Clive Crook

Theorists of American decline are preoccupied with the surging growth of emerging rivals, especially China. That’s an important issue, I don’t doubt. But there’s a much bigger threat to U.S. power: the increasingly abject failure of the country’s own political class.

If Europe’s new plan for Greece succeeds, nobody will be more surprised than the politicians who designed it. At best, the arrangement is a holding action, one that fails yet again to deal with the much larger confidence crisis facing the euro area.

For the past several decades Germany’s aim for Europe has been to create a wider and deeper union. In this way it sought to advance its economic and national-security interests, to bind itself to ever closer co- operation with its neighbors, and to atone for its history. Today, the system that it designed is in danger of coming apart, and newspapers in Italy and Greece carry digitally altered pictures of Angela Merkel in Nazi uniform.

It has come to something when the International Monetary Fund, that stone-faced inspector of fiscal rectitude, advises governments to go easy on austerity.

While Europe’s governments struggle to contain their debt meltdown, a big part of what’s gone wrong is easy to forget.

How gloomy should we be about the European Union? Are its problems manageable, or is it headed for systemic collapse? My answer is yes -- the problems are manageable, and the EU’s leaders are behaving so recklessly that collapse is all too possible. I don’t know whether that makes me an optimist or a pessimist.

Even before the Great Recession, mainstream economics offered few clear-cut policy prescriptions. At the top of an embarrassingly short list were two rules of monetary policy: keep prices stable and politics out of central- bank operations. Now, it may be time to rethink both.

Mitt Romney likes to contrast the U.S. economic system with Europe’s welfare state. You can have a merit society, he says, or an entitlement society, but not both -- and an entitlement society is where the U.S. is heading if Barack Obama and the Democrats get their way.

With the world’s rich economies struggling and the leaders of the European Union intent on making things worse, the gravity of the economic crisis still confronting the West is hard to exaggerate. Nonetheless, it can be done.

Democrats in the U.S. have decided to make inequality a central issue in next year’s elections. I’d question whether that’s good politics. Even in hard times, American voters aren’t easily persuaded by appeals to class interests.