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In mid May, 2010, European Union leaders approved a rescue package worth 750 billion euros (nearly $1 trillion) to buttress weaker states such as Greece, Portugal and Spain.  The funds were contributed by state governments on account of resistence to the EU itself raising the money through direct taxation in the states using the euro as their currency. In early 2011, Sarcozy and Merkel proposed greater EU coordination of fiscal policies in states using the euro. The proposal was shot down by Belgium's prime minister as a threat to the social agreement in his state. Whereas such resistence to giving the EU more governmental sovereignty is typically highlighted in news reports, I contend that simply having a common currency inexorably exercises a subtle though gradual force in the direction of further integration manifesting in more governmental sovereignty being transferred from the state governments to that of the EU. It is not always easy to see the changing contours of a forest when one is used to studying leaves.

According to David Marsh, the euro was intended to complete the European program of liberalized cross-border trade, promote the old dream of political unity, rival the dollar as an international reserve currency and — the most complicated objective — prevent an enlarged Germany’s domination of Europe by bringing its currency under European control.”  Before the euro went into effect, Chancellor Kohl of the state of Germany noted that a monetary union without a corresponding political union would be “a castle in the air.” His remark echoed the concerns of the Bundesbank, his state’s statutorily independent central bank, that unless there were greater political and economic anti-inflationary discipline and solidarity among weaker and stronger states, the monetary union would be doomed. I contend that this pressure for greater solidarity or coordination via EU governmental institutions is a pressure that is inherent in the monetary union, whose gravity pulls the EU toward further integration until the equilibrium point (with the monetary union) is reached.

To be sure, the EU was at a precarious place in 2010 amid the debt crisis and the attempt by the EU collectively to come to the rescue. Even though EU institutions had acquired a significant amount of governmental sovereignty, it was less than what was being required in responding to a common currency in trouble. A currency in any federal system requires some degree of fiscal consistency among the governments subject to the currency.  In the want of adequate means, the government representing the system as a whole can over-react out of sheer frustration. Beyond the emergency fund, for example, the EU Commission wanted the state governments to submit their budgets for approval before appropriating funds. This would have represented more political consolidation than is the case in the US. Euroskeptics would have hit the ceiling.

To the Europeans who deny the political or governmental aspects at the EU level (i.e., the ECJ, the EU Parliament, and the EU’s various political offices), fiscal coordination represents an infringement on the “national sovereignty” of the “member states.”  Even so, the need for greater fiscal coordination or consistency for the euro inexorably backs the even the Euroskeptics the uncomfortable position of agreeing to more sovereignty being transferred from the states to the union. The invisible integrative forces in monetary union do not bend to denial; instead, they bend it. So while the skeptics might get the headlines today, the extend of union even in 2010 presaged ever closer union even if the pattern involves fits and starts rather than a linear trajectory. In other words, it is best to have a long-term perspective in evaluating the implications of newsworthy events on the EU.

Source: http://www.nytimes.com/2010/05/18/opinion/18marsh.html?hp

According to David Firestone of The New York Times, a “surprising number” of the Tea Party members were calling for the repeal of the 17th Amendment of the US Constitution during the election campaign season of 2010. That amendment, which was ratified in 1913, provides for direct election by the people of each state of US senators. According to Firestone, “allowing Americans to choose their own senators seems so obvious that it is hard to remember that the nation’s founders didn’t really trust voters with the job. The people were given the right to elect House members. But senators were supposed to be a check on popular rowdiness and factionalism. They were appointed by state legislatures.” That it may seem so obvious to us does not mean that we have it right. Yet Firestone presumes so in writing, “a  modern appreciation of democracy — not to mention a clear-eyed appraisal of today’s dysfunctional state legislatures — should make the idea unthinkable.” Should it really?  Firestone seems biased in his dogmatism.

