The EU and the Crisis: Beginning of the End, or End of the Beginning
Adam Blickstein comments on tensions within the European Union over how to grapple with the economic crisis:
On the one hand I want to say the financial crisis is the first major test of the post-enlargement, modern EU and will help determine how Europe will grow institutionally in the future. But on the other hand worry that European integration may have moved too fast too quickly without a truly robust structure so that when real hard times like now hit, it threatens the stability of the entire system. In other words, while this test will tell us a great deal about the present and future of the EU, it might not only merely be a test of pan-European harmony but also reveal a destructively discordant note in the basic structure of the European project.
Whereas even up to two years ago, fuller integration was seen as mutually beneficial to both the”net givers” (Britain, France, Germany) and “net takers” (Poland, Bulgaria, Spain), that ideal has clearly been disintegrated in the current financial climate. The growing divisions in Europe and the across the board economic suffering of countries from west to east may be exposing the mutually destructive nature emanating from the lack of protective economic compartmentalization in the basic political and financial foundation of the EU. It will be interesting to see if Britain’s greater economic autonomy allows it to weather the economic storm more adroitly than their continental counterparts, despite of course ostensibly a more dire economic reality.
Nobody is talking about it, but you could definitely sketch a scenario in which the crisis leads to the breakup of the euro and a substantial collapse of the European Union and the entire European “project.” On the other hand, you can also sketch a scenario in which the reverse happens. Public opinion in most European countries has been hostile to deepening European political integration but also unwilling to try to undue European economic integration. That’s created the current scenario in which Europe needs more policy coordination than the formal institutional structure in Brussels permits. That could be a recipe for disaster. But it could also be a recipe for statecraft and the creation of a stronger, more consolidated Europe.
A big part of the history of the past 100 years has to do with the fact that the logic of the situation in Europe points to some kind of large, integrated, German-dominated political and economic unit on the continent. But other countries haven’t liked that idea, and some—primarily England and France—have been in a position to do something about it. We’re now reaching a point, however, where the bulk of the European “periphery” would probably welcome their new German overlords, insofar as the Germans are willing to do some bailing out. Similarly, I’m sure the British, would be perfectly happy to see such a thing happen with them just sitting on the sidelines. It sort of becomes a question, at this point, of whether or not the Germans really want to play leader.
Since the movie’s coming out Friday, I’ve got Watchmen on the brain and this seems to be the choice facing the Germans:
[A]ll the whores and politicians will look up and shout “Save us!” —and I’ll look down and whisper “No.” They hade a choice, all of them. They could have followed in the footsteps of good men like my father or President Truman. Decent men who believed in a day’s work for a day’s pay. Instead they followed the droppings of lechers and communists and didn’t realize that the trail led over a precipice until it was too late. Don’t tell me they didn’t have a choice. Now the whole world stands on the brink, staring down into bloody hell, all those liberals and intellectuals and smooth-talkers—and all of a sudden nobody can think of anything to say.
Well, okay, Angel Merkel almost certainly won’t start referring to her Spanish and Irish counterparts as whores or lechers. But you could see her adopting this basic attitude.
43 Responses to “The EU and the Crisis: Beginning of the End, or End of the Beginning”
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March 3rd, 2009 at 5:51 pm
Because black people are deficient in IQ, in inverse correlation to their penis size.
This makes not good with abstract thought, but very good with sports, music, sex and violence.
I realized this when my wife was gangbanged by three black men. They forced me to watch and play my banjo, and my wife had to bang a tambourine, which was very painful for her since her legs were behind her head.
The black penises slid in and out with perfect rhythm.
March 3rd, 2009 at 5:55 pm
The typos in this post improve it. More typos would improve it even more, because Angel Mirkel — while not actually the name of the German Chancellor — would be a great name for a character in Watchmen.
March 3rd, 2009 at 6:08 pm
“Nobody is talking about it, but you could definitely sketch a scenario in which the crisis leads to the breakup of the euro and a substantial collapse of the European Union and the entire European “project.””
The current problems with the European “project” were predicted from the beginning. From a column in last month’s FT by Edward Chancellor (“EMU on the rocks and all exits closed”:
March 3rd, 2009 at 6:08 pm
Nobody is talking about it, but you could definitely sketch a scenario in which the crisis leads to the breakup of the euro and a substantial collapse of the European Union and the entire European “project.”
First, everybody is talking about it. In fact, there are few more widely accepted ideas in the US that the EU is on the verge of collapsing. But more generally, it has always been the case.
