It’s beginning to look a lot like the 1930’s as France goes ‘Socialist’ in its latest election. Needless to say, the United States has been there since 2008. The difference is understood within the discreet immeasurable social aggregates that animate our Union; people throughout this Nation are fed up, most seek to check the Socialist agenda that has grounded the American left since The New Deal. My guess is that innumerable fiscal and social crisis’ similar to the failure of the international system that underwrote the pretense of stability throughout Western Europe in its prewar era will play out again. We hope contemporary political parties throughout Europe don’t lose the allegiance of its citizenry for that would be the first step towards another round of radicalized politics that animated the 1930’s.
For those not informed regarding the social and political impact that is the ‘Eurozone’ this post will examine both the trajectory that animated the writers of the Eurozone and its failure; but particular attention will be played to the sheer ignorance that Eurozone Socialists embody as they display populist fiscal rhetoric as a bid to forestall the inevitable.
The European Union’s government structure is far closer to the US Articles of Confederation of the 1780’s than it is to the federal system that animates our current Republic.
Each Nation within the Eurozone has a separate Treasury, but each is firmly tied to the European Central Bank. Structural governance is only part of the problem. Essentially, each Nation must be self-sufficient in revenues or borrowing to fund its expenditures. Spendthrift Nations like Greece tax/spend more than they grow; this is intrinsic to the political culture of socialist regimes. The European Commission lacks the taxing resources to fund nation-state shortages. How else to put it: what the Socialists could not get politically they gained through an economic federation, and a weak one at that! The European Union is self-imposed Socialism just look at the results in Greece!
Similar to how all other Revolutions end, Socialists seek passionate partisan wedge issues from which to promote radical ideas of equality. We have this agenda today in Gay Marriage. Nevertheless, Socialist partisans seek rents in the form of political support. At the least these partisan utopian radicals decry a market based system that is inherently unjust.
Fredrick Hayek wrote for decades how free market competition would not necessarily reward the deserving. We don’t cooperate because we sense the need to properly reward the merits of others. We cooperate in the free market system simple because the mark of a free individual is to be dependent for his livelihood not on other people’s views of his merit but solely on what he has to offer others. Peter Drucker was right to scold idealist students into accepting a stark reality: wealth is inseparable from the creation of value.
With today’s revolutionary credo of decentralized, small, self-organized, voluntary aggregates of individuals pursuing value on a globalized scale, why opt for greater centralization whether it be Dodd-Frank or the Eurozone?
A market system cannot work properly if a society aims to dole out rewards and punishments like a teacher in a classroom. Market institutions are anonymous and blind. Imposing preordained scheme of merit and reward will make coordination between individuals, and therefore wealth creation more difficult. Any technocratic vision of budget acumen has its informed mores from the Socialists in France & Germany. As the European social model has now reached its inevitable breaking point, we should anticipate how America will suffer if we elect more technocrats.
“The cost of forcing heterogeneous populations with disparate histories, languages and cultures into a single national currency will be prohibitively high.” That was Milton Friedman in 1999. The Continental United States and all of North America will enact what is playing out in Athens. Let’s explain.
What did Friedman know that the Socialists that constructed the Eurozone didn’t? He knew that any proposed Eurozone would not be an optimal currency area. Europe lacked wage flexibility and labor market mobility, both necessary for a functioning monetary union. Europe lacked a system of federal fiscal transfers like our Central Bank that functions to maintain liquidity. Given relative developments of inflation among Union member states, Eurozone members were forbidden from currency depreciation to boost exports. The austerity that is now eating away at the southern periphery of the Mediterranean is consequence of not pursuing pro-growth policies.
Absent from having to acknowledge the utter intellectual failure that is Keynesian thought, Euro-Socialists and their fellow travelling laze faire technocrats only have austerity to fall back on. Whatever happened to classical economics? Given how liberals like the authoritarian mien of centralization, they ignore any idea that actually might thwart a ruling elite.
The fiscal, economic issues facing the Eurozone can only be resolved through an intellectual revolution that favors classical economics: one that appreciates economic fundamentals like wage growth, price discovery, currency appreciation and political ideals like individual sovereignty. Productivity can be raised dramatically in a short time by incentivizing people; dump arbitrary regulation, the very essence of tyranny is power expressed arbitrarily; regulatory, fiscal and classical macroeconomic aggregates that sustain market efficiency are responsible for wealth creation. Market volatility will remain until either an election or classical ideals are implemented.
The technocrat’s vision of efficiency and authority, the twin enormities that dominate the fiscal and economic intellectual lives of technocrats are on display throughout Europe today: a stronger Eurozone Union that increases the expressed authority of bureaucrats will not help nor enhance the quality of democracy that underwrites the American Republic. Dido for Europe. Nor can the proposed interests of equality, fairness or harmonization. All violate the principle of subsidiarity; the foundation of equity in a free market economy.
Its easy, you either decide to help finance government or you help finance growth. Unfortunately, they’re not the same nor do they have the same interests.
How does this end? The Eurozone will fracture along sectarian lines, this will push the Socialists to pursue a centralizing agenda inimical to democracy. As for Eurozone Socialists: they can begin reading the Federalist Papers, for it is there they can inform their specialized fiscal banter to the contours of our present political economy: decentralized, agile and hungry to enjoy the arduous labor that accompanies personal growth.