We’ll start with the Europeans since I’ve written extensively on this topic over the years.(1)
On the surface of it, the European elites have achieved extraordinary things since the dark days at the end of World War II. Following two catastrophic wars twenty years apart in the first half of the 20th century, Europe has been at peace now for almost seventy years. The countries of Europe have not only avoided open hostilities against each other, they have cooperated in ways that the rest of the world can only gaze on in astonishment.
The European Coal and Steel Community was formed back in 1951 and that experiment in European cooperation led to the formation of the European Economic Community in 1957. That in turn led eventually to the crowning achievement of Europe’s elites, the formation of the European Union in 1993. The euro was launched at the beginning of 1999 and by 2002 euro notes and coins were circulated, marking the end of the former European national currencies. And, of course, while all this was happening the Europeans grew into the wealthiest societies in the world, some of them on a par with, or even ahead of, the US.
The Europeans naturally celebrate these accomplishments – but they give themselves far too much credit. First, the entire European experiment in unification took place in a highly artificial environment, a security cocoon provided by the US, and was therefore never a real-world idea. Second, the flimsy nature of the EU fabric and of the euro were baldly exposed by Europe’s floundering response to two recent crises, the Financial Crisis of 2008 and the crisis in Ukraine. An idea that only works during the best of times isn’t an idea at all, but an hallucination.
In this post I’ll address the Financial Crisis and its implications for the EU. In my next post we’ll turn to Ukraine.
Over the course of half a century Europe’s elites have enthusiastically pursued the idea of a united Europe on the model (eventually) of the US. There is nothing wrong with this vision – except that it long ago ceased to be a thoughtful and worthwhile goal and hardened into a religion. The continent was divided between the enlightened Eurocrats who could clearly grasp Europe’s magnificent future and the ignorant barbarians (racists, anti-immigrationists, nationalists, cultural boobs) who couldn’t.
All along, the elites blithely ignored the facts on the ground: that the European nations had vastly different cultures, that the European economies operated at stunningly different levels of competitiveness, that nationalism is not all bad and most certainly isn’t all dead, that citizens have little interest in delegating decisions about their futures to a remote supranational Parliament. Democracy itself was cast aside, as the elites decided they knew what was best for Europe and would impose that vision on the louts whether they liked it or not. Europe came to be ruled by unelected technocrats at the European Central Bank and the International Monetary Fund, unelected bureaucrats at the European Commission (who run the EU), even unelected governments in Italy.(2)
All this magically held together so long as everyone was getting rich. But then the Financial Crisis hit and the creaky edifice came tumbling down. It turned out that most of Europe hadn’t been getting rich in any useful sense at all. Instead of competing head-to-head with Germany, the US and China, Mediterranean Europe had borrowed itself into penury, using Germany’s credit rating. (This was, of course, entirely in Germany’s interest. Germany lent its credit – via the common currency – to the rest of Europe so they could lever up and buy German goods.) In the good old days, these countries could have devalued their currencies and fought their way back into competitiveness, but in the bad new days they were using the same currency as Germany. There was no way out.
While the rest of the world – including Germany – has recovered from the Financial Crisis, the economies of Southern Europe remain smaller in 2014 than they were in 2007.(3) Unemployment remains at Depression-era levels. Most of Europe is hopelessly uncompetitive in global terms, but there is very little, on a Continent dominated by German interests in the north and an increasingly desperate dolce vita in the south, that can be done about it.
The biggest casualty of the Financial Crisis, though not widely remarked on, has been the demise of the Franco-German alliance that was at the essential heart of the elite vision of a united Europe. The Financial Crisis has exposed France as not just a secondary partner to Germany, but no partner worthy of the name at all. Instead, France has given up trying to keep up with Germany – very much in the way the USSR eventually had to give up trying to compete with the US – and is now trying to create, instead, a Franco-Italian axis. That France has much more in common with its statist southern neighbors than it does with vigorous Germany should have been obvious to everyone all along, but French pride and German guilt kept everyone from pointing it out.
France and Italy might actually succeed in creating a new alliance, but unfortunately it would obviate the entire purpose of the elite’s European experiment. France and Germany have always been the core of Europe, and it has been the conflict between those two nations that turned the Continent into such a bloody battlefield: the two countries have been warring with each other essentially since they evolved as nation states. If France and Germany are no longer in alliance – but are, in fact, members of rival alliances – we are back to 1939.
As I noted in Part 1, when elites fail, they fail spectacularly. The elite version of a powerful, united Europe failed not because the vision was evil or even empty. It failed because of the arrogance with which the elites pursued it. Sometime in the mid-to-late 1990s the idea of a united Europe stopped being interesting or promising or audacious and started being bigoted.(4) From that point on it – and Europe’s elites – were doomed.
Today, Europe’s elites are everywhere in retreat and euroskeptics are everywhere in the ascendant. As so often happens when elites fail, what replaces them might be far worse. Across Europe, from Britain to Hungary, far right and far left parties are the dominant political forces. These parties aren’t just anti-Brussels, most of them are populist, anti-immigrant, anti-Muslim, and even outright racist (though more often nativist) or neo-Nazi (Greece’s Golden Dawn party, e.g.).
In the European Parliamentary elections, UKIP in the UK is expected to win an outright majority. If national elections were held today in France, Le Pen would outpoll Hollande. In Greece 40% of the population is now under the control of the far left Syriza party. The situation is nearly as bad in Italy, where Beppe Grillo’s Five Star Movement is neck and neck with the European People’s Party, which had heretofore been the largest bloc in the European Parliament.
Perhaps the biggest lesson of the failure of Europe’s elites is that, no matter how sound an idea might be, or appear to be, it can’t be shoved down people’s throats. The resulting reaction won’t just shoulder the existing elites aside, it can create a vacuum into which who knows what rough beast might slouch.
(1) E.g., Creative Capital, pp. 13-24 and 49-53; The Stewardship of Wealth, pp. 10-21 and 43-47.
(2) As James Joyner put it, “There’s something not quite right about trying to save the Eurozone by entirely bypassing the democratic process.” Italy’s Unelected Government, Outside the Beltway, 11/16/2011.
(3) Overall, the EU is recovering even more slowly than after the Great Depression. While Germany’s economy is 4% larger than before the Crisis, Italy’s remains 8% smaller. As Kenneth Rogoff, co-author of This Time It’s Different: Eight Centuries of Financial Folly, puts it, “The question is, what’s Europe’s future for the 21st century? Will they be able to grow and compete with…more dynamic regions?”
(4) Oxford Dictionary, “Bigoted: having or revealing an obstinate belief in the superiority of one’s own opinions and a prejudiced intolerance of the opinions of others.”
Next up: Our Floundering Elites, Part 3: The Europeans and Crisis in Ukraine
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