Monday, September 17, 2012

Europe: The God that Failed?

Europe is very unpopular these days in the two countries generally considered to be the heart of the European Union. In France, where the Masstricht Treaty was approved in 1992 by a close 51-49 vote, it would lose massively today, with only 36% in favor. In Germany, 65% say they would be doing better if Germany had kept the Deutschmark and 49% say they would be doing better if the EU did not exist.

These are alarming numbers for leaders facing a summit in December at which the future direction of the EU will be decided. Economic logic says that the euro cannot be sustained indefinitely without a closer union equipped with tax-collecting and redistributive institutions, but this would require a treaty modification and ratification whose prospects seem dismal indeed given the above polling results. But the euro is "irreversible," dixit Mario Draghi. So Merkel and Holland find themselves between a rock and a hard place.

The euro crisis has become a crisis of the European Union.


Mitch Guthman said...

Apropos to our earlier exchanges about democracy, I would point out the interesting juxtaposition in your post. On the one hand imply that the skepticism of Europe’s two largest and most important countries might influence Merkel and Hollande to prefer saving some versions of Europe over the euro. Yet Mario Draghi has proclaimed that the euro is “irreversible.” If there is no deficit of democracy in the EU, then what can be the nature of Merkel and Hollande’s dilemma?

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Mitch Guthman said...

To which we can now add "Google: The spam filter that failed".

Anonymous said...

yes, lets go back to populist power. also, lets change the constitution at each election turn.

Just a reminder, this crisis is much worst than it should have been thanks to the US real estate disaster that weakened European banks.
You would make a very popular politician, turning with the wind.

Mitch Guthman said...

@ Anonymous,

To begin with, there is a difference between populism and the recognition that the structure of the EU is profoundly antidemocratic, elitist and technocratic. In my view, this was a serious flaw going back to the original design of the EU and the response of the EU’s leadership to the response against proposed constitution only confirms their lack of democratic legitimacy (By the way, this criticism of the EU as antidemocratic is hardly limited to “populists,” unless you choose to count De Gaulle as a populist).

You are quite correct that the crisis in Europe is far worse than it need have been because of the crash in the US subprime market and the speculative use of credit default swaps, derivatives and the like that Warren Buffett described as “financial weapons of mass destruction.” The blame for the crash lies with flaws in the failure of regulators to stop banks from gambling so heavily on American housing-related assets that the entire banking system was imperiled by a drop in the housing markets.

Surely, however, this is a failure of neoliberalism with its emphasis on on laissez-faire and cannot fairly be blamed on my tribe. Indeed, those countries such as Canada and Sweden which have the strongest regulations of private economic activity (especially banking) have suffered the least during this crisis and seem best situated to have very strong recoveries as it abates. Neither was my tribe responsible for idiotic decision to impose austerity in the midst of a recession thereby turning a minor economic downturn into the greatest economic crisis since the Great Depression.

As those readers of this blog who have been forced to endure my many, many comments on issues of economics, the euro, and the antidemocratic nature of the EU will tell you, I have been quite consistent on these issues.