More on Political Unification
I’ve written at reasonable length before on the nature of the EU, inspired very much by some thoughts expressed by Hoppe. Now I’ve found a paper by Jorg Guido Hulsmann which goes into the matter in some detail:
The basic idea is that states are motivated to unite by two important problems: on the one hand by the unavoidable internal limitations on power they each face, and on the other by the difficulty and risk associated with military expansion. There is a fascinating comparison made with the progressive centralisation of insolvent fractional reserve banks, eventually joining together under a central bank to avoid going out of business. In a similar manner, governments may unite in order to pool their debts and thus prevent collapse while staving off a hyper-inflation and managing to continue their repayments.
Of course an EU balance sheet has not yet replaced Europe’s national balance sheets, but most banking systems have already merged under the ECB and the process of unification continues, notwithstanding some complications.