Why it won't work Just below, I broached the idea that Europe is trying to recapture some power on the global stage by recreating the American experiment in the EU. David Carr tells of a new initiative which demonstrates why it will never work.
Another draft Directive is formenting in the cesspit of Brussels and this time it's pensions that they are pawing at with their oily little hands."Spanish officials were trying to insert a clause that would limit the amount of equities that pension schemes can hold. The EU directive could become UK law within as little as two years."British pension funds typically invest some 70% of their funds in equities and, if this law passes (Did I say 'if'? I mean 'when') they would have to drastically reduce this figure to bring Britain into line with many European countries where such investment in strictly limited by national law.But this is not madness, it is cold, hard method. The main alternative to equities in funded pension scheme portfolios are long-term financial instruments such as government bonds and, by a simple extension, EU bonds.
The EU is copying the form of America by forging a monolithic trading block, but ignoring the qualities that allowed America to prosper far beyond other large economic powers. The Soviet Union, China, India, all are or were, in the case of the Soviets, large unified economies, fully able to compete on a scale with America. They failed to do so because, as I hear so often, size doesn't matter. It's what you do with it that counts. America did not achieve superpower status because of the size of our country, or the resources we have. Remember, we've been a net importer of raw materials for decades. America achieved greatness based on the freedoms recognized in our Constitution. Power was kept in the hands of the people, and they used it to prosper.
As David's blog shows, the EU is following the traditional European model and centralizing power in the hands of the state. This will not lead to increased global power and economic might, but will lead Europe down the same path followed by the Soviets.
Sadly, the differences between the European and American models are shrinking rapidly. The Federal government is continuing to grow in size and scope, usurping the rights of the States and the people. If we allow this to continue, like this for example, then our ability to compete, to innovate will ossify. America will lose the very thing which made her great, to the detriment of the entire world. If America stumbles, the rest of the world will fall. This is not jingoistic hubris but economic reality. Of course, no great democracy has lasted for more than two or three hundred years before either rotting from within, or collapsing under its own bureaucratic weight. If we don't change course soon, we will join Europe in the has-been category, and some new energetic upstart will take center stage.
Posted by Rich at March 22, 2002 11:40 AM