Another week, another E.U. bailout agreement
Once again German Chancellor Angela Merkel has had to dig deep to ensure that the euro zone can limp along for a little longer without any single nation defaulting.
And this story changes day by day. No sooner has Germany rescued the euro, Greece apologises and says they can’t meet the deficit targets – no more savings can possibly be achieved through austerity.
But as economists chart the course of this rollercoaster ride of expected default and the potential catastrophe of the entire European single currency project unwinding, is anyone paying attention to the social effect of all this uncertainty?
I don’t mean the pain of the middle classes ruing the days their house would increase in value week by week, I mean the potential for a completely different system of politics.
The political answer to the crisis in Europe is austerity. Public sector jobs are being slashed, taxes are being increased and more widely enforced, and state services normalised over decades are suddenly being cut.
Yet faith in centre-ground politicians is possibly at its lowest ebb since the end of the First World War. The general public has a very low tolerance for their elected leaders at present and non-economists generally view austerity packages as the wrong approach for repairing damaged economies.
This is not an argument focused on spending our way out of trouble. Forget the politics for a moment and consider how many unthinkable truths have become normal in the past few years.
Most of us had previously only ever experienced a run on a high street bank when watching Christmas repeats of ‘It’s a Wonderful Life.’ Ex-government ministers have been jailed for fraudulent expense claims and dozens have been forced to repay public money used for their own convenience. The housing market is no longer a secure investment for the future, and now most young adults cannot even dream of owning their own home. And to cap it all, The News of the World is no more.
If anyone had predicted these events in 2007 they would have been dismissed as a fantasist, yet as we watch enormous amounts of public money being used to prop up the banking system, those same bankers are posting profits in their annual reports and awarding themselves fat bonuses.
On the surface it would appear that all the maxims we once held about economic growth being healthy, and leading to jobs and prosperity, have been swept away leading to something that feels like post-war austerity. The only thing we don’t have yet is the ration books, but with soup kitchens now being overwhelmed with demand, it feels like a vague possibility.
A general discontent has already sparked riots in the UK. Greece has daily violence contained by a riot squad that is now on permanent alert. Wall street has been occupied in the U.S. and this week protesters are ready to occupy the London stock exchange. The people have had enough and are now ready to oppose the state mechanism – and figures of authority – that caused this mess in the first place.
Ordinary citizens are now ready to break the law and even to swear at police officers, much to the chagrin of London Mayor Boris Johnson, but this doesn’t feel like law breaking any more, it feels like a cry for justice.
The danger is that extremists will be the ones who shout loudest and clearest. The centrist politics of Europe, and even the British coalition, will be seen as useless in times that demand a more direct response. And given all those unthinkable changes in society since 2008, who could rule out a complete overhaul of the democratic process because the people have had enough of the present system that is no longer seen as representative?
In 1933, Adolf Hitler became Chancellor of Germany based on three principles; Lebensraum, or expanding the nation to include other German-speaking countries, anti-Semitism, and anti-communism. The wealthier European states of today, such as Germany, France and the UK, are not actively seeking to establish new empires, but it cannot be denied that people are withdrawing into their own indigenous tribes and fearing the outsider.
The free movement of labour across Europe is blamed for reducing wages and enhancing structural unemployment – footloose foreigners can flit to where the work is located and live twenty to a house, but the jobless of Tyneside cannot just relocate their family to Berkshire. Though the British National Party were roundly defeated at the 2010 general election, various elements that would encourage greater extremism seem to be falling into place.
As we remember the seventy-fifth anniversary of the battle of Cable Street this week, it would help if some of our present day political leaders thought longer and harder about shackling themselves to austerity. Economic engineering is needed to help create a genuine recovery, but who is going to monitor the social engineering that will also take place during this lost decade?
Image — German Chancellor Angela Merkel and European Commission President Jose Manuel Barroso (R) address a joint news conference at the European Commission headquarters in Brussels October 5, 2011. REUTERS/Francois Lenoir