For one thing, the delegates to the Constitutional Convention in 1786 didn’t want to restrict direct representative democracy in the US Government to the US House only out of fear of mob rule as Firestone suggests.  They thought the direct power of the state governments in the US Government would be necessary to keep the new empire from consolidating at the imperial level (i.e., in the US Government). Firestone himself admits that to most authors of the Constitution, “allowing states to appoint the Senate was the linchpin of the entire federalist system and the real reason there are two houses of Congress.” Whereas the British House of Lords represents wealth, the US Senate was to represent not only that, but semi-sovereign republics as well.  The latter likens the US Senate to the European Council rather than to the upper chamber of one of the EU’s states.  Firestone makes a category mistake where he avers that it “may be true that appointed senators, accountable only to state legislators, would never approve of many useful federal mandates designed to put the national interest above local parochialism — including everything from the minimum wage to the new health care reform law.” States commensurate with European kingdoms/countries are not local polities.  Furthermore, reducing the US Government to a “national” interest ignores the semi-sovereign nature of the states (and thus the international principles in the design of the US Senate as opposed to the US House, which is national in nature).

Firestone seems to misunderstand what the US Senate is.  In referring to returning to having the state legislatures appoint their delegates to the US Senate as an “elitist notion,” Firestone forgets that state legislators are elected by the people and in fact have smaller electorates than do US House or Senate members.  Empowering state legislators would ironically be to bring power back closer to the people.  ”Senate candidates have to raise so much money to run that they become beholden to special interests,” Tea Party members say according to Firestone.  The members ”argue that state legislators would not be as compromised and would choose senators who truly put their state’s needs first.” That in turn would restore checks and balance to federalism, wherein both the state and federal governments would be checked (by the other). This is not just a matter of state rights; rather, it is a matter of a viable federalism instead of consolidation. As Tim Bridgewater, who ousted Sen. Robert Bennett of Utah as the Republican candidate writes, “We traded senators who represent rights of states for senators who represent the rights of special interest groups.” By rights of the states, one can infer an empowerment of the representatives elected by the people of the states.  Such a change would hardly be anti-democratic or elitist; rather, it would reduce the power of the elitism in Washington DC.  A writer ought to be careful in dogmatically writing that something is ridiculous or unthinkable, for the lack of thought could come back to haunt him or her.  It is clear that Firestone is not very open to the possibility that he could be wrong.  The arrogance of centralized power at an empire-level is truly remarkable, even in its press.

Source: http://www.nytimes.com/2010/06/01/opinion/01tue4.html?hp

According to The New York Times, Florida, like about a dozen other states, debated a proposed amendment to its state constitution that would try to block, at least symbolically, much of the proposed federal health care overhaul on the grounds that it tramples individual liberty. Before getting to the matter of federalism, whose primary object is the protection of liberty, I raise the issue of an industry with such a vested interest making substantial campaign contributions to the supporters of the amendment nonetheless. I contend that there is an ethical conflict of interest in the practice, even if it is constitutional (assuming wealth as free speech, which is problematic).

What united the proposal’s legislative backers in Florida was more than this ideology. Its 42 co-sponsors, all Republicans, were almost all recipients of outsized campaign contributions from major health care interests, a total of about $765,000 in 2008.  Around the 2008 election, the groups that provide health care contributed about $102 million to state political campaigns across the country, surpassing the $89 million the same donors spent at the federal level. This opened the backers and their state government to attack by those "nationalists" who wanted the federal government to be involved in health-insurance. Indeed, they argued that the magnitude of the health care industry’s contributions demonstrated the dangers of leaving such a question up to individual states, where campaign finance and ethics rules vary from strict to negligible. The industry has enormous power at the state level, they contended, and very few states have state-level consumer groups that are able to lobby effectively against them. Yet the alternative of consolidation of the "extended republic" carries with it other dangers.

Indeed, the matter of the US Government’s enumerated powers was not lost on the state legislators opposed to a federal health-care law.  “We are trying to prepare, and trying to send a message that there is no reason for those decisions to get made at the federal level,” said Representative Linda L. Upmeyer, a Republican who is leading the council’s efforts in Iowa.  Without “opt-in” or “opt-out” provisions in the federal legislation, state constitutional amendments would be preempted, and thus merely symbolic.  It seems like a lot of work just to make a statement. 

