Tuesday, July 24, 2012

Euro Mess

Tennessee Jed once said that I read The New Republic so you don't have to. Whenever I critique one of their headline articles, I like to do so only when the article is not just liberal, but reveals the author and the magazine as deeply-imbued with the “Progressive” ideology. Often the prejudice is clear, sometimes not so evident. This past Monday's article, The Weimar Union is one of those where the discussion is about Europe, but actually reveals the author's domestic prejudices.

TNR articles tend to be both erudite and wordy, but I will do my best to cut through the extraneous material and get to the hidden heart of this article. Author Walter Laqueur first discusses the concept that the weakening and perhaps collapsing Euro currency could mean the end of the European Union. He then points out that the chaos which could result might lead to extreme governments in the poorest of the former union members, and quite possibly the same thing for those few prosperous members which have been buoying up the profligate nations in order to protect their own reestablished currency and their borders. None of this is particularly new, and an equal number of conservatives and liberals have discussed precisely the same possibilities.

Laqueur leans toward believing that the cost of dissolving the currency union would prove too expensive for every European nation. He estimates the cost to the poorer countries such as Greece at $14,000 per person if the Greeks dumped the Euro and returned to the drachma as its sole currency. But he doesn't pretend to be a prophet. He also believes that powerful forces in the currency world might decide that the end of the Euro would bring temporary monetary chaos, but a long term recovery and ultimate fiscal health.

It is a very intelligent analysis, and I find little to criticize in his possible alternative scenarios. I tend to lean toward collapse simply because those countries in deepest financial distress are unwilling to take the extreme austerity measures needed to restore fiscal sanity to their social welfare economies, but Laqueur's opinion is not at all far-fetched. Among the scenarios he envisions is the political collapse of the union in the wake of the currency/monetary crises. Most of the rest of his piece revolves around what might happen as a result of political disunion.

This is where Laqueur and I begin to diverge. My belief is that if the currency collapse leads to the end of the political union, the worst that would happen would be a return to a Europe which looks a lot like the Europe after the fall of the Soviet Union and before full currency union and the arbitrary creation of a central European government. Laqueur sees far more dire consequences. He fears the return to the stultifying effects of competing nation-states and bemoans the loss of the civilizing nature of a masterful central government which prevents conflict between competing nations.

I should make it very clear that Laqueur is not an hysteric by any means. He makes it clear that he doesn't foresee anything that would lead to the armed conflicts of the Twentieth Century. His concern is that a few, a lot, or all the continental nations would return to various forms of repressive government in order to protect themselves from the pernicious influence of the other nation-states after the collapse of the central government.

He tries to be fair in his assessment. He thinks that those “repressive” governments could include neo-communist forms, but does seem to lean toward the liberal fear of “fascist-like” governments. Without the central political government, the kids will forget how to play nicely with each other, and will instead compete for supremacy. Anything is possible, but I fear the nation-state a great deal less than most liberals. He points out that significant portions of the populations of certain Euro nations felt that “the introduction of the euro and the relinquishing of existing currencies was never thought of as a hopeful measure of economic and political progress, but rather as a rude affront to national pride.”

He then shores up his centralist beliefs by saying: “Politicians will also use such nostalgia to insulate themselves from the economic hardship as a consequence of exiting the euro zone. They will praise the days before the globalized economy, when it may not have been as easy to acquire great wealth, but at least life was simpler, more familiar, and not as hectic.” He calls those politicians unrealistic, appealing to the populist appeal of nostalgia who are likely to extol the continent's former political divisions. This is a gross exaggeration, ignoring the fact that the euro and the European Union created a great deal more apparent wealth than real sustainable wealth. Centralized government discouraged diversity of trade and innovation in business rather than encouraging healthy market competition.

He worries that disaffected youth in Europe suffering most from the recent economic downturns and financial crises would be too quick to turn to men on white horses. He is not entirely out of step with historical reality on that issue. Angry youth manned the barricades in France during numerous popular rebellions, and in Germany, the Wandervogeln (the hippies of their day) rejected materialism after World War I, embraced pacifism and individualism, and yet became the heart of the heart of the SS. He believes that a benign bureaucracy which has no political stake in various national politics avoids such consequences by centralizing control in one body which has no national loyalty. The loss of such an authority would be part of the “danger” if the European Union falls apart. Rivalry and extreme national politics will replace relatively peaceful cooperation.

My observations lead me to believe that youthful enthusiasm and even anger would likely lead to very different forms of governance in some of the newly-seceded European nations. But they have the lessons of communist and fascist domination to temper their potential extremism. Laqueur concludes that “these movements, whatever form they take, will be unpleasant. These currents of nostalgia and radicalism may push European leaders to look beyond the monetary union and to undo the other institutions comprising the European Union, the single market, the European Court of Justice, the coordination of economic and foreign policy. When these functions are unraveled, the European Union would, in essence, cease to be.” He makes it sound apocalyptic, but is it really?

