Free Markets, Free People

Denial is not just a river in Egypt

Dale’s post, “Fantasy v. Reality” is spot on.  And there are plenty of examples of his point to be found.  One of the characteristics of those who live in the fantasy side of things is their continued denial of the real cause of Greece’s problems specifically and Europe’s problem generally.

They, like certain politicians on this side of the pond, want to lay it off on others – the implication being that if that situation is changed, the problems that Greece and other countries are encountering will resolve themselves.

Here’s an example:

And then what? And then the strategy would appear to be to cauterise the amputation; to circle the wagons; to issue the most ringing and convincing proclamation to the markets that no more depredations will be tolerated; and to get the Germans to stump up, big time, to protect Spain and Portugal. We are told that the only solution now is a Fiscal Union (or FU). We must have “more Europe”, say our leaders, not less Europe – even though more Europe means more suffering, and a refusal to recognise what has gone wrong in Greece.

The euro has turned out to be a doomsday machine, a destroyer of jobs, a killer of growth, because it entrenches and exacerbates the fundamental and historic inability of some countries to compete with Germany in making high-quality goods with low-unit labour costs. Unable to devalue their way back into the game, these countries are forced to watch industry wilt under German imports, as the euro serves as a giant trebuchet to fire swish German saloon cars and machine tools across the rest of Europe.

Germany is almost alone in recording economic growth in the first part of 2012; Germany is doing well from the euro; and so the theory is that Germany should pay to keep the whole racket going by bailing out the improvident and the uncompetitive, just as London and the South East subsidise the rest of the UK.

Alas, it is not a strategy that is likely to work. As Angela Merkel has made clear, there is little political support – let alone popular support – in Germany. EU leaders may want a fiscal union, but it is deeply anti-democratic. We accept large fiscal transfers in this country because Britain has a single language and a single political consciousness in a way that Europe never will. Rather than creating an “economic government of Europe”, the project will lead to endless bitterness between the resentful donors and the humiliated recipients, as these diminished satrapies will be instructed to accept cuts and “reforms” – designed in Berlin and announced in Brussels – as the price of their dosh.

Or, “it’s all Germany’s fault”.

Germany implemented Greece’s labor laws, work week, retirement age, public pensions and government subsidies.  You didn’t know that?  It’s Germany’s fault that it has all caught up with Greece in a down global market.  If Germany wasn’t so damn good, Greece would be in such damn bad shape.

Really.  That’s what this guy is pushing.  I mean, my goodness, imagine – “high-quality goods with low-unit labor costs”.  How dare they?  How can one pump up a welfare state and keep it going with competition like that?  It is Germany’s job to enable Greece’s work 38 hour week. Germany’s job to ensure their generous pension plans, early retirement, subsidies and welfare payments.

How dare they do otherwise.  They owe Europe.  They owe the rest of Europe the lifestyle they desire but can’t afford.

What is wrong with that country?


Twitter: @McQandO

22 Responses to Denial is not just a river in Egypt

  • I’m surprised, Bruce.  You’re normally pretty good at reading.  The author is actually agreeing with your point (and Dale’s).  You can tell by the way he says the plan to have Germany pay for everything “is not a strategy that is likely to work.”  Not to mention the way he calls the idea “deeply anti-democratic.”  It may be the plan the EU Leaders want, but the author is calling it stupid, not “pushing” it.

    • He’s not a fan of the Euro Zone and he’s certainly no fan of Germany. If you read the beginning, he’s lamenting Greece’s decline and saying, while not very likely, Germany should (could?) shoulder the burden of saving the Euro Zone, because, well, they’re one reason Greece is in the shape they’re in and the only country that’s able too make a difference. That’s because Germany has actually done well under the regime. You know – high quality products with low unit cost labor – how UnEuropean. He may make our point, but it is only because he backs into it (reality pushing the fantasy out of the way for at least a second or two).