The split over the Iraq war was the end of Europe. The failure to pass the European constitution was the end of Europe. UK dropping out of the common monetary system was the end of the euro, and of course the end of Europe.
People just have to realize that the EU is a very flawed, but very resilient institution/super-state. Not one country has ever left the EU. Think about that for a second. It is difficult to understand what the EU exactly is, so most pundits would like to just wish it away.
March 3rd, 2009 at 6:15 pm
Another aspect of European integration and the economic crisis is that a lot of the recent western European opposition to the EU (outside the UK) has been the perception it furthers an Anglo-Saxon deregulated free market model. See the French rejection of the constitution.
Obviously there are other factors – the passing of blame by unpopular European leaders for economic reform on the EU, hostility to potential Turkish membership, etc – but in a less deregulated future the EU may seem less of a threat.
March 3rd, 2009 at 6:47 pm
has been the perception it furthers an Anglo-Saxon deregulated free market model.
Well that’s the whole point isn’t it? To have an efficient, innovative, risk-taking economy that is willing, and able to, create wealth and prosperity and not be stuck in French-style long-term economic malaise.
March 3rd, 2009 at 6:52 pm
not be stuck in French-style long-term economic malaise.
Would that be the French who are now richer than Americans, or the French who exist only in your demented mind?
March 3rd, 2009 at 7:06 pm
It’s going to be an interesting couple of years for the new member states, because the early economic migration that brought Polish bricklayers to the UK and Lithuanians to Ireland is hitting the skids, and those workers — often pretty-well-skilled — are heading home. That’s not necessarily a bad thing, given the reports of skill-shortages in those countries, as long as there’s investment when they return; the EU purse that helped build lots of Irish infrastructure needs to stay open. So you can argue, at least to some extent, that labour mobility has the potential to offset exchange rate immobility.
(Picking up on one of the commenters at the original post, an EU- and Euro-member Iceland would have been less likely to bankrupt itself.)
And I’m always minded to take British opining on the Euro with a pinch of salt.
March 3rd, 2009 at 7:15 pm
Matt, just to thank you for continuing to do articles about this. You’re the only US commentator I know who gives the EU decent attention. Keep it up, thanks.
March 3rd, 2009 at 8:14 pm
Um, I have to agree with the above – lots of people are talking about the possibility of a break-up.
March 3rd, 2009 at 8:47 pm
A big part of the history of the past 100 years has to do with the fact that the logic of the situation in Europe points to some kind of large, integrated, German-dominated political and economic unit on the continent.
*rubs hands in glee*
March 3rd, 2009 at 9:01 pm
Re: Matt, just to thank you for continuing to do articles about this. You’re the only US commentator I know who gives the EU decent attention. Keep it up, thanks.
Of course he does, Douglas. Cosmopolite Yglesian hipsters are big fans of the EU.
March 3rd, 2009 at 9:29 pm
Why on earth people expect the EU to spring forth, fully-formed, with a few pen strokes is beyond me. Put things into perspective: The American Union has seen an incredibly bloody civil war and even now, 230 years in, dysfunction is still rife. For the last 8 years one group was calling for the President’s impeachment; now, the other group is wishing for failure. Then there’s the debt, the collpase of the financial institutions, mass unemployment, crumbling infrastructure, and Sarah freakin’ Palin.
Compared with the American Union, the European Union is in fine health. Going through a slightly rough patch, but that’s to be expected. All countries take their lumps. All countries have their disaffected. All citizens like to complain about the state of things. But no one really wants to see the end of the EU. This sort of crisis is good for countries more often than not–it allows them to evolve. It would be far worse for a political union to be completely static and “perfect”, than to undergo the occassional crisis of confidence.
The only way I see the EU going down is if the whole of modern civilisation goes with it.
March 3rd, 2009 at 9:44 pm
Good post MY, though I think the Watchmen quote was a bit of a stretch. E for effort.
I wonder what will come out of this crisis. If the member countries came together, giving up some economic power to the EU Central Bank, they could pull through this all right. But everyone has to throw in, and realistically I think no one wants to be the first one on the dance floor.
March 3rd, 2009 at 9:57 pm
Not one country has ever left the EU.
The modern EU is what 16 years old? In some respects only on year 7.
Nobody tried to leave the US either until around year 30.
March 3rd, 2009 at 10:14 pm
I’m sorry but – this is your authoritative source on Europe, a guy with a BA, whose expertise on the matter appears to derive from a year abroad in London?