Still, he has his own sense of redemption as well. “What will eventually bring this to a halt will be Europeans' instinct for self-preservation. Indeed, this faint pulse of enlightened self-interest will also motivate their tentative rediscovery of the virtue of continental unity.” Simply, perhaps even simplistically put, big central government is the answer to all political ills, and sophisticated Europeans will quickly recognize it after the “populists” and nationalists have made a mess of it. If some form of the European Union is not preserved (or restored), only chaos and repression can result.

I leave it to you to decide if Laqueur is right. Before deciding, you should read the entire article: The Weimar Union.

Now, for what kept my attention about the article. It addresses the trials and tribulations of the European Union. But it's Laqueur's analysis that led me to see something else in the article. It is guided by the same Progressive ideology which has played so much mischief here in the United States. Progressives don't much care for the Constitution, and they certainly don't like federalism. Compare Laqueur's belief in an overweaning central government and the danger of a return to nation-states in Europe to the Progressive view of a strong national government in Washington DC which stops petty competition by bending the will of the sovereign states to the federal will.

Change “European Government” to “Federal Government” and change “nation-states” to “states” and Laqueur's entire article can instantly be converted to a Progressive opinion piece on the evils and dangers of American states' rights and the efficiency of centralized government. Europeans don't have a Tenth Amendment. We do, but Progressives simply ignore it or demean it.


Tennessee Jed said...

very good article, Hawk. We cannot know, of course, how things will ultimately pan out. The hopeful part of me likes to think it might lead to a different, and potentially better form of governance. But, as you suggest, I will read the entire article before drawing final conclusions.

Unknown said...

Tennessee: I should have known you would be the first to comment on another TNR critique. LOL

Nation-states (not to mention our own states) have been the source of problems from time to time. But I've always felt that individual nation-states with common internal goals contribute more than they take away. Our Founders thought much the same way, and their prescience led to the states being the "crucibles of experimentation." Obamacare proved that at least one political party thinks that's an old-fashioned and archaic concept. I don't. Federalism--true federalism--produced a great nation with many individual states contributing to the commonweal, while creating a central government with very specific obligations and few opportunities for "getting creative" with an entire nation. Federalism is on the way to the dinosaur graveyard if we don't revivify it in November.

In Europe, Greece created democracy and a primitive form of equality, but one has to wonder what it has contributed since. Meanwhile, Germany plunged the world into two deadly world wars, but afterwards developed very strong democratic institutions and an economic engine that was the wonder of the world.

What has the European Union done that is comparable? Not much. Could a fascist Greece, a communist Italy, and a hardline capitalist Germany do much worse today as nation-states than the European Union? The Union hasn't raised the condition of most of its denizens, but it has managed to produce a monetary crisis unable to react to the vicissitudes of the market and human nature, while forcing new entrants like Ireland to abandon their successful economic policies to support Euro social welfare programs. As a result, Ireland went from boom to bust practically overnight.

All of that said, if the EU headquarters would abandon the current centralized control that it has awarded itself and become a fair referee and negotiator, the original concept of the Union might be restored in a way that could somewhat smooth out the bumps in the continental road.

Unknown said...

One quick thought: Is any governmental entity which would even consider allowing Turkey to become part of its structure worth preserving?

Joel Farnham said...


Here's a thought. If each European nation, in order for it to join the EU, was required to be solvent, I think they would have faired far better.

Unknown said...

Joel: That would be a good idea if the Union itself understood fiscal management and sound economics. But solvency as a condition for membership means very little. As I pointed out, for reasons of their own, Ireland decided it really wanted to join the Union. It was a booming economy, making a lie out of everything that had been said about Ireland's perpetual poverty. For reasons even more obscure, Ireland accepted the EU's conditions of membership, raised taxes, discouraged capital investment, created bureaucratic governmental agencies to conform to the EU's standards, and instituted expensive social welfare programs demanded by the Union. The result was predictable as hell. Ireland's economy went over the cliff, and very little of it had to do with the international downturn. Solvency and massive social programs are simply incompatible.

T-Rav said...

I read an article of Laqueur's some years ago, basically talking about the dangers Europe faced to its culture from a low birth rate and growing Muslim minorities. On the whole, he seems like an okay guy. And, in his defense, Greece and a few other countries have shown signs of extreme nationalist/racialist sentiment gaining ground recently, which is probably what he means when he says "fascist." Most writers on European affairs automatically equate the two.

Unknown said...

T-Rav: As I mentioned in the article, this guy is no loon, nor is he an hysterical liberal. But he is a centralist. The conflation of "fascist" and "racist" is common, and largely accurate. "Nativist" or "xenophobic" might be equally accurate. The reason I find Laqueur reasonable (even if I disagree with him) is he is one of the very few TNR contributors who doesn't think Geert Wilders is a racist for denouncing Islamism.

