Opinion

John Lloyd

Europe’s welfare rock has made it a hard, undemocratic place

By John Lloyd
February 9, 2012

Speak now to an intelligent European politician (having assured him or her that the conversation is off the record) and you will discover a deeply worried representative — and one who leaves you in a similar state. Whether they are in the European parliament or a national legislature, European politicians are now constrained to contemplate their powerlessness. And ours.

Ordinary members of parliaments often feel like that. But ministers, even of small states, who have been elected to represent, propose, plan and legislate, now feel it too, and more acutely. Especially in the countries that remain devoted to the idea that the state should protect its people from the hardships and, in some cases, the vicissitudes of life, people have been accustomed to expect much more in the way of protection. But politicians must now offer less. For many citizens, that provision, coupled with security, was the point of government. But now, as each week brings little respite, ministers, prime ministers and presidents feel powerless.

In part this is because one state, Germany, emasculates all others. It acts — nominally — with France, but the latter’s weakened economy and politically weaker president, Nicolas Sarkozy, makes the duopoly at the apex of the European Union one of the weak providing political cover for the strong more than a true meeting of equals. On Angela Merkel’s decisions, and those of the German parliament, hangs the fate of nations. She has not wished it so: Those who make the parallel between the Nazi savagery of 70 years ago and Germany’s present power indulge in a facile radicalism that owes nothing to observable reality. Yet however reluctantly, she disposes for a continent.

This reduces politicians in other states to colonial administrators, constrained to follow the policies determined by Berlin, endorsed by France, and proclaimed as inevitable by prevailing economic opinion. It means that when their unions demonstrate, their small businesses cry for help, their students grow hopeless about jobs and careers, and their vulnerable and aging citizens grow fearful for their supports and pensions, they can only say: It will pass, we will return to growth and the good times will roll once more. And yet they don’t know if it’s true.

They are paralyzed, caught between two sets of headlights bearing down upon them. Germany has decreed that all members of the euro zone sign on to a pact that will make  the economic and financial levers of national governance dependent on a central EU power — a move on which the European citizens are not to be consulted and that comes at a time when there is a gathering revulsion against the Union.

To say it is undemocratic is to say the obvious. In the member states, parties of the far right and left, long hostile to the EU, denounce it at meetings and in statements. The strongest of the extremists of the right, Marie Le Pen’s Front National party, which poses a real threat to Sarkozy’s ability to remain on the ballot through to the second round of France’s presidential election in April, has soft-pedaled its racism but accelerated its anti-Europeanism. One of its militants, a translator named Guy Rondel, was quoted in the Financial Times this week as saying that “I think we should leave Europe. They decide everything and we have no say.” How much that remains a minority view depends on the success of the French president’s Merkel maneuver. Failure would play well for Ms. Le Pen.

If countries took Mr. Rondel’s advice, and left “Europe,” or at least the euro, then, indeed, democracy could be restored. Control of the currency would allow a devaluation, making domestically produced goods cheaper both at home and abroad. Fiscal decisions could again be taken by ministers. Industries could be protected.

But the relief would be temporary. Indeed, it might be illusory. The restoration of the drachma, the peseta or the lire would be followed by a ferocious attack on the new/old currency, driving it down — and leaving the government and the banks with debts even more vast because they are still denominated in euros. Unemployment, already high, would leap. Faith in conventional politics, already faltering, would collapse. Democracy would tremble, extremism gain.

The promise of the EU was to provide both protection and dynamism; the former from a welfare state, the latter from the removing of barriers to the international market. Protection, in many states, cannot be sustained at past levels. Dynamism, meanwhile, happened largely in Germany and the Scandinavian countries, while the southern states borrowed heavily over the past decade to finance their welfare states and disguise their decreasing competitiveness.

Governments, banks and corporations were all complicit in this. But so were citizens, forgetting all the tedious old warnings, dating back as far as Polonius in Hamlet: “Neither a borrower nor a lender be.” (And wasn’t Polonius king of the bores?) They racked up easily extended debt, careless of a reckoning. Now the reckoning is here, and its stakes are higher than even the Poloniuses thought.

Faced with a rapidly devaluing mandate, the intelligent European politician can do little but hope that Germany, the great European phoenix of our time, knows what it’s doing and will do it with care, returning us to growth. But it will do so without our assent. Because we have taken ourselves into a cul de sac from which there is no democratic exit.