As no.4 above said, people have been predicting the demise of the “European project” since its inception. It’s usually at least partially motivated by a desire to see the EU fail, rather than based on some kind of honest analysis.
March 3rd, 2009 at 10:32 pm
Would that be the French who are now richer than Americans, or the French who exist only in your demented mind?
I remember reading about doctors in Paris hospitals who get paid something like $65,000 a year, and about French teachers teaching in Swiss independent schools because French salaries are something like half to two-thirds the Swiss figure.
Doctors making $65,000, and teachers making a fraction of Swiss salaries, is not what I would call rich, you damn Bolshy.
March 3rd, 2009 at 10:38 pm
The News Hour had three economists on — Simon Johnson, Annie Beddoes, and Scheherezade Rehman — talking about EU reaction to the economic crisis. They were unanimous that the EU does not have the institutional structure required to agree on a coordinated policy. Judy Woodruff was practically pleading for them to give her something upbeat, but was met with a solid front of deep pessimism.
March 3rd, 2009 at 11:02 pm
If only they asked nicely
March 3rd, 2009 at 11:28 pm
<iDoctors making $65,000, and teachers making a fraction of Swiss salaries, is not what I would call rich, you damn Bolshy.
Miley really loves the idea of dermatologists and plastic surgeons pulling in half a mill while the rabble die in gutters. It’s his idea of how societies should be run, because he’s foppish that way.
March 4th, 2009 at 12:36 am
Miley really loves the idea of dermatologists and plastic surgeons pulling in half a mill
I don’t love the idea per se, but it reflects their market value.
March 4th, 2009 at 12:54 am
Matt II for Holy Roman Emperor!
March 4th, 2009 at 1:40 am
“Miley really loves the idea of dermatologists and plastic surgeons pulling in half a mill while the rabble die in gutters.”
Where’s this, Calcutta? Here in America, the rabble get all-expenses-paid health care. We call it Medicaid. No co-pays, no nothing. Gold-plated care. We just expect people who aren’t poor to pay part of the cost of their own health care, sort of like how we expect them to pay their own rent, etc.
March 4th, 2009 at 3:15 am
I think Germany will help out, but at a price.
The price will probably be “tax harmonisation”, stripping countries like Ireland of the power to offer companies low corporation tax regimes. This will make Germany (and the high-wage economies like France and Britain) competitive for inward investment.
March 4th, 2009 at 3:16 am
Riley, prince of lies. Go and pay obeisance to King Rush, wouldja?
March 4th, 2009 at 5:24 am
Not to butt in on your little trollfest, but Myles is perfectly right:
PPP adjusted GDP/inh., 2008 (IMF figures, varies from CIA Factbook)
France 33500$
USA 45800$
We could also compare unemplyment figures and such, the result would be the same.
That being said, the death of the EU is highly exagerated. The inability to pass coordinated stimulus bills, with little probability of success anyway, is hardly a sign of impending doom. If only the politcians would spend their time reforming the central banking system, not like that will happen anyway.
/Limagolf
March 4th, 2009 at 5:29 am
Oh, and just to burst the anglo-liberalist bubble:
PPP adjusted GDP/inh., 2008 (sorry all my figures were World Bank not IMF)
UK 33500$
The US is considerably richer than most European countries. Basically only countries with banking secret or oil is richer.
/Limagolf
March 4th, 2009 at 7:17 am
“The modern EU is what 16 years old? In some respects only on year 7.
”
CEE is born in 1957.
UE is the same with more country.
March 4th, 2009 at 7:32 am
PPP adjusted GDP/inh., 2008
What about basic GDP/inh, you know, the category that the US completely dominated for decades?
Luxembourg: $118,045
Denmark: $67,387
France: $48,012
USA: $47,025
We could also compare unemplyment figures and such, the result would be the same.
Such as education, life expectancy, child mortality, health care coverage…?
Sure, compare it. As for unemployment, I wonder how deep must be the recession before people like Myles stop parroting talking points of the 90’s about the greatness of the dynamic American job market.
March 4th, 2009 at 7:52 am
Adding to the pile on about EVERYONE talking about the EU, Gideon Rachman’s Tuesday column was on this exact subject and added more insight than Mr. Blickstein.
