Conrad Black: Europe reaps what it sowed
Posted: May 15, 2010, 9:45 AM by NP Editor
www.realclearpolitics.co m
Conrad Black, euro, Greece, European Union
Here is the most chronic problem in Europe: Barely 30% of Europeans work________________________
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The economic shambles in Europe is the greatest crisis facing the West. It is a startling disintegration, especially given the lofty hopes briefly generated in the Europhoria of Western and Central European union following the implosion of the USSR.
The United States, by contrast, remains a proud and determined country with a hard-working and immensely skilled work force, and is unafraid to deploy its superb military in good causes, exchanging live fire with civilization’s enemies.
Letting America be America has already produced some organic progress. The general scourging of Wall Street, well-earned in principle if not in the details of the bill being prepared in Congress, will cool out the steroid-bloated financial industry.
The U.S. federal budget deficit for the current year is already $300-billion below the initial forecast, and there are plausible indications that it will come down from its present 11% of GDP to less than 5% within three years. The current account deficit is down by almost 50% and the savings rate has risen from zero to about 5%. Most of the cities and states are terribly strapped. (Arizona has sold its state capitol and leased it back, and New Jersey is facing an $11-billion deficit on an initial spending requirement of $30-billion. The suggestion of a 5% reduction in the schools budget, or a one-year freeze on the pay of the state’s teachers was greeted with the composition and circulation by teachers’ union officials of a poem hoping for the death of the new governor, Chris Christie.) But at least they can’t expand the money supply and create inflation
The United States has made some disastrous economic mistakes and there are terrible problems in the justice, education and health-care systems, but it certainly has the means, if not at the moment apparently, the leadership, to work its way out of the problems. Such an incomparably successful country, having led the defeat of the Nazis, seen off the economic threat of Japan and induced and watched the soufflé-like collapse of the USSR and international Communism, can probably afford two decades of erratic leadership, as long as it ends soon. Dealing with the current problems will not be like falling off a log, but Americans, despite the widely accepted caricature of them as an obese lumpenbourgeoisie, have not been mollycoddled by the state as Europeans have and have not become inert and dyspeptic as most of the nationalities of the old continent have.
Here is the most chronic problem in Europe: Barely 30% of Europeans work, to sustain the rest. Working hours have been steadily reduced in most countries; holidays have multiplied, and perhaps even more than elsewhere, Europe has fled to service industry and public-sector employment, which is often not really productive work, or may be just disguised welfare, or at least workfare.
Almost the whole continent has lumbered into double-digit deficits, three to four times the agreed maximum of the Eurozone, and cutting the deficits will require more draconian measures than the political leadership possesses the will to impose.
It was only 10 or 15 years ago when European elites dreamed audibly of standing on each others’ shoulders and reliving the glories of Europe’s preeminence in the world, before it gave us Nazism and Communism. There abounded smug remarks to the effect that the United States was about to become a majority non-white country, which continued until much of Western Europe itself, stunted by a collapsed birthrate and trying to replace the unborn with unassimilable immigration, erupted in sectarian violence. (In the United States, meanwhile, almost all immigrants sign on to the American Way eventually, and their pigmentation is irrelevant.)
The assembly of a trillion dollar Euro-fund to backstop struggling EU members is impressive, but it is borrowed money in a debt-ridden jurisdiction, and the real test will be to see how much of Europe will be ready to impose the sort of fierce measures that have had the Greeks energetically rioting for the past several weeks. For notorious historical reasons, Europe has been paying Danegeld placebos to workers and small farmers since the Second World War and the recipients have become very addicted to them.
The customary solution is the devaluation of the currency, but the stronger economies, France and Germany, won’t stand for that. It may be that differently valued Northern and Southern euros will be necessary, but the burdens of a hard currency will not be shouldered easily by countries which have not borne them for literally thousands of years.
The 13 years of New Labour in Britain have squandered almost every advantage the 18 previous years of Margaret Thatcher and John Major accomplished, except flexible labour markets. Britain is overtaxed like the rest of Europe; public sector spending is over 50% of GDP, and now government is in the hands of a pantomime horse coalition of parties who do not agree on much and are led by two young pretty faces who have never been tested and were not impressive in the election campaign. Prime Minister David Cameron’s championship of the “Big Society” is jarring, acoustically and substantively. In the end, British luck usually holds, but that is what will be required to prevent Britain’s descent into Euroshambles.
Russia is a melting iceberg, a sharply declining, alcohol-sodden population with no sign of economic progress or renewal apart from the oil industry and pandemic corruption and wilfull lawlessness in all areas of government. Its only distinct policy is to terrify or seduce former Soviet republics that seceded from the Soviet Union.
For decades, Europe has played Turkey as a 50-pound fish on a 20-pound line, reeling it in when Turkey was needed and rejecting the Turks as a Muslim rabble at other times. The predictable has happened, as Turkey is now enjoying greater economic growth than any other country in (or partly in) Europe. It is an Islamic regime that is casting aside Kemal Ataturk’s guardians of secularism, the army and the judiciary, who became thoroughly corrupt in the 70 years that they have held the clergy at bay. Turkey has virtually turned its back on Europe and on its former allies, Israel and the United States, and is now asserting influence over its former Arab satrapies. How far it will vanish into the Islamic world, where no matter what happens it will be a force for comparative moderation, is an open question.
And Japan, just now being passed by China as the world’s second economy, is racked by high debt and taxes, sluggish growth, aging and declining population and a completely dysfunctional political system. The country’s most popular politician, who has just founded a new party, has a radical pro-growth economic program, but his first priority is to shrink the Diet (parliament), by half. For nearly 60 years, Japan was a one-party state, and now is almost a no-party state. The Japanese will work it out, but not overnight and not with this crew.
Canada has the highest economic growth rate of any advanced economy, with the possible exceptions of Australia and Israel, and relatively modest debt (for which everyone should be grateful to Jean Chrétien and Paul Martin). The country’s financial and political institutions are working as well as any in the world and Canada is finally getting some recognition for what it has achieved. Let’s get used to it.
National Post
cbletters@gmail.com
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and we are heading there as well.
