Between 1776 and 1815, Britain was at peace for just 10 years, and reading the Scottish defense of free trade without this in mind is a mistake.
My preceding post noodled over non-German authors’ contributions to the Frankfurter Allgemeine Zeitung’s “Crumbling Europe” series. Today, a few of the Germans. Their contributions are charitably described as disappointing; if you’re seriously worried about the EU, hair-raising is a better adjective. The general pattern is 1) a resolute unwillingness to re-think the EU project, coupled with 2) an unnerving insistence of projecting Germany’s political preferences and attitudes onto the EU and 3) not one word of acknowledgment that the EU is confronting a central, blazingly obvious German problem (see my earlier post).
None of this is exactly news. Chancellor Merkel invited millions of immigrants into the EU with a confident “Wir schaffen das” (“We [meaning Germany] can cope with it”)—evidently, without the slightest attention to what that might mean for other member-states or, for that matter, the Schengen Accord. That wasn’t a blunder; it’s Germany’s m.o. The response to the Euro and sovereign debt crisis shows the same pattern. But it’s still bracing to see this mindset displayed in print and across the entire respectable political spectrum.
Even the good guys can’t help themselves. Roland Koch is a former, reasonably successful state governor. He wants more economic growth and dynamism: that, he says, would solve a lot of what ails the EU and alienates citizens from it. And he is commendably clear-eyed about the EU’s failures on that front. “Nothing but disappointments,” he writes,
remain of the 2000 Lisbon Strategy and its full-throated promise to become ‘the most competitive region in the world.’ [Translator’s comment: The Lisbon Strategy, which proposed to achieve its lofty objective by 2010 (!), is not to be confused with the eponymous Treaty. The EU has so many programs, strategies, and accords and agreements, it’s running out of cities after which to name them.] Instead we have become lost in a blizzard of standards that in fact strangle growth and lock the work force into the wrong places.”
All that is right, factually and directionally. But the author’s exhortation that “We [meaning the EU collectively] must” re-commit ourselves to the original objective is wishful thinking, sans any understanding of the institutional problems. Every EU country produces a “blizzard of standards” all on its own. The way to address that is not to have them all get together to organize “competition”; it’s to make them compete. The reason why that won’t work is that a lot of EU members, especially those inside the Eurozone, can’t compete, at least not with Germany. That’s how “competition” becomes an intergovernmental project—which means ipso facto that it’s dead. Mr. Koch’s article lists five additional “We musts,” all equally illusory.
Sigmar Gabriel (SPD), Germany’s Minister of Economics, also emphasizes economics. He worries about the increasing gulf between the rich and the poor in Europe. Whosoever wants “the unifying experience that common prosperity will again become possible in Europe,” he writes,
must create opportunities, build schools and universities, erect the digital infrastructure of the future, invest in communities and in small and medium-size businesses so that enterprises grow and provide work and income. What would help us is to see the European banner more often on signs and advertisements of investment projects.
In short: let’s ramp up the Social-Democratic program to an EU scale. You don’t have to digest Jim Buchanan’s collected works to realize the absurdity. (Central spending on local public goods? Work out the results.) You do have to spend time over there to appreciate the hilarity. My blessed vacation island (Foehr) has the social structure of Martha’s Vineyard—and more EU projects and banners than Pokemon stops. (My son, Pokemon Level 17, informs me that those sets overlap.) That’s because it is in a “border region” (to Denmark). EU funds are distributed to such regions to mask the intended redistribution. Drop the mask, expand the EU “Structure Fund,” and tell German taxpayers that they must pony up (yet) more money for Piraeus and Palermo: that’ll do wonders for EU cohesion and civic support.
Martin Schulz (also SPD) has been the President of the European Parliament since 2012. He is, like all Eurocrats, good at combining “values” talk with underhandedness—very good. The Brexit vote, he writes,
leaves a queasy feeling that the vote had less to do with Europe than rather with a discontent with our entire political system—that we are stuck in a fundamental crisis of confidence that poses a dangerous challenge to democracy as such.
See how clever this is? There’s obviously something to the suggested premise of discontent. What the sentence skirts is that (1) the pro-Brexit voters, far from despairing of “democracy as such,” may have expressed their confidence in their own parliament and (2) that the EU may have contributed to the discontent. What’s left is the insinuation that the Brexit challenge to the EU was a challenge “to democracy as such.”
To counter that challenge, Mr. Schulz wants to “connect to the hopes of young Brits and so many other young people all across Europe” that an “effective Europe is a necessary condition to allow them to live as they wish.” To that end he wants a “Europe that delivers.” That, in turn, requires reforms that provide “clarity who is responsible for what, so that citizens can correctly address those who are responsible for political results.” Really? Almost half of the “young voters” in the EU’s Southern countries are unemployed; anybody want to take responsibility for that result, or institutional reforms in that direction?
As Mr. Schulz knows very well, the EU was deliberately built without and against the voters. It operates through intergovernmental haggling and what we call “commandeering,” i.e. the “transposition” of EU directives by member-states—operational principles that in their design and in effect guarantee an imbecilic, irresponsible government. And sure enough, Mr. Schulz’s appeal for “clarity” turns into an exercise in exculpation. Time and again, he writes, the EU has been blamed for its failure in the migration crisis—even though the crisis was caused by member-states and the EU has “hardly any competences [i.e. institutional powers] that could have failed.” That is factually incorrect, and duplicitous. It was the EU, through the Schengen Accord, that adopted the bizarre idea of a passport-free area without providing effective means of controlling its external borders. (There actually is an EU border agency called Frontex; but it mostly counts people, “coordinates,” and gives good coffee.) There’s your failure.
