Tuesday, February 21, 2012

Greek Ruins

The latest "bail out" of the Greek economy should fool no one.
The agreement is a band aid on top of a band aid, and only delays
an eventual collapse of the Greek situation and further deterioration
of the whole European economic crisis.

The seeds of this financial disaster in Athens were sown at the very
beginning of the European unity experiment when, soon after World
War II, the visionary dream of Jean Monnet and others was to create
an economic structure that would be followed by a political structure,
each step that would unify the continent and eliminate a millenium of
violent conflicts between the nations originally created by the various
barbarian tribes which lived in the region.

As Euroskeptics have warned throughout the many decades of the
development of the European Common Market to the present
European Union, the strategy at the outset, however well-meaning,
was flawed. It was understandable that, after two unspeakably violent
and murderous wars in the 20th century, following countless brutal
conflicts over many centuries in the region, there was a desire to
restructure the continent so that instead of jealousy and revenge,
religious persecution and totalitarianism in many forms, there would
be commercial cooperation, tolerance, mutual respect and democracy.

M. Monnet and his colleagues, however, proceeded to construct a
top-down structure of the New Europe. Perhaps knowing that modern
democratic forms were mostly unknown to the populations of the
various surviving nations of Europe, they did not have confidence in the
European masses, and assumed a paternalistic attitude of recreating the
region without building what we Americans call "grass roots" support.
It is probably true that the only major European nation which resisted
this, and only gradually found its way fully into the Union (minus
accepting the Euro, the new currency of most of the continent) was Great
Britain which had been the mother (albeit a reluctant one) of the
American democracy. (Most Americans, for whatever shortcomings U.S.
democratic structures have, would find the political process which Europe
has taken to be unthinkable and unworkable.)

I am not suggesting that Mr. Monnet's impulse and goals were not good
ones, even necessary ones. After so much human slaughter and suffering,
there had to be a better way to conduct the affairs of this large and
important part of the world. Democratic capitalism, a child of the
Industrial Revolution of the 18th and 19th centuries, in fact was born in
the cities of northern Europe. But another child of Europe, socialism,
had greater influence on the new nations of the continent, and a new
form, the social welfare state, emerged as the dominant economic
model. In this model, the needs of the populace were relegated more and
more to the central government of each national state, particularly in
providing unemployment insurance, education, health care, industrial
controls, taxation, old age pensions, etc. Prominent economic theories in
this period asserted that these costs and services could be provided
indefinitely by postponing growing debt resulting from them into the
future. (The same theories were temporarily put in practice on the other
side of the Atlantic, but soon after the Viet Nam War were primarily
rejected as destructive to an ongoing healthy economy.)

In Europe, however, the economic model was increasingly imposed on
the intranational structure that was becoming more and more political
as well as financial. But two main factors were working against this
process. First, of course, the economic model was fundamentally
flawed. At some point, the accumulated national debts would be
confronted by the "Piper" who would demand to be paid. The notion
that debt could be put off indefinitely was a fantasy. Second, although
it was an obvious improvement to eliminate passports, tariffs and other
impediments to free trade and passage between the European nations,
the top-down structure did not accommodate over time the different
languages, traditions and customs, and self-interests of each component
of the New Europe, the former nations developed over centuries from
the original barbarian tribes. One major reason this happened, I have
suggested, was that the "visionaries" who created the New Europe had
done so without building and receiving a slow and careful approval from
the populations of each nation. As long as the New Europe was bringing
apparent prosperity, of course, objections were relatively few and isolated.
But as the original group of nations, most of them recovering nicely from
the catastrophes of world wars (thanks in part to long-term economic and
military aid from the U.S.), were expanded to poorer nations, economic
crisis became inevitable. Large waves of immigration from outside Europe
to provide labor for the post-war European boom profoundly has
complicated this crisis, as Europe evolved from its traditional Catholic and
Protestant constituencies to much more secular ones whose traditions were
challenged by the immigrants.

In short, there is now an economic and political crisis in Europe which
cannot be resolved by "bail outs" and other economic sleights of hand.
The problems are not only endemic in the newer "Euro" nations of Greece,
Portugal and Spain, they now reach farther and farther into Germany,
France and The Netherlands, some of the more successful economies,
as well as Italy, chronically one of the financial and political "trouble
spots" of Europe.

Whether now or at some "postponed" date, the "Piper" will have to be
paid. Those who will have to pay include most of the citizens of Europe,
i.e., the pensioners, the shareholders, the small businesses and those
dependent on public welfare. These are most of the voters in Europe,
and thus we understand why the politicians continue to delay resolving
the crisis.

The United States is not immune from many of these problems, nor
more immediately, would it be unaffected by a worsening of the
European crisis. Americans hold European debt and American
business depend on European trade. This is why the Obama
administration acts in ways that resemble European administrations.

Behind the "bail outs" is a massive deception, that is, that everything
will turn out all right if only we can postpone dealing with the Piper
who wants to be paid. Greece is the focus of today, but the crisis
will emigrate quickly wherever it can, like a river exceeding its banks,
like a volcano emitting merciless lava in all directions.

Copyright (c) 2012 by Barry Casselman
All rights reserved.

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