas of a fully functional and capable European Union.

But reforming the social welfare systems of many nations is not the only thing we need to do. We should reform Europe into a true nation which disregards the current national borders up to a certain extent. One thing you can do is to set up a European voting system which is centered around certain population masses in the European realm. These matters would be smaller than most member nations are. There will be about the size of a German state or a French province. All European politics should be focused on states about that size. It allows for a much more detailed approach to regional problems within the European Union. It would also largely negate the problem of bigger countries of ruling smaller countries on the basis of them having a much bigger population or more economic might and the national egos of those nations running the show. Of course cultural differences are allowed to exist I do not deny that those made Europe what it is today. This might help the European Union in becoming more effective as a government.

Can the euro survive?

I think it can, but only if political reforms on both national and European levels are carried out, and carried out soon so that Europe becomes an effective force on the world stage again.