The end of EU-rope?

Europeans may one day wake up in an environment of revived national rivalries, new political extremism and a continent without the open borders they once took for granted. This could be a tragedy even worse than the economic turmoil the continent is experiencing at the moment.

One of the most oft-quoted sayings in economics is Herbert Stein’s famous dictum that if something cannot go on forever, it will stop. It is so often quoted because it is logically true. It certainly holds for the construction of the eurozone and the design of those policies to rescue it.

In many ways, Australia today reminds me of Europe in the first decades of the post-war period. We are full of optimism … our population is growing … our economy is booming. But make the wrong choices about the size of government now, ignore the challenge of population ageing, gloss over temporary problems with public deficits, and just a few decades later, we will end up like Europe – under different stars, but with the same destiny.