The piece de resistance is the first contribution to the FAZ series, by Germany’s Finance Minister Wolfgang Schaeuble. Read it: your jaw drops. It helps to know that Mr. Schaeuble has been Mrs. Merkel’s junkyard dog for the past near-decade: Germany’s EU policies in matters of money and debt are his.
A crisis, the minister begins, is always an opportunity. (He ends on various opportunities to work with Mr. Erdogan and Mr. Putin.) By that standard, the EU should confront better prospects than ever. But sometimes a crisis is just a crisis, and that is bound to be the case when you’re uncertain about—or want to prevaricate about—the causes and the responses. Minister Schaeuble’s solution to what ails Europe is the perennial mantra: more integration. “Beyond all criticism of European institutions, national governments and parliaments,” Mr. Schaeuble writes, “the decisive impediment to integration is a lack of preparedness to transfer competences from the national to the European level.” He acknowledges that such a transfer “remains problematic.” Democracy requires a common “public space” and political debate, and the EU doesn’t have that. So you’re stuck with a common currency union without adequate foundations. Monetary policy cannot equalize member-states’ different economic and fiscal policies. Hence, the Euro and sovereign debt crisis.
What’s the answer? “A stricter observance of rules, agreements, and reform resolutions.” In plaintext, yet another austerity program for Greece and Portugal and Spain and, coming soon in this theater, Italy. This time with teeth.
They’ve been trying that for eight years running. At some point a crisis is just a crisis. Minister Schaeuble ought to know this isn’t working, and in truth he does. As his article went to print, the EU Commission declined to sanction Portugal and Spain for violating supposedly binding “fiscal stability criteria” originally negotiated in 1996 and subsequently amended for the entire Euro zone. In public, the minister harangued the Commission; in practice, he declined to oppose it. The Commission’s President, Luxembourg’s Jean-Claude Juncker, responded by accusing Mr. Schaeuble of having influenced the zero-sanction decision—as if the Commission needed pressure to arrive at a foregone conclusion. That’s how it always goes in the EU: solemn insistence on supposedly sacrosanct EU rules and then blame-shifting when the rules are broken, as everyone knows they must and will be.
The obvious truth is that the “stability pact” was dead at the outset, when the EU affirmatively encouraged Greece to lie its way into the Euro; deader when Germany and France—not the supposed deadbeats—broke the pact in 2003; and deader yet after the still-lingering sovereign debt crisis. In defense of Mr. Juncker, he is the quintessential Eurocrat: he cannot even conceive of a “binding” rule that should not be broken for reasons of political convenience, and he has never pretended otherwise. Minister Schaeuble still does.
So what now? To my mind, what is missing in the debate—not only but especially in Germany—is a hard-nosed classical-liberal appraisal of the EU’s operation and design. Quite arguably, Germany’s liberal party, the FDP, has been the most pro-EU force in German politics. (The party has become nearly irrelevant but played a major role in formulating and implementing the country’s foreign policy over the decades.) It’s easy to see the overlap between liberal ideals and the EU: free trade; open borders; peaceful relations among nations. It’s equally easy to see, though, that the EU’s actual operation and design violate and in fact rest on the derogation of equally foundational liberal principles: political accountability; the rule of law; the idea that a government that demands its citizens’ allegiance must acknowledge and enforce its obligations—the protection of common citizenship, common borders, common defense against enemies, domestic and abroad.
Suppose you actually believe in those precepts: perhaps, you could come up with a plausible EU reform program. You’d abandon the preposterous idea of a European defense force and instead leave that to NATO. You’d yank the EU back to the 1980s—a glorified free-trade area. You’d open up access to non-EU countries without demanding compliance with every jot and tittle of the acquis communautaire. You’d probably realign the currency areas by having Germany exit the Euro. (At the risk of confusing the new currency with Greek food you could call it the Geuro.) Other countries could opt into it or stay with a devalued Euro.
I recognize that these options might prove messy, and I’m not wedded to any of them. Considering the state of the EU, though, surely they ought to be on the table. They are not.
In large measure that is because European liberals, and German liberals in particular, have effectively jettisoned the underlying principles. Three orientations, I think, account for that surrender: internationalism and the hope that commerce will transcend all differences; a hankering for technocratic solutions to central political issues; and an undue preoccupation with high-falutin’ rights instead of institutional structure. I recognize that these orientations also afflict many American classical-liberals and libertarians. My colleague Ilya Somin, for example, gets most of this wrong, with customary enthusiasm and good cheer. (It’s worth following the links in his online discussion with Seth Tillman, who takes the opposite tack.) But charming libertarian illusions here play out differently over there.
Way back in high school, we read a book on the “Greatness and Failure of the German Bourgeoisie”—Groesse und Versagen des Deutschen Buergertums. In 1848/49, the author argues, the bourgeoisie faced a choice between liberal principles and a grander Germany (Grossdeutschland). It made the wrong choice then (and again later), and the results weren’t pretty. Say what you will about the liberals of those days, though: they knew that that was the tragic choice, and they knew that their choice was a choice about Europe’s fate. Today’s German bourgeoisie—depleted by emigration, dispirited, and beleaguered—has no advocate for liberal principles. It has thrown in the towel. And so the country’s political establishment is stuck with a demagogic insistence on an “ever-closer union” whose roads all end in Berlin.
This cannot end well.