The apparent success of Europe's leaders in dealing with the
European economic crisis at their recent summit may mark the
beginnings of a stronger fiscal union but exactly how this might
be enforced is still a big question. The long term goal is to
tie budgets, currencies and governments even more tightly
together. However, without further political integration – an
actual federal system with tiers of powers and responsibilities
– there is really no way that member nations will adhere to
mandated tax and spending decisions. Moreover, the transfers
that would be part of such a system from “richer” to “poorer”
regions could very well be even larger as a share of GDP than
those in Canada’s federation as described in Stephen Gordon’s
recent post. The trials and tribulations of the European Union,
its debt crisis and the Euro and the suggestion that part of the
solution lies in a stronger fiscal union reminds me of the
forces behind the drive for Canadian confederation in the mid-
nineteenth century. Canadians are