Europe Needs a Hamiltonian Moment

The Eurozone’s decision to put monetary union before political union has left it vulnerable to the economic ravages of COVID-19.

Alexander Hamilton must be rolling in his grave on hearing the happy talk that Europe is having its Hamiltonian moment. The truth of the matter is that the Eurozone is still lacking any semblance of a fiscal or banking union. That leaves Europe particularly ill-equipped to meet the existential threat that the COVID-19 pandemic is likely to pose to the Euro.

In 1790, Treasury Secretary Hamilton succeeded in engineering a permanent fiscal union for the 13 states of the new nation. He did so by having the federal government assume the debt of all the states, including those of the heavily indebted northern states. In exchange, the capital was to be moved to Washington, D.C., and the federal government was to be granted expanded tax authority. The resulting fiscal union was to serve the country well when it eventually became a full monetary union.

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