USS Ben USN (Ret) said...

Excellent post, LawHawk!

Yes, Laquer's centralist proclivities are readily apparent when he says stuff like this:

"He believes that a benign bureaucracy which has no political stake in various national politics avoids such consequences by centralizing control in one body which has no national loyalty."

Benign bureaucrasy? Really? And since when has any bureaucracy in the history of mankind not had a political stake?

The politics of bureaucracy has always been about power and control; although the forms may be different, the substance is always the same.
Bureaucracies become corrupt very quickly, because the bureaucrats in charge are unelected, yet they have the power to rule over the lives of everyone in the European Union.

This is what many in England were against for years before they finally joined the EU.
It's not representative govt..

And that's a huge problem because they don't have an interest in the individuals, only what will make them (the EU authorities) bigger and more powerful.

IMO, such a union could never stay together for long. Because of the political problems and the economic problems it actually creates.
Not too mention the EU rewards nations like Greece (who got some incredibly generous and incredibly stupid loans from the EU and IMF but will squander the opportunity),
and punishes nations like Germany who are successful.

The EU simply cannot remain standing with that kind of fiscally and politically unsound foundation.

The successful nations will not be dragged down by countries like Greece, the people are tired of the taxation without representation (legal burglary) loss of more liberties, and the corrupt bureaucratic control of their lives.

The EU was doomed because it is central control which never last for long because all they do is keep adding to the bills until everyone pulls out or becomes insolvent among all the other idiotic things mentioned in your post.

Other than that, Lacquer wrote a good article. :^)
I am glad he's not a complete loon about it, however.

AndrewPrice said...

I find it interesting that the new argument is "what we did was horrible but stopping now would be even more horrible." How does that make sense? Sometimes, the best answer is to bite the bullet.

tryanmax said...

The only prognostication I am comfortable about making is that whatever lessons can be learned from the EU should it collapse will be wholly lost on the American left who will adopt the policies that led to it in the name of avoiding it.

Unknown said...

USSBen: Bureaucracies are not only corrupt, they are about the least efficient way of getting anything done. They are charged with a certain job, rarely do it, and it if it's done, they have to create other things to do or face extinction. It is creativity of exactly the wrong kind. In a way, bureaucracies don't grow, they fester.

You brought up England, and it brings me to another point about the Union and centralists. England was scarcely ever in favor of joining the Union and giving up its sovereignty. But they were fearful of being "left behind." So they vetted the fundamental documents, got a few concessions, and joined up in 1993 by ratifying the Treaty on European Unity ("Maastricht").

What they saw ain't what they got. One of the flaws in the centralist Union is that most of the purposes and functions of government are not peformed or planned by the participating states. They are done from the central authority. The Treaty quickly became a malleable document in the hands of the bureaucrats who determined what the goals,methods and values of Union should be. The Treaty was a "framework," not a foundational document with enumerated powers and restrictions. England (like certain other nation-states) was surprised at how much sovereignty they had actually given up, and as as the economic union became inextricably intertwined with the political union, things only got worse.

Which brings me back to my argument about centralist thinking. Fully foundational and nearly immutable documents like our Constitution are anathema to centralists because they limit the power of unelected bureaucrats to chart the course for the future for everyone, willing or unwilling. The Union has gone wrong because there was little or no responsibility to the people it exercises power over. This is also the reason that our Progressives and other centralists hate the Constitution and will do anything in their power to negate it or end-run it. "Living constitutionalists" are merely Euro-style centralists in disguise.

Centralists see society as a large primitive life form, each part performing essentially the same functions as every other part. Constitutionalists see society as a full, sophisticated body with each part performing a different but useful function. An arm is quite different from a liver, but each performs a discrete and necessary function. Without that diversity of purpose and function, the body is incomplete, and if certain parts fail, the body dies.

Unknown said...

Andrew: It's the same kind of thinking that says that throwing money at difficulties is not the problem. The problem is not throwing enough money at difficulties.

It's not that the EU central authority doesn't have enough power, it's that it has too little. If you stay the course and give it enough power, the bureaucracy will fix all the problems. If beating your head against a wall doesn't crack your skull, keep doing it until it does crack.

Unknown said...

tryanmax: I'm absolutely sure you're right that the left will ignore the lessons of history and march forward with Euro-style policies even after a Euro collapse. Let's just hope the lesson isn't lost on the center and the right.

T-Rav said...

Judging by what people have told me who have been to Europe far more than I have, there seems to be an almost pathological belief on the part of Europeans (and especially Germans) that a repeat of World War II has to be avoided at all costs. In Deutschland's case, maybe this is some kind of lingering war guilt or whatever. Presumably they believe that a strong central authority is the only means of checking national conflicts. This perhaps accounts for some of their short-sighted behavior.

tryanmax said...

