Thursday, June 07, 2012
Harold Wilson, in one of democracy’s anomalies, served as long as British prime minister as Winston Churchill and Viscount Palmerston — and longer than the elder Pitt, Sir Robert Peel, Lord John Russell, Benjamin Disraeli, and David Lloyd George, who all, like Churchill and Palmerston, were distinguished holders of that office when Britain was a very Great Power in the world — even though Wilson was, in Cromwellian terms, a “decayed servitor,” remembered now mainly for the truism that “in politics, a week is a long time.” In something short of irrational effusion in this space last week, I described the impending German power play of virtue and self-discipline, in uplifting contrast to previous German pan-European initiatives conceived in Bismarckian guile and force, never mind Nazi barbarism. Less than a week went by before Germany doubled its winning bet, and without loss of a jot of its benignity, presented Europe with a second route to the salvation of the more sober dreams and claims advanced with such confidence in the Europhoria of ten and twenty years ago.
Back then — after a century that included two world wars, several scores of millions of combat dead, two score millions of massacred innocents, vast tracts of the old continent smashed to rubble and ashes, and long nights of Nazi and Communist barbarism — a united Europe arose to the stirring resonance of Beethoven, and the heady fable that the Eurocrats, in Lego-built institutions and led by the greatest army of unelected social safety Santa Clauses in the history of man, would emerge from the mists of tragedy, nod appreciatively at their American liberators, protectors, and democratic preceptors, as if to the concierges of Europe’s timeless five-star hotels, and would resume the headship of the world. The “time of troubles,” to borrow a phrase from the Japanese (about World War II), would pass beneath the unrippled waves of convenient recollection.
It will never be known to what extent German chancellor Helmut Kohl deliberately overpaid his East German compatriots for their nearly worthless East Marks, and then overpaid the southern Europeans (little accustomed to hard currencies over many centuries) in the euros largely composed of German currency, which was built on the fiscal discipline of the German nation and the genius of that country for world-leading engineered products. To some extent, Germany’s guilt for its previous atrocities was monetized, partly by and for the benefit of formerly victim countries; and to some extent Germany bought the economic suzerainty of Europe, subtly, and on the installment plan, as those who would pick Germany’s pockets claimed to subscribe to the German ethos of work and high-quality industrial production, a culture and economic model for which the Greeks, southern Italians, and Iberians never had the slightest affinity. When the music stopped and the invoice was presented by the international financial markets, with Germany as a sad and sympathetic observer, the overstuffed celebrants in southern Europe divided between the penitent converts to austerity and the mock-righteous protesters against capitalist stinginess (still wearing, in many versions, crisp Wehrmacht uniforms).
The Europhorists had imagined that bonds denominated in euros could be issued with the same yield, whether from Germany or Greece, because they were both denominated in euros, and they imagined that the collapsed European birth rates could be made up with Islamic immigration, that 40 percent or fewer of their countrymen could work while the others took state benefit of some sort, and that Germany would continue expiating its past misconduct to their account sine die.
Germany’s genius was to be the benefactor, and not the bill-collector. First, Germany said it would approve the extension of the resources of the European Central Bank, and of Germany itself (they are not wholly distinguishable), to countries that took the German pledge and did the necessary to ensure that at least 50 percent of their populations normally were gainfully employed, which was not defined as pencil-pushing at the taxpayers’ expense.
As this challenging change of pace was being painfully assessed, Germany last week sweetened the offer: The struggling and distressed and afflicted Eurobrethren didn’t have to replicate German labor-market flexibility and fiscal incentive to investment and a growing free market. They could instead revert to the Eurodream of federalism, in which there would be central control of fiscal and banking oversight, depository insurance, taxing, and spending, as well as structural changes to promote competition (i.e., sacking redundant public employees and putting an end to feather-bedding protectionism). The poor local politicians, who are being pitchforked out of office by their electors almost every week, wouldn’t have to drink the Kool-Aid; the European federal officials would pop the trap door on the gallows of Eurosocialism, on secret orders from the German government. Presto, the euro is saved, the politicians have passed the buck (euro), the Germans are bystanders, and in the name of the great Eurovision, nameless people are administering nasty medicine to the fiscally infirm. It is as close as Godless, bureaucratized Europe gets to an act of God.
The Germans may be able to devise some partial face-saver for the new French carnival-socialist faux government of François Hollande to preserve a shred of France’s former status, or not. But either the euro will roll back to a Grossdeutschland of the Germans, Austrians, Dutch, Scandinavians, and possibly Czechs and Poles; or the euro will broadly continue under drastically different rules that make of Europe, at last, a market economy. Under either scenario, for the first time in the peacetime history of Europe, Germany, finally, is the undisputed leader of the continent, and this time no hand-holding between the British and French is going to counter it.
In the United States, meanwhile, unemployment increased and the false recovery became impossible to portray as a success. It is the merest and most fragile stall in a general economic collapse, and it was purchased at a cost of nearly $5 trillion in deficit spending. Increasingly, the administration will have to face the music, and, unlike in Europe, it is no Ode to Joy: Unemployment in the Clinton and Bush years of between 5.2 and 5.3 percent has become an average of nearly 9.4 percent under Obama, and is not declining; there has been a 50 percent increase in the national debt in four years; federal spending as a percent of GDP (25), the budget deficit as a percent of GDP (10), and federal debt as a percent of GDP (67) are all the highest since World War II; the country now has the slowest post-recession job growth, lowest percentage of taxpayers paying income tax, and lowest rate of home ownership of the past half century; and the percentage of Americans receiving government benefits of one form or another (47) is the highest in history. In the Obama years, the number of food-stamp recipients has gone from between 23 and 23.5 million in the 16 Clinton–Bush years to 39.5 million, and the number of employed people in the country has declined from 144 million people to 138 million, despite the addition of 10 million people to the population and nearly 2 million more federal-government jobs.
The effort to distract the country from this indefensible record with claptrap about a Republican war on women, a papist plot against access to contraception, legal semantics about same-sex relationships, and other red herrings, has failed. The bag of tricks is empty, the well is dry, and the sands are running out. Unless Willard M. Romney drowns in platitudes, or proves a greater Gatling gun of self-inflicted wounds than Barry Goldwater, George McGovern, Walter Mondale, John Kerry, and John McCain combined, the chalice he has so ardently sought but the country is not enthused to give him will be his. America and the West are incomparably strong, as they showed not so long ago in the Cold War. If WMR (I know it’s not the same as FDR or JFK or LBJ but I’m waging a rear-guard action against calling him “Mitt”) appoints some such people as Jim Grant to the Fed, Mitch Daniels to Treasury, and Paul Ryan to the Budget Office, with a mandate for entitlement reform, prudent spending reductions, higher consumption taxes and lower income taxes, incentivization of energy-import reductions, and, if necessary, some temporary workfare to shrink chronic unemployment, the United States and Germany will lead the West and the world to better days. It not only could happen, despite the encircling gloom, it is, by a cigarette paper’s margin, the likeliest scenario. In four years, children could be singing “Amerika über alles” and “God Bless Germany”; this would be less improbable than the international Gong Show of the last 15 years or so that has brought us to our present improvident embarrassment.