The Euro's True Value: Post-Westphalianism

The Westphalian system has three main components:

1. The principle of the sovereignty of states and the fundamental right of political self determination
2. The principle of (legal) equality between states
3. The principle of non-intervention of one state in the internal affairs of another state

As a Post Nationalist, I am a firm believer that all three of these tenants should be undermined on a global scale.  Sure, national sovereignty is the closest thing we have a global religion as every government from China to Russia to the U.S. all jealously defend the ideology of national independence.  But national sovereignty is conveniently ignored whenever one those nations finds a way to dispute the 'sovereignty' of a rival.  For instance, failed states like Afghanistan are not really given national sovereignty, neither are those suspected of genocide like Serbia, nor states suspected of violating the NPT, like Iraq.  (This includes Iran, but not Israel.)  Or Taiwan, where both China and Taiwan give lip service to 'One China', while both sides retain their mutually exclusive claims to control both nations.  State sovereignty is not always used for good. I don't think I need to go down a list of examples that would include the North Korea, Sudan, Zimbabwe, and just about any country needing to justify a self-serving narrative. 

First, let me say that nationalism has not always been detrimental to human society and development.  Nationalism was first used to overcome tribalism and feudalism, a dark period when each cluster of people were loyal to their own bosses and humanity was far more divided and war-prone than modern times.  At its outset, nationalism was a tool to overcome mutual isolation and unawareness.  Nationalism actually helped unite larger groups of people into economic free trade zones and broader definitions of the in-group, while shrinking the ominous out-group.  Though nationalism is the primary reason for every modern war and trade dispute, it was actually an improvement on the previous system. 

The particular brand of nationalism that is widely credited to the Peace of Westphalia faces many challenges. While failed states and non-state actors like Al-Queda are certainly a challenge the Westphalian System, those problems have been attacked by attempts to reinforce the system of state sovereignty.  The U.S. is trying to set up a nation in Afghanistan (failing...but trying), the U.S. is giving billions in aid and military equipment to Pakistan (a potential failed state), Kyrgyzstan (out of the news-but fail), Yemen (an undeclared failed state), and many others.  The U.S. response to the threat posed by failed states on the Westphalian order has been to try to build states that can uphold the model.  The jury is still out on this technique...my guess...fail!  At any rate, the cost of maintaining the Westphalian system under modern geopolitical conditions is just too high.

Despite the importance of existential threats to the current system, the most important development in post-nationalism is without a doubt the EU, specifically the Euro.  The Euro is at its core an indirect and roundabout assault on the concept of Westphalian Nationalism.  Though the Euro founders claimed that they intended for nations to keep their sovereignty, anyone can see that a monetary union will require a fiscal union to succeed in the long term.  Erratic fiscal policies under a single monetary policy will inevitably lead to crisis just like the one we are witnessing now.  In fact, low interest rates needed by economies like Germany provide skewed incentives in countries like Ireland whose rapid growth demanded higher interest rates.  In Spain for example, national economist Angel Ubide explained that the government would've needed to run 5-6% surpluses just to offset the negative real interest rates available under the Euro.  This is functionally impossible in a democracy, where people want to spend their money or have it returned to them immediately.  It is left for us to decide whether the founders of the EU actually intended for crisis to occur in order to further political integration, or whether they truly believed that the basic principles of economics could be ignored.  

Putting that debate aside, the core of the matter is that the Euro is the future of money.  As my new favorite person Tommaso Padoa-Schioppa (head of Notre Europe, former member of ECB's executive board) explains, "the dynamics of history consist precisely of the search – largely unguided, often painful but inexorable – for an optimal distribution of power along the scale of ever-wider human aggregations, which are tied by common interests more than by tribal identity."
http://www.ft.com/cms/s/0/7596170a-5ec0-11df-af86-00144feab49a.html#axzz17rXMiXmz

As it is obvious to everyone on both ends and even some in the middle of the political spectrum that global corporations, global terror networks, global environmental problems, and global human rights all require an ever-widening scale of government; the Euro is a great tool in advancing beyond the seductive tribalism of nationalism.  Since Euro members have so much invested in the success of the Euro, it is nearly impossible to resist the inexorable march toward a more centralized (and less democratic-yay!) system that gives economists a veto over the spending initiatives, labor laws, and other purview of national legislatures.  This is after all, the only way to sustain a supranational monetary union. 

So, we've learned that Euro was designed to fail, and that the only way forward while saving face is to build a supranational fiscal union.  The only way to give coherence to the persistence of national governments would be to allow them to continue making fiscal policy, subject to review by the center.  This is my ideal!  It destroys the basic tenant of state sovereignty by taking away the ability to control fiscal policy. It undermines the idea of equality between states because no one will truly consider a state without control over either fiscal or monetary (or ostensibly foreign) policy, equal to a state with sovereign control over these aspects of policy.  By giving a review of legislation to a central authority, the principle of non-intervention is completely obliterated, and the era of nation states begins its decline!

Once the death grip of nationalistic ideology has been weakened, regional monetary unions could spring up across the globe.  Asia is prime real-estate, though it would have to endure the long foundation laying process just as Europe did.  Whether it is an alliance of Japan, South Korea, and India to counter China's growing influence, or an even larger union including China, the endgame is the same...the eventual merging of regional monetary unions under a single global system that does away with currency manipulation as trade protectionism, vetoes unsustainable spending by national legislatures and executives eager to buy votes, equalizes labor and environmental laws to level the competitive playing field, and imposes transparent and universal rules on multistate actors like financial institutions who seek to play states against each other and demand bailout money by holding discreet economies hostage. 

The Post-nationalistic world order also does away with the ability of states to resort to hyper-nationalistic (and dangerous) propaganda when their local power is threatened by the international community.  This takes away one of the most important tools of control of any authoritarian regime.  The China Nobel situation is an example.  I will post on that next.