      • Except for the way he keeps calling it “the theory.”  Heck, look at the first paragraph of the full article:  “Let me show you how to create employment – the Brussels way.”  Any UK-centric argument that begins that way is decidedly anti-EU.  I agree the theory he is discussing is denial in full.  But he is deriding it, not praising it.  In short, he comes to bury the EU not to praise it.  🙂

  • Here’s another view about what happened to Greece—as opposed to the standard conservative argument about Capitalism vs. Socialism:

    • Yeah, you bet.  Why don’t you distill that into a nice, tight paragraph or two.  Try to avoid, “Bu…bu…but it’s GOLDMAN SACHS…!!!”  That will be unpersuasive as a narrative, see…???
      Next, you can explain how the Greek standard of living and working has no effect on their financial collapse.

    • Yeah Taddy, don’t trouble yourself as to WHY they were boring the money from the loan sharks….it was no doubt because a random lighting bolt blew a hole in the top of the Acropolis and left their aged grannies sitting in ruin and rain in the cold of the Athenian winter without a dime to their names (best not to follow THAT line of thought, one might ask why they didn’t have a dime to their names…..) Well, anyway they HAD to borrow it from those leg breaking bastards at Goldman Sachs.
      You just don’t get it do you, the problem of them borrowing the money from ANYONE was secondary, the REAL problem is they HAD TO BORROW THE MONEY to pay for their life styles.   Just like most socialist states, just like WE’RE having to do.
      If you don’t like the rates the loan sharks charge Tad, find a way to cut back on the life style that puts you in a position where you have to borrow to maintain it.

  • Germany is almost alone in recording economic growth in the first part of 2012; Germany is doing well from the euro; and so the theory is that Germany should pay to keep the whole racket going by bailing out the improvident and the uncompetitive, just as London and the South East subsidise the rest of the UK.

    Respectfully, McQ, that’s not what the guy was saying.  I read it to say the problem…in addition to “improvident and…uncompetitive” living by other nations…was the Euro.  It made it impossible for Greece and others to manipulate their currency to allow their businesses to be competitive with Germany.

  • It’s Germany’s fault the way the trouble in the middle east is Israel’s fault. If only these obstinate countries would listen to the world and stop balking about running themselves into the ground for everyone else’s benefit!  (The irony of this comparison isn’t lost on me. I do wonder how the Germans appreciate being scapegoated for once?)

    • Not sure why the Germans are surprised, look at the trouble the Greeks gave them in 1941…

      • I read somewhere the last few days that an ALARMING percentage of Athens police had voted for the Nazi party in the recent elections.
        I guess when you are sinking for the third time, your brain just stops working properly…

        • I don’t think Europeans generally opposed Hitler and the Nazis due to ideological differences for the most part. Nationalism was a more likely reason. Of course, the various European communists and the few liberals (old definition) were another matter.

          In France a good part of the Undergound were communists.

      • Off topic, but Hitler invaded Greece and the Baltics to help out his Italian allies. Same reason the Germans went into North Africa.

  • Bruce,
    Count me as agreeing with KVA and Ragspierre that I think you’re misunderstanding Boris Johnson’s point.  He’s not complaining about Germany, and he’s not suggesting that Germany *should* be on the hook to take care of all these other nations.  He’s saying that when you have highly-disparate nations, with their own cultures, politics, and economic tendencies, trying to wrap them up under a single currency is impossible.  He’s not lamenting that Greece is a basketcase and Germany is fiscally prudent, he’s only saying that trying to strap the two together under a single currency is doomed to fail unless Greece starts acting like Germany (which they won’t).

  • Last week PJM Interconnection, the company that operates the electric grid for 13 states (Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia) held its 2015 capacity auction. These are the first real, market prices that take Obama’s most recent anti-coal regulations into account, and they prove that he is keeping his 2008 campaign promise to make electricity prices “necessarily skyrocket.”
    The market-clearing price for new 2015 capacity – almost all natural gas – was $136 per megawatt. That’s eight times higher than the price for 2012, which was just $16 per megawatt. In the mid-Atlantic area covering New Jersey, Delaware, Pennsylvania, and DC the new price is $167 per megawatt. For the northern Ohio territory served by FirstEnergy, the price is a shocking $357 per megawatt.
    –Steven Green

    Think of that as a motivator…
    Be irate. This is just the beginning.