In terms of health-care policy, states opting out could compromise the economies of scale being assumed by the federal cost-saving measures.  However, such policy reflects ideological preferences, which can vary from state to state.   The effect on our system of public governance (i.e., federalism) ought to be considered as well, lest we inadvertantly run our ship of state into a wall.  Consolidation at the expense of federalism (i.e., semi-sovereign political units—in this case states that are republics) works against the inherent diversity in an empire-scale Union.  However, if the health-care industry is able to dominate health-care policy at the state level—a consolidated industry against comparatively smaller republics—then federal action might be necessary to protect republican principles…yet at the expense of federalism.   In other words, what if the cost of maintaining federalism is rule by industry?  Governmental consolidation may well be foisted on us by necessity, given the power of consolidated private capital in the US.   Yet by this logic, why stop at the US Government?  To be sure, the health-care and banking industries have demonstrated their influence on Congressional action (and inaction).  Why not then argue that a federation of the US and the EU is necessary to create a governmental entity large and powerful enough to fend off the encroachments of big business?
I suspect that anti-trust legislation is necessary not only to protect the viability of competition and the market, but also to keep industry from capturing government.  The latter is particularly important where federalism exists because the smaller units of a federal system are perhaps more easily dominated by big business.   Sadly, those who are in favor of free-market health-insurance (rather than government involvement) do not also push for enforcement of the anti-trust law.

In terms of US federalism specifically, federal health-care legislation cannot be justified by any of the enumerated powers granted to the US Goverment. So it must be the spending clause that the feds are using.  The US Government may spend for the general welfare.  In my view, this is best interpreted as “for that which the states cannot do” or “for emergencies rather than ordinary spending.”  Otherwise, the spending clause easily trumps any enumeration at all because with spending comes power (i.e., strings).   My interpretation dovetails with the heterogenious nature of an empire-scale Union such as the US or EU, wherein consolidation is not natural.   Broadening out to political economy, the problem then is the ability of big business to bully state governments.  This can be viewed as a threat to the semi-sovereignty of the states, and thus to the federal system itself.  Federalism, in other words, may make it possible for industries to veto any reform they do not favor (and to ensure special treatment for themselves).   Large concentrations of commercial wealth may be able to use federalism for their purposes, and perhaps a consolidated government of the Union less well.  In allowing such private concentrations of power, we may be forcing ourselves to consolidate our public governance.  State governments are reduced to symbolic amendments (i.e., impotence); one size fits all, across a continent.  Yet the alternative is capture by industry.  However, this can be a false dichotomy.  If the business interest can be trumped at the federal level, US anti-trust law could be expanded to include “protection of the state governments.”  The US Government could still serve as a check on those governments (e.g., when they are captured by an industry), and vice versa!   It is perhaps because this is not in the interest of big business that we no longer have the checks and balances of federalism.  In any case, we can’t very well afford to look at federalism in isolation, though it is equally dangerous to ignore it in favor of the issue, or flavor, of the day.

Source: http://www.nytimes.com/2009/12/29/health/policy/29lobby.html?_r=1&ref=politics

Ask a European if the E.U. government could ever consolidate power from the state governments and you would probably get a "nope (or nein, or non), we identity with our respective countries." The problem is, such attachments can change. Europeans would do well to look at the first hundred or so years of the U.S. to get a sense of how the E.U., too, could change. 

On June 18, 1787, in the U.S. constitutional convention, Hamilton pointed to “(a)n habitual attachment of the people. The whole force of this tie is on the side of the State Govt. Its sovereignty is immediately before the eyes of the people: its protection is immediately enjoyed by them.” (James Madison, Notes , p. 131) Hamilton concluded that the people would protect their respective countries from encroachment from the new general (i.e, federal) government. Back on June 20th at the convention, Luther Martin (not Martin Luther!) had pointed out, “(a)t the separation from the British Empire, the people of America preferred the establishment of themselves into thirteen separate sovereignties instead of incorporating themselves into one: to these they look up for the security of their lives, liberties & properties. . . . the sovereignties of the particular States which the Union was meant to support.” (James Madison, Notes, p. 159) The people set their respective ex-colonies, whose legislatures had largely been self-governing in various periods in the seventeenth century, as countries equivalent to those in Europe. The implication from Martin's argument is that the people had enough of a sense of nationalism to protect their countries from a general continental government. At Virginia's convention ratifying the U.S. constitution, Patrick Henry thus said, “I consider myself as the servant of the people of this Commonwealth.” (Storing, p. 295) Hence, Madison writes that the ratification of the U.S. Constitution “is to be given by the people, not as individuals composing one entire nation; but as composing the distinct and independent States to which they respectively belong.” (James Madison, Federalist #39, in Cooke, p. 254)

