My last post garnered a lot of comment. Some readers assumed I was advocating for an immediate Grexit, while others wondered where I stood on the issue. Just to set the story straight (spoiler alert!), here are my views in a nutshell:

Whether Greece stays or goes is hugely less consequential than the overwrought stuff you read about in the newspapers.

I’m largely indifferent as to whether Greece goes or remains, with a slight preference for their remaining at least in the EU, even if not in the Eurozone. (But with an even slighter preference for the latter.)

What really matters is not Grexit or non-Grexit, but the terms under which Greece – and everybody else – stays or goes.

Although Europe has had its collective head in Cloud Cuckoo Land(1) for many years, it didn’t start out that way: what initiated the idea of European union was hardheaded realism. When the Second World War ended in 1945, people looked around and noticed that the last two devastating world wars, plus the biggest war in the world before that (the Franco-German War of 1870), all had their roots in the bitter competition between Germany and France. The European Coal and Steel Community (ECSC, 1951) was organized to force the two countries to work together more constructively. They could compete economically, culturally and politically, but not militarily.

The idea of European integration, with Germany and France at its core, proved to be wildly popular. The ECSC morphed into the European Economic Community (EEC, 1958), which morphed into the European Union (EU, 1993). The EU quickly boasted twelve member nations, including Greece, which had joined the EEC back in 1981.(2) Eventually the EU would grow to 28 absurdly-diverse members, most attracted by the ever-growing affluence of the EU’s population. Layered on top of this was the Eurozone, a subset of 19 of the EU members who agreed to use a common currency.(3)

An integrated Europe was, as far as I can tell, the single most successful multinational unity project in the history of nationhood. The Europeans are happy to take credit, and rightly so. But let’s not forget how and why it really happened.

After World War II France fully intended to punish the Germans a la the Treaty of Versailles, but, fortunately, France wasn’t calling the shots this time.(4) The US took a different line and used the Marshall Plan to help Germany rebuild and join the democratic community of nations, aligned en masse against the USSR. After that, two factors enabled the US to enforce German-French cooperation: the Europeans’ fear of the Soviet Union and the fact that Germany, and, to a far greater degree, France, stopped mattering on a global scale. The first factor – fear of the USSR – ensured that the Europeans would do just about anything to stay under American military protection, including cooperating with each other whether they liked it or not.

The second factor was equally important. Although we hear a lot about how powerful Germany is, they are only powerful on a regional scale and relative to the other, increasingly puny, European countries. Germany’s GDP is only one-quarter that of the US, and is well below that of China and Japan. (In France the ratios are much worse: its GDP is about one-sixth that of the US.) As separate countries, Germany and France simply don’t much matter geopolitically and they don’t matter at all militarily. No one is worried about a Would War III starting between Germany and France because the US, China, Japan and Russia (and increasingly, India) wouldn’t let it happen. Germany and France could only continue to matter economically and geopolitically by locating themselves at the core of 28 allied nations that for a time constituted, in aggregate, the world’s biggest economy.(5)

That’s all well, and good, but it led directly to Cloud Cuckoo Land. To understand what a lunatic idea a unified Europe has become, it’s useful to compare it to the situation in China. In both China and Europe people agreed to exchange freedom for affluence.(6) In both cases it wasn’t an entirely stupid idea, since post-war Europe and post-Mao China were both very poor. But in both cases it turned out to be a Roach Motel.

China is now growing at one-third its former rate, but its people are still unfree. It’s one thing to be unfree and rich, but another thing altogether to be unfree and poor. The Chinese made a bad bargain, and no one knows what the future holds for the Communist Party or for China itself.

And in Europe, the economic crisis and its aftermath have stopped economic growth in its tracks – but the Eurozone countries aren’t free to do what needs to be done about it. It’s one thing to lack sovereignty and be rich, but another thing altogether to lack sovereignty and be poor. Countries like Greece made a bad bargain, and no one knows what the future holds for the Eurozone or for Greece and similar countries.

But just because you’ve lived in Cloud Cuckoo Land for three decades, that doesn’t mean that you have to stay in Cloud Cuckoo Land forever. There is that bit of advice about dealing with a mule: you knock it upside the head with a two-by-four, and now that you have its attention, you can begin to reason with the animal. Greece knocked the Eurozone upside the head with a (very large) two-by-four, and Greece now has Europe’s full attention. Cloud Cuckoo Land has gone to the birds and Europe, led by a very annoyed Germany, has evolved very quickly from frivolous naiveté to realpolitik.

We’ll look at the implications of that evolution in my next post.

(1) In case you forgot, Cloud Cuckoo Land was invented by Aristophanes in his play, The Birds. It refers to a world that is perfect in every way but which exists only in the clouds and which, in any event, comes a cropper. Aristophanes may have thought things were screwed up in Greece 2,500 years ago, but clearly the man had no idea.

(2) People have mainly forgotten that Greece was actually admitted to the union in 1961. However, the country became a dictatorship in 1967 when the colonels took power and Greece’s membership was “frozen” for two decades. An unheeded canary-in-the-coalmine.

(3) As noted in my last post, Greece adopted the euro not because it thought a common currency was a good idea but because the drachma was under constant attack by currency speculators.

(4) Although President Wilson had put forth his Fourteen Points as a basis for resolving Would War I, he was badly outmaneuvered by the French and British. In the end it was Marshall Foch (who, despite his name, was the ranking French military officer), who negotiated the final, humiliating treaty with the Germans.

(5) Although you still hear that the EU is “the largest economy in the world,” the combined GDP of all 28 EU countries is actually below that of the US, according to the most recent IMF figures available (4/15): US GDP = $18.1 trillion, EU GDP = 16.4 trillion. Thanks to Charles Miller for pointing me to the most recent stats.

(6) In China it was personal freedom that was sacrificed, while in Europe it was economic freedom and sovereignty.

Next up: Greece and the End of Political Innocence (Part 3)

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