The Euro-Marital System

Written by Lionel Tiger on . Posted in Breaking News, Posts.

The United States was a
good idea. Here was the new continent setting its face against the old one and
needing the heft that cooperation between the various signature states could
provide. It was not an easy merger, but it happened, and once the tragedy of
the Civil War was over–a sign of the last profound difficulty in the story–life
could go on. We see the results all around us.

The United States of Europe
may not be such a good idea. I’ve used this space for some time mantra-ing
reservations about the euro common currency and the various federal arrangements
that are supposed to reveal the emergence of a unified Europe able to compete
with America and Asia. More important, the theory/dream/plan is that the unity
expressed by the European bureaucracy and other structures will make the once-endemic
and frequently ruinous European wars a thing of the past forever. To this end,
a number of the influential founders of the European idea were French, anxious
to create a structure within which Germany could be contained, and German, anxious
to do anything to deal with the guilt and despair caused by the Nazis. But now
the two most recent and most powerful proponents of the system, Mitterrand in
France and Kohl in Germany, are out of play. It’s not clear the current
actors foresee a smooth surface on their interstate under construction.

Two recent events have baffled
Europeans committed to the Community. One is the seemingly inexorable decline
in the dollar value of the euro, from about $1.18 when it was issued to around
87 cents as I write. This is a remarkable drop when we consider the euro is
composed of, among other currencies, the Deutsche mark, which for decades was
one of the world’s strongest currencies, and of which Germans were understandably
proud given their history of gross inflation just before the Nazi era. Why,
Germans may well ask, is the value of their economy so much lower on the world
market these days? Because they’re subsidizing other countries with less
discipline and skill? Will the falling value of German currency be a dangerous
political issue, as it was before?

And what about the efficiencies
amalgamation of Europe was supposed to generate–why haven’t they produced
an increase in the value of the currency rather than the opposite? Is it because
the unity is a costly political illusion that benefits only the officials and
central bankers who are the principal proponents of the plan, rather than the
populations on whose behalf they claim to speak?

The second disruptive event
suggests the latter diagnosis may have merit. When the Danes in a recent referendum
voted not to join the European currency, there was a clear difference between
the business and bureaucratic communities and popular forces. Evidently, the
Danes were expressing something felt by many Europeans, which is that the new
structure is in fact a superstructure imposed on them from above–a rational
bureaucratic scheme that is essentially immune from effective and stringent
public control. And that it is a structure directed to reduce the individual
national variation, which has always been Europe’s curse and treasure.
And that this structure expresses the forces of globalization that appear to
represent the inevitable future, but which also threaten the agreeable idiosyncrasies
of existing social patterns that have been marinating for centuries.

This is certainly the feeling
of the many Britons who have resisted entry into the monetary union, whose country
appears to be doing very well outside it, thank you very much. The sociologist-manque
Tony Blair is bewildered by such stubborn affection for This Sceptered Isle,
and has been put off his feed by the ongoing resistance to Europe, which the
currency decline and the Danish rejection have catalyzed. And while the English
business community has been heretofore a strong supporter of joining Europe,
now it appears to be less sure, if for no other reason than it hasn’t endured
a currency loss of more than a quarter (in fact, the pound has increased in
value), that business is booming and there remains a strong national fear of
the toxic banality of the bureaucrats of Brussels.

Meanwhile, European companies
and investors have been aggressively moving their money into the American economy,
which has been no small feature of the relatively prosperous financial sector
here. Earlier on, companies such as Daimler hurried to get their assets out
of the European system by buying U.S. companies such as Chrysler, or as Bertelsmann
did with Random House. The fact that the European growth rate is lower than
the American is not in itself a revelation about the future failure of the European
monetary union. But it is not encouraging.

So what was or is wrong
with the Good Idea? Surely no one would deny that there’s immense value
in broadening modern economic and social horizons. As a matter of principle,
the good idea is a good thing. It speaks to more admirable moral and social
goals than maintaining old barriers, and is a refreshing affirmation of cooperation
in a Europe just this side of conflict to this day, as we’ve seen. And
yet, is something going wrong at the outset that threatens its durable future?
Is opposition to the European idea serious in practice but unworkable in theory?

What’s wrong? For one
thing, it was the very essence of Europe that it was marked by intense variation,
and that while it had a plethora of seemingly inefficient producers, it also
produced goods of enormous variety. Just when the internal skill of modern industry
made niche production easier to accomplish and consumers more eager to enjoy
it, the Eurocrats sought to move in an opposite direction. Just when the communist
system has been dismantled because it employed central standards to govern a
once highly heterogeneous half-continent, now it seems another group of centralizers
is keen to impose central standards on the other half.

This is not to say the reformation
of much of European industry hasn’t been beneficial, or that there isn’t
a new intellectual verve and expansiveness. It is far easier for Europeans to
travel. Some day the banks may actually stop charging exorbitant sums for changing
money in the same euro currency when it moves from country to country.

Nevertheless, something
is amiss, at least temporarily. More serious in the long run may be the European
response to its negative birth rate, which will involve continued immigration
from elsewhere. This has already had volatile and vexing political impacts in
many of the communities. For the moment, it appears more people move into the
European Community than move in countries within it, which creates real if unpleasant

How long can this go on?
Should there be a serious economic setback, how willing will Germany be to continue
to bear more than its share of the communal bill? Or even stay in the game for
that matter?