ANALYSIS/OPINION:
The kaleidoscope of events and mock events is moving so rapidly in the European crisis that even a dedicated netizen trying to follow the news finds himself bemused.
It might be good to look at a little history:
The European effort to unify — after two bloody civil wars of near-annihilation and the post-World War II threat of Soviet communism — began with economic integration. According to its primarily French and German sponsors, political unity — given the long history of national, racial and ethnic conflicts — eventually would fall into place after economic coordination had been achieved. Somewhere down the line, Europe’s idealistic if elitist architects believed, a united Europe would achieve something like North American unity.
A step-by-step customs union followed the 1951 formation of the six-nation European Iron and Steel Community, the seed for the amalgamation that became the European Union. That body reorganized what was then the region’s most important industry in the face of diminishing domestic raw materials and need for revised marketing.
But when the visionaries — often slowed down by parochial interests — finally got around to a monetary union in 1995, they jumped a cog. For the relatively easy creation of a common currency and a central bank did not ensure coordinated national economic policies or, perhaps more important, coordinated national bureaucracies. In fact, some of Europe’s strongest economies, such as Britain and the Scandinavian countries, opted out. To do otherwise would have required commonality that did not exist even among the most advanced economies, to say nothing of the bloc’s less-developed members.
It was inevitable that when — not whether — a major crisis hit the world economy, the euro would be imperiled. For it was being used by participating governments for their own individual economic strategies rather than for any common development purpose. German Chancellor Angela Merkel may now well say that the euro’s preservation, not Greece’s more parochial interests, is the issue. But that, too, is 20/20 hindsight. The inability to solve the euro crisis quickly has brought into question the continued successful pursuit of European unity.
In fact, the southern European countries pretended that the euro was a truthful representation of their productivity. They used its perceived unlimited resources to fund a standard of living that their productive capacity did not, in fact, support. Outrageous “benefits” — the retirement age in Greece is 50 — were accorded a population only a generation away from the horrors and privations of World War II and the Great Depression. Cities such as Barcelona and Athens increasingly embraced “la dulce vida,” a lifestyle that their economies could not really support.
Crunch time revealed a stark dilemma: Northern European taxpayers with their higher productivity must rescue their southern European spendthrift compatriots, or southern Europeans face slashing their living standards to levels not seen for a generation. The German taxpayers, their French fellow travelers, as well as minor players such as the Dutch, Austrians, Finns, Estonians and Czechs are yelling foul.
Furthermore, there is a danger that such cutbacks may reach the bone, destroying these poorer economies’ ability to restart the long-term drive to higher productivity and the just rewards of higher living standards. (This is a fundamental problem of Continental economies with backward areas, a problem not unknown even in the U.S. with its vast homogenization. One element in the present American economic debate: How far does federal taxpayers’ largesse extend to Mississippi and Arkansas?)
What’s at risk, of course, is the whole post-World War II concept of a universal, representative European government. There was applause in obscure corners for Greek Prime Minister George Papandreou’s brief threat to take the issue of Greek “suffering” to the people for a referendum rather than impose it from above — even from an elected government. Good try! But, perhaps to the long-term detriment of true European democracy, the threats coming from northern Europe and the Greeks’ own political maneuvering will permit authorities to paper over the crisis. The risk is grave, of course, that mandated “solutions” from above — the curse of Brussels for a generation now — may run into bedrock popular resistance and even civil unrest.
Can the center — as it could not in the 1930s — hold? That may be the question of the hour.
• Sol Sanders, a veteran international correspondent, writes weekly on the intersection of politics, business and economics. He can be reached at solsanders@cox.net and blogs at https://www.yeoldecrabb.wordpress.com.
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