PHOTO: A combination of three pictures shows German Chancellor Angela Merkel as she reacts during a discussion of the BELA (Broader European Leadership Agenda) foundation at the Neues Museum art gallery in Berlin, February 7, 2012.    REUTERS/Fabrizio Bensch

Comments
9 comments so far | RSS Comments RSS

Errrr… the whole point of leaving the euro is so you can DEFAULT on your debts. So no, whatever happened to the currency you would not be left with a pile of outstanding euro debt because you would have DEFAULTED.

Greece has a particular problem because the can’t get ris of their primary deficit, but that’s another thing entirely.

And for the umpteenth time it was NOT the European social model that brought us here. It was the Anglo Saxon financial model. There is no need to rewrite the terms of the European social model and every need to address the problem of financialisation of the economy.

Posted by Dafydd | Report as abusive
 

“This reduces politicians…to colonial administrators, constrained to follow the policies…proclaimed as inevitable by prevailing economic opinion…when…unions demonstrate,…small businesses cry for help, students grow hopeless about jobs and careers, and…vulnerable and aging citizens grow fearful for their supports and pensions,…they don’t know [what the future holds].”

Welcome to the real world. The socialist economies of many Euro countries have long shoveled out greater citizen benefits than their actual economic productivity could support. Their life has been in an alternate reality in material conflict with pertinent facts and all that has changed is that the disconnect is finally too great to continue to ignore.

Germany did not create the bad tidings they must today deliver. As perhaps the sole member economy of sufficient production and capital to keep the Euro train on the rails, is it any wonder that Germany demands “cold turkey spending reductions” essential to the preservation of a European Union capable of eventual economy recovery?

So the very monkeys who mismanaged this circus complain now that they are forced to live within their means that the process is undemocratic? Of COURSE the process is undemocratic, and of COURSE European citizens accustomed to spending like drunken sailors on leave exhibit “gathering revulsion” to their “plight” of no longer being able to write checks with no money in the bank!

@Dafydd,

“There is no need to rewrite the terms of the European social model and every need to address the problem of financialisation of the economy.”

Yeah, right…don’t preach to us, just send money. Typical college student rationale.

Posted by OneOfTheSheep | Report as abusive
 

Where is the word undemocratic coming from? Voters can vote in any kind of Government they like – pro-Europe, anti-Europe, leave Europe, stay in Europe. Dempcracy = Government by the people; a form of government in which the supreme power is vested in the people and exercised directly by them or by their elected agents under a free electoral system. I think this sounds pretty much like Europe!!! Sorry, but this article just plain misses the point in my eyes. The problem in Europe is financial incompetence, not democracy in any form. So, why shouldn’t Germany, being a responsible parent reign in the wayward spending Children, Go for it Germany and France, and rap their knuckles with a ruler at the same time.

Posted by xini | Report as abusive
 

Agree entirely w John Lloyd’s comments and find the first two posts representative of the diametrically opposed capitalist and socialist positions. As an American who has now lived in Europe for five years and spent a significant amount of the past 20 years doing business in many countries of Asia, I’ve tried to maintain a global perspective while observing the relative decline of the West and Europe in particular. Would consider myself a compassionate capitalist in that I believe the well off have an obligation to help those who cannot help themselves but not to take care of those who simply want an easier life.

Socialism can only work in smaller homogenous cultures where all participants share cultural values and have decided to sacrifice some material wealth for quality of life. As soon as scale develops, the governments get bigger, government regulations create real hurdles for entrepreneurs and the probability of corruption or inept performance increases. After all one has a lesser sense of responsibility when playing with taxpayer money than with one’s own. Additionally, as soon as a population begins to age, the system breaks down because revenues cannot keep up with the cost of promised benefits. Further the days of massive government-sponsored public works public works boosting a Western economy ala FDR’s New Deal are long gone as such programs today do not increase long-term employment in skilled positions which is needed for Western nations to grow; developing nations will dominate unskilled work/production in the long run because employment costs and benefits are far lower.

Improved education is clearly the key but for both Europe and the US where will the money for this come from in the future? Was shocked when London students rioted over increases in tuition costs and heard one student say that the government was “taking away her motivation” to get an education(will acknowledge that tuition changes being implemented immediately does seem somewhat unfair.) In the US, tuition to an average school is easily three times the cost in Europe so students both take out loans AND work while going to school. Will readily acknowledge that US universities tend to focus on job preparation while Europe provides better liberal education but would also argue that in the US one can go to a mediocre school at any age to improve his or her position in society. Having paid for their own educations, students appreciate the value of it more- it is entirely understandable that successful graduates donate vast amounts to their university endowment funds in appreciation(and get a tax deduction for a portion of the donation). In my opinion, the European system helps perpetuate the feudal nature of European “democracy.” The minority who get to go to university are set for life with the top jobs in government and industry and the rest of society accepts mediocrity, in return for shorter work weeks and government promises that they will be taken care of. Meanwhile government lacking any everday work experience continues to implement idealistic policies while avoiding making any decisions that would cause discomfort.(Again, must admit I’m also disgusted by the politics in my own country where we have a president following the European model and a Republican party also far removed from reality and dominated by religious zealots to boot.)

