Sunday, May 20, 2012

Europe's New Normal

This article begins, “The eurozone's troubles no longer qualify as a crisis, an unstable situation that could either quickly improve or take a dramatic turn for the worse. They are, instead, a new normal -- a painful situation, to be sure, but one that will last for years to come. Citizens, investors, and policymakers should let go of the idea that there is some magic bullet that could quickly kill off Europe's ailments. By the same token, despite the real possibility of Greek exit, the eurozone is not on the brink of collapse. The European Union and its common currency will hold together, but the road to recovery will be long.”

The underlying assumption for this article is that “economics” trumps all other concerns. It doesn’t specifically address my concern but if it did the author might invoke Fukuyama and argue that we are at the end of history. There is nothing for any of us except Liberal Democracy and Germany is in it with the rest of us; so they are just going to have to learn to live with its inequities.

As it happens I am reading several books about the American Civil War and notice a parallel between the American and European States. Eighty years previously the 13 colonies divorced themselves from the British Monarchy: “if only we can be free from British control we shall be at the end of history as we know it” [my paraphrase], but in the interim between this obtained freedom and say the 1850s something reminiscent of the above article occurred. That is, some states didn’t want a central government telling them what to do. Other states believed that a central government was necessary.

It took a long time for this stress to create a crack but that crack occurred in December of 1860 when South Carolina seceded from the Union. They weren’t doing anything illegal. Nothing was in the constitution that said they couldn’t do that but after several other states followed suit, President Lincoln by executive order declared such secessions illegal. And so the two sides went to war. Both sides believed in the 1861 version of Liberal Democracy but they went to war anyway.

To argue that this sort of thing can’t happen in Europe in 2012 is one most Europeans would agree with, but most Americans in 1850 would have argued that the American States could never go to war with each other, and yet in 1861 they did. Both sides believed in the same things more or less but one side didn’t want a central government telling them what to do.

[By the way, slavery wasn’t initially a major issue. Lincoln didn’t go to war because of slavery. The war officially began April 12, 1861 when Fort Sumter was attacked by Confederate Forces. The Emancipation Proclamation freeing the slaves was declared January 1st, 1863 and the historians I’ve read suggest that the primary reason for it to have been declared was to keep Britain from providing support to the Confederacy. Slavery was illegal in Britain but as long as it was legal in both the American North and South Britain could continue to favor the South; after the Emancipation Proclamation that was no longer politically possible.]

Saturday, May 19, 2012

Germany can't make Germans out of us

This from the Matt Cooper of the Irish Examiner: “Germany is behaving like the euro is a pain in the ass to it, that it has received little or no reward for adopting it as its currency, that it wishes that it never gave up its Deutschmark as its own prized currency and that, now that it is stuck with the euro, it will be damned if it is going to pick up the tab for the fecklessness of other European nations (including us).”

Cooper presents his analysis of Germany’s economic history and summarizes, “So it is complex and multi-faceted. It is easy to see why the German public does not want to foot the bill for the euro going wrong. But let’s not forget how much the euro has contributed to the existing great wealth in that country.”

I can’t see Germans responding favorable to that argument. Here I am, not a German, but nicely retired after 39 years in aerospace. Suppose Governor Brown and President Obama were to hit me with huge taxes. Suppose I complained and received the response, “don’t forget, Helm, you got through college on a government sponsored G.I.Bill. You then worked for most of your 39 years making aircraft for the U.S. government. You benefited from all that government support in your earlier days; so suck it up, Helm, and shell out.” Is that a valid argument all ye logicians? I don’t think so and here is why: The European environment presented Germany with the prospect, “perform in certain ways and receive benefits accordingly.” Now the EU (at least Ireland) is reneging. They are attempting to retroactively say to Germany, “perform in certain ways and receive benefits accordingly unless we get in financial trouble and then we will need some of your money.”

Germany is in a better situation than I am. The EU can’t force them to cough their money up, but the state of California and the Federal Government can arrest me if I don’t mine. On the other hand there is a vast history of individuals being taxed more and more by governments who decide they need more and more money; so I shouldn’t complain. Here, come take my money. I’m used to it. But will Germany see it the same as I do?

Germany and a danger of liberalism

In the May 19, 2012 edition of Inland Southern California’s The Press-Enterprise is the editorial by the historian Victor Davis Hanson, “Europe would be wise not to provoke, isolate Germany.” In it he writes, “All over Europe, the gospel is that tight-fisted Germans are at the root of the European Union meltdown: They worked too hard, saved too much, brought too little and borrowed not at all. All that may be true, in theory. But, in fact, faulting thrift and industry is a prescription for incurring anger and guaranteeing backlash – especially in the case of the Germans, who are now asked to provide even more capital to help other European economies to recover.”

Hanson alludes to the various attempts to contain Germany since the Franco-Prussian War and while no one has quite said that they are today thoroughly “contained” or at least thoroughly different than they were in World Wars One and Two, they are being treated as though they were. Hanson writes, “the very thought of an armed, powerful – and increasingly exasperated – Germany, furious at its neighbors for a fourth time seems silly.”

Perhaps no one in Europe is talking about war at the present time, but no one in America was talking about war when South Carolina seceded from the Union in December of 1860. Who would go to war over such issues as “States’ Rights” and “Federal Union” most Americans might have asked earlier in 1860? The assertion in the middle of 2012 that another European war between Germany and the rest of Europe is impossible involves a considerable amount of unsupported faith. War may not be likely but it isn’t impossible and a recollection of our various histories will keep us mindful of this interesting human characteristic, the willingness to go to war for all sorts of reasons.

Hanson concludes by saying “History is quietly whispering to us in our age of amnesia: ‘I would not keep poking the Germans unless you are able to deal with them when they wake up.’” Surely, the liberals of the world will be quick to assert “Germany would not start a war since Russia and the U.S. are in possession of weapons more powerful than any they possess.” But will Russia in the midst of internal turmoil choose to go to war with Germany to protect other Europeans? And will the U.S. war-weary after years in the Middle-East want to fight Germany over the right of Italy, Greece, etc. to be improvident? I think not.

Perhaps someone living in Germany would scoff at these suggestions, and yet . . . there were great numbers of Americans who didn’t want to be independent of Britain prior to and even during the American Revolutionary War. And the choosing up sides to fight during the American Civil War was a complicated business. Generals who were once classmates met each other again on the field of battle, and brother in actual fact often fought against brother. So even if in Germany most would rule war out. Others have drawn a mental line. They are saying to themselves, “we worked hard for what we have. Others did not. Despite our warnings they have bankrupted themselves and now they have the temerity to demand that we give them our money? This is not to be borne. This cannot be permitted to happen. Let them try to take it if they have the strength.”