The European Union’s summit last week has produced a rough agreement on a firmer “fiscal union,” capable of imposing credible budget controls on Greece, Italy, and other debtor-countries. The details have yet to be worked out, and the markets are unlikely to repose any great confidence in the deal. The deeper problem, however, is that no version of a fiscal union can save Europe or the euro. The principal authority for this proposition is Alexander Hamilton.
Hamilton’s name is much in vogue these days in European capitals. Behold the bold visionary who talked a dysfunctional Confederacy into a closer union, assumed the states’ debts, and founded a powerful central bank: Europe needs his example and prescriptions. Alas, Hamilton’s admirers misunderstand him. He argued for a closer union of a particular kind — and against the kind of union they are contemplating.
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