In spite of the apparent fixed nature of the attachments of the people favoring their respective countries at the time the U.S. constitution was being debated and ratified, such affinities should not have been counted on as a check against encroachments by the general government of the union. The fact that they were can explain why the U.S. constitution contains more checks against encroachments by the state governments than by the federal government. Melancton Smith, in a speech delivered at the New York ratifying convention, picked up on the error: “(a)n honorable gentleman from New-York [i.e., Hamilton] observed . . . that the states would always maintain their importance and authority, on account of their superior influence over the people.. . . But I ask him, how long the people will retain their confidence for two thousand representatives, who shall meet once in a year to make laws for regulating the heighth [sic] of your fences and the repairing of your roads?" (Storing, p. 349) Smith foresaw from the imbalance of checks in the proposed constitution that the general government would win the struggle for power at the expense of the state government.  Smith continued, “the powers of the confederacy will swallow up those of the members." (Storing, p. 354)   Smith then pointed to the finite duration of the primary political identifications of the people with their countries. "I do not suppose that this effect will be brought about suddenly—As long as the people feel universally and strongly attached to the state governments, Congress will not be able to accomplish it; If they act prudently, their powers will operate and be increased by degrees.” (Ibid.)  As it turned out, Smith was correct; the state attachments waned, which in turn facilitated Congress in usurping state prorogatives. Rather than being dissuaded or halted by the people, members of Congress could promise the people goodies from federal programs. Since 1913, U.S. Senators have been elected by the people of the states rather than appointed as delegates of the state governments.  This "reform," while in line with immediate representative democracy, left the state governments unable to act directly in the general government to arrest the encroachments.  As a result, American federalism came to lose that balance of power between governments that is necessary and sufficient for both the systems of the U.S. Government and the state governments to be checked by the other. For while the general government can still check abuses in any state government, the state governments--even working together--can no longer check federal abuses.  Hence the system of federalism is broken.

Europeans in the early decades of the twenty-first century would be wise to remember the American experience in assessing whether they have built-in sufficient safeguards against consolidation. What seems so strong today may be gone tomorrow.  Attachments are fleeting. As per Ecclesiastes 1:1-11, everything in our domain is fleeting; all is vanity. It is prideful indeed to presume the conditions of one's own day are somehow permanent--and ever worse, to be counted on by future generations. Once the artifacts of one's age are qualified or bracketed, the E.U. federal system can be examined in itself--in its structure or design. An assessment can be made on whether the checks against encroachments from either the state governments or the E.U. government are sufficient and in balance.

Dual sovereignty is not sufficient for modern federalism; there must be a certain balance of authority and power, or consolidation (or dissolution) will surely result.  Europeans like to point to the long history of their state governments to argue that the nationalisms in the E.U. will be reliable checks on an E.U. central state in the future. I counter that Europeans would be wise to look at the history of the United States--comparing that union in its first hundred or so years with the E.U. in the early twenty-first century. This approach is preferable to simply relying on momentary attachments that benefit from an assumed weight of European history. European empires gave rise to the empire that is now comprised of fifty united (i.e., nearly consolidated) states; now the latter can give back by providing a lesson of what not to do. I suspect that only pride can get in the way.

Sources:  James Madison, Notes in the Federal Convention of 1787. New York: Norton, 1987; Herbert J. Storing, ed., The Anti-Federalist, Chicago: University of Chicago Press, 1985; Cooke, Jacob E., ed. The Federalist, Hanover, N.H.: Wesleyan University Press, 1961.