Hawk, I don't think the lessons will be lost on the right. As to the center, they may find and even understand the lessons, but are generally prone to go along with whatever causes the least upset. I thank God we are a 50/50 country, because if we were a nation divided in thirds like most others seem to be, we would be just as doomed as the rest.

Unknown said...

T-Rav: Germany has good reason to avoid any appearance of becoming the bellicose nation it was in the past. On the other hand, Germany has taken a healthy lead in economics, and that's the kind of competition the various European states need. As an economic but independent power, Germany could lead the pack and stir up capitalistic impulses in other less industrious European nations. If Greece or Italy doesn't want to compete and excel, that's their choice. Without the European Union, Germany has far less of a chance of being the major determinant of the success or failure of other European nations. With a centralized and bureaucratic superstate, Germany can be the black heart of that strong central authority. Without the union, Germany has to compete and convince rather than control.

The Common Market worked because France and Germany tossed aside their ancient enmities and decided to promote mutual trade and free markets where the good plans succeeded and the bad plans failed. Politics played a very small part. It was about innovation and creation of wealth, not about regulation. The European Union is about regulation and politics. It is the creation of an artificial unity among very different nations and peoples, and unlike our original federal system, it doesn't have economic and personal freedom as its foundation.

Unknown said...

tryanmax: I know what you mean. "Status quo" is paralysis in most instances. "Go along to get along" is very bad politics. Unfortunately, lethargy plays too large a part in our national politics.

Individualist said...


I found the article interesting but I still find it ironic that these people can write over 1500 words on the dangers of Fascism without once addressing any real point of Fascism.

IF he would do so he might find that the socilist footprint of Fascism is firmly entrenched in the very European Union he praises.

Italy still owns stock in major corporations, aremnant of Musolini's government. The Dutch use subsidies to support their superior trade advantage in shipping and the EU practically funds Air Bus in order to provide the only real competitor to Boeng.

The amount of government involvement in dictating the operation of so called "private industry" in Europe is astounding.

Yet we are led to consider the Fascism of the Extreme Right because they expouse patriotism for their country. I seriously doubt any of the groups labeled extreme right by the author have any belief in constitutional republics, limited government, private property rights or lower taxes. Yet they are "the Right", nonsense.

Musolini was a leftist. he beleived in socialism and he thought his ideology Fascism was an answer to making syndicalism and union based governance work. The Third Way between Capitalism and Communism where the government simply takes the stock of coprporations.

Instead of enlightening us to the truely repressive controls of Fascism that these new Pirate parties may wish to employ we are told to consider their call for nationalism. This idea of a post nation government is something only a communist cares about and in the end is hipocritical in nature since their nation is the socialist collective they wish to create.

As to his assumption that the EU will simply dissolve, maybe it will and maybe it won't however it mayy be impossible for any new countries to get rid of the free trade provisions across national borders.

Case in point, Insurance. The EU created a unified standard for insuracne providers that have to be accepted by any member countries. The net effect of this is that individuals can buy insurance from any company in the union.

The insurance industry will make it very difficult for a new government to abondon these standards. Especially as the regulation properly aids their market. Even after a collapse these methods of doiing business survive into the next political regime since the populace knows this method of obtaining the good or service.

What the final result will be I am not certain but there are plenty of liberal memes that are just accepted that are to my mind without a basis in how people live their lives.

It is a well written article,I just find that the individual has very little financial and economic background to be able to make an informed decision about a debt crisis. Sadly, the men handling the crisis in the political circles probably had as much understanding as him.

Unknown said...

Indi: Good discussion. Fascism is a great deal more than ethnocentrism and overblown patriotism, a fact most liberal miss. I don't get into the debate about fascism versus communism since they share two common traits--socialism and repression. Thinking the two are mutually exclusive is a common mistake. They have similar goals, just different methods. I prefer the terms "centralist" and "statist" for most purposes of discussion, unless the discussion is about which method is best for enslaving human beings.

T-Rav said...

LawHawk, I personally stopped worrying about the Germans repeating history some time ago. They don't have the manpower for it. Of course, there is the possibility that they will come to economically dominate Europe (to the extent they don't already) but hey, that's the market for you.

Unknown said...

T-Rav: And I think there's more chance of them dominating Europe economically by free state competition than by pulling the strings at EU headquarters. Laqueur is of French descent, so he thinks that's a bad thing. I'm of German descent, so I think that's a good thing. LOL

Germany could still mount a rather formidable military force in a short period of time if it chose to. But why should they as long as we provide the vast majority of the firepower needed to protect Europe? It couldn't rival American, Russian or Chinese military strength, but France would be a sitting duck (not exactly something new). Germany hasn't lost its military talent, it just has no reason to exercise it. A smaller military leaves more money for profitable ventures.

Post a Comment