In the final analysis, even if Europe admirably believes that life should be more than work, it concomitantly will have to accept far lower levels of material wellbeing if the rest of the world is working and producing more. French workers on average work six weeks less per year than Americans and Asian country citizens work far more for far less than Americans. An indication of the respect that European bureaucrats have for the citizens of the various countries came earlier this yearwhen the union for the employees of the EU refused to increase the work week from 35 to 37 hours while austerity measures were being introduced throughout Europe indicating that the move would diminish the attractiveness of jobs– and these people have 13 weeks of vacation/time off from work per year!!

Posted by washu | Report as abusive
 

“Germany did not create the bad tidings they must today deliver.”

No, but boy did they profit from it. Germany in particular benefited from having a single currency. “McKinsey management consultants attributing two-thirds of German growth in the last 10 years to the euro’s introduction.”

I see plenty of typical rationale here myself that refuses to look at things on balance.

Not surprising and that particular dislike of the younger generation is thrown in there for good measure. Even though it was under the watch of the older/last generations that these problems festered. Leaving the next generation to deal with the consequences.

Posted by TheUSofA | Report as abusive
 

I hope this doesn’t lead to war. European dicontent amongst the people has led to many wars in the past and killed 10′s of millions of people.

Posted by jjmciny | Report as abusive
 

@TheUSA,

You obviously regard “profit” as immoral. You misinterpreted my parallel example of common and widespread immature behavior as a “particular dislike of the younger generation”? I hope the bitterness of your present envy and prejudice dilutes with passing years.

There is NOTHING I enjoy more than taking an unrelated person up with me on a local flight if the right seat is empty, and many are young. I pride myself on never having scared ANY of them because I tell them what’s going to happen before we crank the engine or well in advance in flight so there are no surprises.

Posted by OneOfTheSheep | Report as abusive
 

I don’t regard profit as immoral but I also don’t believe profit is sacrosanct and that all profits are gained fairly. I suppose using your reasoning “profit” is simply moral then, holy even. No thanks, I think it more important to look at the entire picture and take context into account.

Again, Germany benefited greatly from the single currency Euro, far and away more than any other nation, just to add some perspective and depth when looking at the Euro situation.

I wonder if that tall, pale boy is suffering from “typical college student rationale”? Either way, he’s right that the older generation failed his generation, not the other way around:

“Six inches from the riot policeman’s shield outside the Greek parliament last Friday, a tall, pale boy was shouting at a man who could have been his uncle: “It’s your generation that brought us to this point, but it’s mine that has to pay for it. You have to take responsibility for what’s happening here.” Across the road, a middle-aged woman roared at the line of cops: “Traitors! Collaborators! We’re Greeks. You’re beating up your mothers and your sisters.” Another, her head wrapped in a pink scarf, screamed at the parliament: “They’ve drunk our blood, we don’t have anything to eat. They’ve sold us to the Germans. My child owes money, they’re about to take her house. I hope they all get cancer.” All of them were in an ecstasy of rage, reluctant to go home and lose that temporary release.
-Maria Margaronis (http://bit.ly/ADWgHU)

Posted by TheUSofA | Report as abusive
 

“The restoration of the drachma, the peseta or the lire would be followed by a ferocious attack on the new/old currency, driving it down — and leaving the government and the banks with debts even more vast because they are still denominated in euros. Unemployment, already high, would leap. Faith in conventional politics, already faltering, would collapse. Democracy would tremble, extremism gain.”

That sums up the major risks facing any country that would like to leave the eurozone. It also might suggest how to eliminate those risks prior to leaving the eurozone. If a country paid off all its euro-denominated debts, both public and private, prior to leaving the eurozone, the risks would sum to nil, no? No easy task, but perhaps not unachievable for a eurozone state in which an overwhelming majority are highly determined to leave.

Paying off all euro-denominated private debts might be the toughest task, which would probably require a risky transition period in which new loans are made in a newly re-established national currency that would exist alongside the euro. The only way to get out of the euro safely might be to ensure that such a newly re-established national currency is always slightly stronger than the euro during the transition.

Posted by TobyONottoby | Report as abusive
 

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