March 4th, 2009 at 7:58 am
PPP adjusted GDP is really the way to compare the economies of different countries, otherwise you are comparing apples and oranges. It doesn’t really matter how much you earn in $ but what you are able to buy for those $. And the US is way ahead of most European countries in that regard. Luxemburg hardly counts anyway…
As for unemployment France and Germany has hovered around 10% for a couple of decades. Hardly a good advertisment for their models of governance.
Life expectancy is more difficult. It is not only a function of the quality of health care in a given country, but also the life style choices of the population. Witness how solidly socialdemocratic-with-government-paid-healthcare Denmark has a pretty low life expectancy. It’s the booze and cigarettes…
I’m pretty sure that the US could devise a much better healthcare system, especially since you spend the double of everybody else on it. But that doesn’t change the fact that the US has a dynamic and strong economy. Still has, despite the current financial predicament.
March 4th, 2009 at 8:45 am
The real problem in the EU is that it expanded too quickly when the wall came down.
The west was giddy with the new changes, and the east was all too willing to take the
bribesadjustment payments to join.March 4th, 2009 at 9:17 am
Basically only countries with banking secret
The British banking sector is proportionally larger than its American counterpart.
And interesting you bring up Luxembourg; guess what’s the main industry? You guessed it, private banking for rich foreign clients.
To think you used it as an example to prove your hideous little socialist thesis….
March 4th, 2009 at 9:21 am
That movie’s going to suck out loud.
March 4th, 2009 at 9:38 am
“To think you used it as an example to prove your hideous little socialist thesis….”
Huh?! This thesis:
“The US is considerably richer than most European countries. Basically only countries with banking secret or oil is richer.”
Hardly a reworking of the Communist Manifesto…
/Limagolf
March 4th, 2009 at 10:24 am
@26, 27, 29, 31: The extreme skew of the US income distribution makes means highly deceptive in this context. What are the medians for each of these countries?
And didn’t we just have an argument thread on how the PPP goods basket is arbitrary and subjective, and therefore probably worse than a simple exchange rate correction?
March 4th, 2009 at 10:28 am
Apologies Limagolf. I meant why oh why.
March 4th, 2009 at 11:50 am
We’re now reaching a point, however, where the bulk of the European “periphery” would probably welcome their new German overlords, insofar as the Germans are willing to do some bailing out.
I think you’re seriously underestimating the dislike of German leadership that exists throughout Europe. Other member countries will be happy to take German money, but they will be extremely reluctant to give Germany any sort of increased leadership capacity for it. Between the Poles, who are still intensely bitter about WWII, and the French, who can’t conceive of anyone else leading Europe, I just don’t see Germany stepping into a real leadership role–even if they could get past their self-abnegating tendencies to do it.
March 4th, 2009 at 3:16 pm
To begin with, I just want to point out that it seems to be the nature of Europeans to be pessimistic. Have you ever watched European films? Centuries of war does things to a continent…
European leaders love to blame “Europe” for everything, but I don’t think any of them want to see it gone. If they didn’t think that the EU enterprise was, on the whole, beneficial for them, they never would have joined in the first place. The economic situation has everyone’s feathers ruffled at the moment, and if it weren’t for the EU, these tensions could ultimately erupt into nationalistic violence. Really what we’re seeing here, strangely enough, is the EU working more or less like it was meant to.
My prediction:
In the end, the whole situation will be relegated to a group of economic technocrats who will work out a pseudo-solution that half-works for most of the member states, and the UK will not take part (along with some other countries who will be granted some kind of exception). This will ultimately do little to improve the situation, but will take so long, the crisis will be pretty much over, no one will notice, and they will quietly get back to that whole constitution business.
In the meantime, many people will write about the “death of Europe”.
March 5th, 2009 at 8:57 am
…to using real income instead of PPP, that is.
March 5th, 2009 at 8:57 am
And didn’t we just have an argument thread on how the PPP goods basket is arbitrary and subjective, and therefore probably worse than a simple exchange rate correction?
You give these people too much credit. They don’t actually believe PPP is better measurement, or they would have been using it all along. But instead, it’s only when they realize the real income numbers don’t tell the story they want told that they change their minds, and start talking about PPP.
If the numbers inverted next year, and European PPP was higher than American but real income numbers showed higher per capita income in America, is there even a question that they’d flip back?
April 8th, 2009 at 8:48 pm
This topic is quite trendy in the net at the moment. What do you pay the most attention to when choosing what to write ?
April 15th, 2009 at 5:58 am
I noticed that this is not the first time you write about this topic. Why have you decided to touch it again?