ANDERS ASLUND: Senior Fellow, Atlantic Council, and author, Russia's Crony Capitalism: The Path from Market Economy to Kleptocracy (2019).

The question of whether Europe just experienced its Hamiltonian moment raises many thoughts. In a narrow sense, it seems true. In 1790, Alexander Hamilton, as the first U.S. Secretary of the Treasury, insisted on the U.S. federal government assuming the states' debts incurred during the War of Independence. In late July 2020, the European Council agreed to mutualize an emergency package of [euro]750 billion.

Yet the amount is small and the difference from the ordinary EU budget of just over 1 percent of GDP is very limited. That budget transfers substantial funds of up to 4 percent of GDP to the poorest East European members, which is more than the new fund will deliver. The European Stabilization Mechanism that was founded in 2012 to manage the euro crisis that erupted in 2010 also involves a mutualization of EU debt.

There are two big problems with the cry for a Hamiltonian moment. It is a mindless idea that Europe has to follow the lead of the United States and that fiscal issues offer a panacea. But Europe's main problems lie elsewhere: poor fiscal discipline, incomplete markets, and slow innovation, resulting in very little economic growth. These are the problems Europe needs to solve.

After the euro crisis, the European Union has largely fixed its fiscal affairs. Last year, the composite budget deficit of the European Union was 0.6 percent of GDP, with half the members having budget surpluses. The vast debts of Greece, Italy, and Portugal persist, but the overall situation is under control.

The immigration shock of 2015 has largely been absorbed. At least nine European countries now have a larger share of inhabitants...