EU's Sovereign Debt Crisis And The Centralization Of Power Within The EU.

Ireland has recently accepted/forced to accept a 85 billion euro bailout and Portugal, Spain, Italy are falling like dominoes. The debt contagion is spreading throughout the peripheral nations and will eventually make its way to the core. This is a very good video titled "Von Rompuy:Pin-up boy for Eurosceptics" showing a member of the UK Independence Party Nigel Farage's message to the EU president and those that still wish to keep the European Union dream alive: "The dream is up". Farage's rant against the EU points out that current events in the EU could be leading to the end of the EU and if it doesn't then it will lead to people rallying around nationalism and violence because "when you rob people of their democracy and their identity. Then they are left with nationalism and violence".
(Picture) European Union: European Day poster, 2000. Photograph. Encyclopædia Britannica Online. Web. 30 Nov. 2010

(http://www.britannica.com/EBchecked/topic-art/196399/93978/Europe-Day-poster-2000).

And continuing on the ideal that the current events in the EU are leading to the fragmentation of the EU here is a good article from CNBC,

A few weeks ago, I wrote about the possibility of a political breakup of the European Union. Just before Thanksgiving, I wrote— not ironically — about whether a crypto-breakup of Europe might already be underway in the sovereign debt markets.
Today, a new idea that is at least as unsettling: Fragmentation in Europe, not just along national lines, but along class and economic lines as well.

Michael Pettis, a Professor of Finance at Peking University and a frequent writer on international economics wrote in a recent blog post, in reference to Europe's most economically troubled nations:

'Political radicalism in these countries will rise inexorably as a consequence of rising class conflict. As Keynes pointed out as far back as 1922, the process of adjusting the currency and debt will primarily be one of assigning the costs to different economic groups, and this is never an easy or conflict-free exercise.'

This is indeed a frightening scenario. If, as Milton Friedman suggested in 1965 'We are all Keynesians now,' perhaps it is time to think through some of the darker ramifications for Europe.[...] In the United States, we tend to underestimate the significant ideological grip socialism held in Europe for much of the 20th century.[...] While those examples might indeed be outliers, the policies of many European Union nations are influenced by the fundamental structure of their governments: parliamentary democracies.[...] The upside of the parliamentary system is the promise of an intellectual openness to a broader spectrum of political opinion. The downside is the possibility that small parties—and with them fringe movements—can accumulate a share of power disproportionate to their representation in the general population. (In an example from the opposite side of the political spectrum, the broad Swedish left is apoplectic over the rise of a political party alleged to have racist roots.)

In short, due to cultural, historical, and structural factors at play in Europe, it seems impossible to rule out the possibility of social fragmentation along class and economic lines. In certain European intellectual circles, that oft-quoted line from The Communist Manifesto[sic] —that 'The history of all hitherto existing society is the history of class struggles'—is more than just a ancient relic. It's a political truism.

As Farage notes in his speech, hopefully the Euro project will be destroyed by the markets before this happens. Looking at the fact that these PIIGS nations are receiving bailouts, it doesn't seem that the EU leaders are unwilling to let the free market work. There is too much political capital invested in the concept of the EU.
(Picture) European Union. Flag. Encyclopædia Britannica Online. Web. 30 Nov. 2010
(http://www.britannica.com/EBchecked/topic-art/196399/92316/Flag-of-the-European-Union).

A good article from the Ludgwig Von Mises institute states that these debt crises is leading to a centralization of power in the EU,

Finally, the bailout leads to a centralization of power in the European Union. European politicians already indirectly determine the Irish budget. For instance, they tell the Irish government to increase taxes, such as the sales tax. They also put tremendous pressure on the Irish government to abandon its policy of a low corporate-tax rate, a policy that many European politicians regard as 'fiscal dumping."' Here, at last, the Irish government resisted.

In the short run, one may find some positive aspects of the determination of fiscal policies by Brussels or indirectly by Germany. When Germany or Brussels tells Spain, Greece, or Ireland to reduce their deficits, the result for people living in these countries may be a reduced size of the government in the short run. But such centralization of power in the EU will likely prove to be disastrous for liberty in the long run. The European interventionists now claim that because there is one central bank we need one economic policy.

One factor that frequently hampers governments' attempts to increase their power via increases in taxation or regulation is the competition of other governments. If taxes get too high in a country, economic agents will flee to countries with lower tax rates (such as Ireland, with its low corporate tax rate). If economic policy is centralized in the European Union, this limitation on government power is eliminated. European politicians already aim at a harmonization of fiscal policies and talk about benchmarks for tax rates. Once fiscal policies are harmonized, there will be a tendency toward an increase of power in Brussels and then toward an increase of tax rates throughout the eurozone.

The euro might be saved, but at the cost of building a strong, central European state, as national policymaking is transferred to Brussels in exchange for bailouts. The turmoil produced by the euro will then have served as an instrument for the development of a centralized state in Europe.

This article also describes the problem with the concept of the EU project: it created the incentives for small EU nations to run up massive deficits.

This article notes the Ireland bailout is not about Ireland but it is about the European project,

What you need to know about Ireland's economic crisis is that it's not about Ireland: a small country of slightly more than 4 million people and an economy of roughly $200 billion. It's about Europe. For decades, Europe has pursued two great political projects. One is the democratic welfare state, designed to improve economic justice through various social safety nets. The other is European unity, symbolized by the creation in 1999 of a single currency -- the euro -- now used by 16 countries. The fact that both contributed to Ireland's troubles suggests that Europe could be on the brink of a broader crisis.

Ireland's problems are not isolated, and if they portend a wider meltdown, this would mark a dangerous new phase in the global economic turmoil that began in 2007. Europe represents about one-fifth of the world economy, comparable to the U.S. share. If the continent relapsed into recession, worldwide economic nationalism would intensify, as the already-weak global recovery faltered and countries competed for scarce sales. For example: Europe buys about 25 percent of America's exports, which would suffer. Protectionism and predatory behavior would increase.

Europe's problems can easily spread to the rest of the world. America could possibly have a very similar situation to the EU with its individual states. The concept of the Euro is being put before the economic well being of the individual EU nations and the whole European economy.

The events in the EU illustrates how that the concept of socialism is an economic failure and how that it leads to centralization of power among various governmental entities. In the case of the EU, it is the result of the attempts by them to prevent the economic collapse that is the inevitable result of socialism. If the concept of the EU does not end but continues to be pursued, it will lead to a more centralized European governing body that is built on very shaky economic ground that will possibly collapse into a very different system of government. Friedrich Hayek warned that socialist planning leads to situation where "totalitarian powers will get the upper hand",

I have never accused the old socialist parties of deliberately aiming at a totalitarian regime, but' What I have argued in this book[The Road To Serfdom], and what the British experience convinces me even more to be true, is that the unforeseen but inevitable consequences of socialist planning create a state of affairs in which, if the policy is to be pursued, totalitarian forces will get the upper hand. I explicitly stress that 'socialism can be put into practice only by methods of which most socialist disapprove' and even add that in this 'old socialist parties were inhibited by their democratic ideals' and that 'they did not posses the ruthlessness required for the performance of their chosen task'.

As Farage notes in his address to the EU president, democratic principles are being put aside for the purpose of maintaining the EU. From what I gleam from the various commentary that I have heard on business shows like CNBC's "Squawk box", the situation in Europe is leading to an inevitable collapse of the EU system. What system of government will emerge out of the possible future economic collapse of the European socialist model?