Economic and Financial Structural Reform in the European Union. Introductory Thoughts on the Current Situation

Abstract

It was decided at the Conference of Heads of State or Government in Maastricht on 09.–10.12.1991 to adopt a common currency in these countries. This laid the foundation for the European Economic and Monetary Union. This was and is intended to be a preliminary stage for the creation of the European political union – United States of Europe – according to the model of the United States of America.U.S. economists, above all, were sceptical about this project as a comparison of these two federations would reveal quite considerable differences between the countries. The opinion of Milton Friedman (1912–2006), the 1976 Nobel Prize Laureate, attracted particular attention. He referred to the fact that U.S. experience cannot be transferred to Europe very easily as individual European countries – unlike U.S. states – vary a lot both in economic and sociological terms. In the U.S. most public expenditures are born by the federal government so it is relatively easy in case of regional economic disparities to redirect sufficient aid resources to regions which are in a crisis situation. The labour force and officials are much more mobile between regions due to the common language, in principle commonly perceived culture and relatively few personal connections with their home states. In addition, the labour markets are much less regulated than in Europe. On the basis of all these factors, salaries and wages can be more easily adjusted to different levels of development of economic areas. The same applies to capital flows which can move between the states without.