A Unified Mess

http://balanceofculture.typepad.com

The economic principle I’m exploring is “Institutions are the ‘rules of the game’ that influence choices.”

My research question to help me study the economic principle is “Is the EU necessary?” and within that “What are the benefits/detriments of a united Europe (the EU)? And why has the EU started to deteriorate?”

The article published in the U.S. News & World Report titled “The Cost of Uniting Europe” demonstrates this economic principle because it argues that the EU is not an effective manner of governance for Europe because it doesn't consider difference between Eastern & Western Europe while also limiting countries' sovereignty and draining some of their financial resources. 

 First, countries in the EU, specifically eastern Europe, have stopped trusting the EU in recent years. In fact, “Never since the eight eastern European countries, together with Malta and Cyprus, joined the European Union have the levels of distrust in EU institutions been so high across the continent.” This lack of trust has bred amongst countries, and discouraged any loyalty from growing within the EU, to the idea of the EU, meaning the countries have started desiring independence from the EU.

Second, the benefits of being in the EU a few decades ago, which were “being a part of the Schengen space, and being able to shop, invest or work anywhere in the EU,” have changed. In the “new” Europe, “the prospect of being a part of the EU serv[es] as a justification for otherwise contentious economic and institutional reforms, including the privatization and deregulation of utilities and energy.” But, these benefits predated when eastern Europe began to be included in the EU, and many of these old benefits no longer make it worth it, making it harder to keep growing the EU, and keep the EU united.

Third, the drawbacks of joining the EU have become more and more prevalent. “EU structural funds, once seen as the silver bullet for poor post-communist economies, crowd out the private sector,” and this ultimately harms the individual governments from uniting and taking money from the EU. On top of that, “EU funds have bred waste, cronyism and corruption.” There is a lack of trust growing towards the EU, de-unifying countries and a powerful entity that once was an unstoppable force.

In my next blog post I will research: Should countries in the EU be able to leave the EU without consequences?