The Euro-Marital System
The United States was a good idea. Here was the new continent setting its face against the old one and needing the heft that cooperation between the various signature states could provide. It was not an easy merger, but it happened, and once the tragedy of the Civil War was over?a sign of the last profound difficulty in the story?life could go on. We see the results all around us.
The United States of Europe may not be such a good idea. I've used this space for some time mantra-ing reservations about the euro common currency and the various federal arrangements that are supposed to reveal the emergence of a unified Europe able to compete with America and Asia. More important, the theory/dream/plan is that the unity expressed by the European bureaucracy and other structures will make the once-endemic and frequently ruinous European wars a thing of the past forever. To this end, a number of the influential founders of the European idea were French, anxious to create a structure within which Germany could be contained, and German, anxious to do anything to deal with the guilt and despair caused by the Nazis. But now the two most recent and most powerful proponents of the system, Mitterrand in France and Kohl in Germany, are out of play. It's not clear the current actors foresee a smooth surface on their interstate under construction.
Two recent events have baffled Europeans committed to the Community. One is the seemingly inexorable decline in the dollar value of the euro, from about $1.18 when it was issued to around 87 cents as I write. This is a remarkable drop when we consider the euro is composed of, among other currencies, the Deutsche mark, which for decades was one of the world's strongest currencies, and of which Germans were understandably proud given their history of gross inflation just before the Nazi era. Why, Germans may well ask, is the value of their economy so much lower on the world market these days? Because they're subsidizing other countries with less discipline and skill? Will the falling value of German currency be a dangerous political issue, as it was before?
And what about the efficiencies amalgamation of Europe was supposed to generate?why haven't they produced an increase in the value of the currency rather than the opposite? Is it because the unity is a costly political illusion that benefits only the officials and central bankers who are the principal proponents of the plan, rather than the populations on whose behalf they claim to speak?
The second disruptive event suggests the latter diagnosis may have merit. When the Danes in a recent referendum voted not to join the European currency, there was a clear difference between the business and bureaucratic communities and popular forces. Evidently, the Danes were expressing something felt by many Europeans, which is that the new structure is in fact a superstructure imposed on them from above?a rational bureaucratic scheme that is essentially immune from effective and stringent public control. And that it is a structure directed to reduce the individual national variation, which has always been Europe's curse and treasure. And that this structure expresses the forces of globalization that appear to represent the inevitable future, but which also threaten the agreeable idiosyncrasies of existing social patterns that have been marinating for centuries.
This is certainly the feeling of the many Britons who have resisted entry into the monetary union, whose country appears to be doing very well outside it, thank you very much. The sociologist-manque Tony Blair is bewildered by such stubborn affection for This Sceptered Isle, and has been put off his feed by the ongoing resistance to Europe, which the currency decline and the Danish rejection have catalyzed. And while the English business community has been heretofore a strong supporter of joining Europe, now it appears to be less sure, if for no other reason than it hasn't endured a currency loss of more than a quarter (in fact, the pound has increased in value), that business is booming and there remains a strong national fear of the toxic banality of the bureaucrats of Brussels.
Meanwhile, European companies and investors have been aggressively moving their money into the American economy, which has been no small feature of the relatively prosperous financial sector here. Earlier on, companies such as Daimler hurried to get their assets out of the European system by buying U.S. companies such as Chrysler, or as Bertelsmann did with Random House. The fact that the European growth rate is lower than the American is not in itself a revelation about the future failure of the European monetary union. But it is not encouraging.
So what was or is wrong with the Good Idea? Surely no one would deny that there's immense value in broadening modern economic and social horizons. As a matter of principle, the good idea is a good thing. It speaks to more admirable moral and social goals than maintaining old barriers, and is a refreshing affirmation of cooperation in a Europe just this side of conflict to this day, as we've seen. And yet, is something going wrong at the outset that threatens its durable future? Is opposition to the European idea serious in practice but unworkable in theory?
What's wrong? For one thing, it was the very essence of Europe that it was marked by intense variation, and that while it had a plethora of seemingly inefficient producers, it also produced goods of enormous variety. Just when the internal skill of modern industry made niche production easier to accomplish and consumers more eager to enjoy it, the Eurocrats sought to move in an opposite direction. Just when the communist system has been dismantled because it employed central standards to govern a once highly heterogeneous half-continent, now it seems another group of centralizers is keen to impose central standards on the other half.
This is not to say the reformation of much of European industry hasn't been beneficial, or that there isn't a new intellectual verve and expansiveness. It is far easier for Europeans to travel. Some day the banks may actually stop charging exorbitant sums for changing money in the same euro currency when it moves from country to country.
Nevertheless, something is amiss, at least temporarily. More serious in the long run may be the European response to its negative birth rate, which will involve continued immigration from elsewhere. This has already had volatile and vexing political impacts in many of the communities. For the moment, it appears more people move into the European Community than move in countries within it, which creates real if unpleasant tensions.
How long can this go on? Should there be a serious economic setback, how willing will Germany be to continue to bear more than its share of the communal bill? Or even stay in the game for that matter?
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