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Guy Sorman on European federalism

Guy Sorman is an oddity--some might say a walking contradiction. The French economist and writer has for decades championed free markets in the birthplace of dirigisme. He is a man of the right who is guardedly upbeat about France's future under the first Socialist president in 20 years. And he's decidedly positive on the euro and the European Union.

The latest of his 25-odd books, "Journal of an Optimist," a series of diary-like essays on Europe and France, was published here this spring. His contrarian streak--a virtual job requirement for French public intellectuals going back to Voltaire--flies straight into the gloomiest headwinds. "The consensus is not always the truth," he says without hesitation.

Doomsday scenarios also overlook differences among EU states. The Berlin Wall was replaced by a sort of sunshine curtain that separates a healthy, growing north from the basket cases of Club Med. Visit Berlin, booming Warsaw or the Estonian capital of Tallinn to escape the depressed mood of Paris. "I think you'll have a European revival coming from Poland, the Baltic States and Finland" says Mr. Sorman. "Just look at what they've achieved."

Mr. Sorman has advised the South Korean president Lee Myung-bak since 2009 ("without much result," he says) and lived for a year recently in China. This up-close look makes him skeptical of the rising East hype and eager to halt Europe's premature burial.

Mr. Sorman, who taught economics for three decades at the prestigious Sciences-Po in Paris, knows all the free-market arguments against further empowering Brussels or pooling taxes. "A federation is not the same thing as a super state," he responds. "We're talking about a federation where free-market principles are much better implemented than they ever were when decisions belonged to each nation."

Mr. Sorman says the crisis has usefully brought quick fixes to obvious euro shortcomings. Greece cooked its budget numbers for years; Italy and Spain weren't always open about the rot on their books. After Greece collapsed, the EU introduced transparent national accounting standards. When France and Germany broke through the EU treaty's ceilings on fiscal deficit without any consequences a decade ago, they unwittingly encouraged bad fiscal behavior by others. No one will make that mistake again, says Mr. Sorman, and in any case the EU has strengthened its enforcement powers.

Margaret Thatcher considered Europe to be welfarism by the back door. Contra the Iron Lady, Mr. Sorman says more Europe brings more competition and more prosperity.

Brussels has wrenched open protected markets and broken up state monopolies in transport, telecommunications, energy and more. In the Sorman view, the EU has just gotten started. Its executive arm, the European Commission, "is the major free-market agent we have in Europe," he says. The euro, unveiled a dozen years ago, "is a new kind of gold standard."

By bringing currency stability and taking away the tool of devaluation from politicians who want an easy fix, the single currency has forced "each economy to be more rational, more flexible and more productive." The ECB, he adds, "is even more free-market oriented than the Federal Reserve." Its only job is keep inflation low, while the Fed has a second mandate to bring about full employment.


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