The motto of the United States of America is: ‘E pluribus unum' – ‘Out of many, one'. The European Union's motto is ‘In varietate concordia' – ‘United in diversity'. It is difficult to express the differences between the US and the European model more clearly. The US is a melting pot, whereas Europe is a mosaic of different peoples and cultures.
That difference raises the question of whether it is worth striving for a United States of Europe. Perhaps this dream of post-war children like me can never be realised. But I am not so sure. After all, deeper European integration and the creation of a single political system offer practical advantages that do not require a common identity or language. These advantages include the right to move freely across borders, the free movement of goods and services, and legal certainty for cross-border economic activities.
Banking regulation is another area in which collective action makes sense. If banks are regulated nationally, but do business internationally, national regulatory authorities have an incentive to set lax standards to avoid driving business to other countries and to lure it from them instead. Regulatory competition thus degenerates into a race to the bottom.
There are many similar examples from the fields of standards, competition policy, and taxation. So fundamental considerations speak for deeper integration, extending even to the creation of a single European state.
The danger is that collective decision-making bodies may abuse their power. Even democratic bodies are not immune. On the contrary, they make it possible for majorities to exploit minorities. To counter this threat, democratic bodies invariably need special rules to protect minorities, such as the requirement of qualified majority voting.
The decisions taken by the European Central Bank (ECB) are a particularly dramatic example of this problem, taken as they are by a simple majority of a body that is not even democratically elected. The ECB's decisions lead to a massive redistribution of wealth and risk among the eurozone's member states, as well as from stable countries' taxpayers, who have little stake in the crisis, to global investors directly affected by it.
The ECB has been providing virtually all of its refinancing credit to the eurozone's five crisis-stricken countries: Greece, Italy, Ireland, Portugal and Spain. All the money circulating in the eurozone originated in these five countries and was then largely used to buy goods and assets in the northern member countries and redeem foreign debt taken from them.
The US Federal Reserve would never be allowed to conduct such a regionally imbalanced policy. It cannot even provide credit to specific regions, let alone states on the verge of bankruptcy (for example, California).
And now the president of the European Council, Herman Van Rompuy, is again proposing Eurobonds and debt-mutualisation schemes. These ideas go well beyond the American system. The kind of fiscal integration and centralised power that they would require do not even remotely resemble those in place in the US.
Van Rompuy's proposals could destroy Europe. The path toward a union based on joint liabilities, against the wishes of large parts of its population, is not leading to a truly federal state – that is, to an alliance of equals, who freely decide to unite and promise to protect each other.
Nor can this path lead to a United States of Europe, simply because a large part of Europe refuses to follow it. Europe is not identical to the eurozone. The way that the eurozone is now developing will split the EU and undermine the idea of unity in diversity.
The assertion that the eurozone could be transformed into a United States of Europe is not convincing. The path toward joint liability is far more likely to lead to a deep rift within Europe, because turning the eurozone into a transfer and debt union that can prevent the insolvency of any of its members would require more central power than currently exists in the US.
Hans-Werner Sinn is professor of economics at the University of Munich and president of the Ifo Institute for Economic Research. He also serves on the German economy ministry's advisory council. © Project Syndicate.