Are Fissures in Europe Worse Than Media Reports Suggest?

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Thanks to an alert NC reader, we featured in Links more than a month ago the fact that Denmark, contrary to the spirit of the Eurozone, was implementing border controls. Today, a hand-wringing comment by Peter Spiegel, the Financial Times’ bureau chief in Brussels, describes how sentiment against Eurozone integration has risen among the locals. The near-victory of the nationalist True Finns, regime change in Ireland and Portugal, and demonstrations in Spain, Greece, and Portugal suggest that the citizenry is increasingly unhappy. Spiegel describes the Netherlands as “the California of Europe” and describes in some detail how it opposed the recent €440 billion rescue fund, opposed recent efforts to ntegrate the western Balkans into the EU to i, and demanded reform of immigration policies.

Perhaps I am projecting US tendencies onto the EU, but I see the same signs of elite isolation ther as we have here (in the US, it’s a New York-Washington bubble that includes finance, government officials, and major media). Per Spiegel:

Instead, we may be witnessing a generational change in European political dynamics. Traditional left-right divisions have narrowed. No mainstream social democrat now advocates centralised economic planning, just as no conservative candidate seriously questions the underpinning of the welfare state.

In its place, we are seeing a new division, between globalisers and localisers. The urban elites on both the left (intellectuals, liberal internationalists) and the right (free traders, global business leaders) face a challenge to their postwar consensus from a new group of revanchists.

This political force also comes from both the left (trade unionists, working-class whites) and the right (rural nationalists, far-right xenophobes). More importantly, it may spell a new, unprecedented challenge to the European project.

Did you notice the divide? No right thinking, educated person is against globalization; it’s only the lower classes, people in the hinterlands, and wackos. This is simply astonishing. It somehow does not occur to Spiegel (and I assume that he is merely a reflection of the chattering classes in Brussels) that the globalization/economic integration experiment has led to increased income disparity and and erosion of democracy. Yes, the elites and the rich benefit, but there are plenty of educated and middle class people who have come out on the short end of the stick. He seems to have ignored Dani Rodrik’s trilemma, that you cannot have national sovereignity, democracy, and deep economic integration at the same time. As he noted, you can have at most two of those three:

To see why this makes sense, note that deep economic integration requires that we eliminate all transaction costs traders and financiers face in their cross-border dealings. Nation-states are a fundamental source of such transaction costs. They generate sovereign risk, create regulatory discontinuities at the border, prevent global regulation and supervision of financial intermediaries, and render a global lender of last resort a hopeless dream. The malfunctioning of the global financial system is intimately linked with these specific transaction costs…..

So I maintain that any reform of the international economic system must face up to this trilemma. If we want more globalization, we must either give up some democracy or some national sovereignty. Pretending that we can have all three simultaneously leaves us in an unstable no-man’s land.

Given the spectacle of bankster bailouts followed by grinding austerity which many realize all too well is primarily a further sops to financiers, it is not too hard to see that many citizens correctly discern that the globalization/eurozone experiment isn’t delivering the economic benefits they’d been promised, and they like to have back some of what they gave up, in particular, greater local self-determination. This is completely sensible yet the Eurocrats seem to see it as voter ignorance, rather than a warning shot that the powers that be need to be a lot more concerned about the living standards of ordinary citizens than they seem to be now.

Related to the desire of the elites to depict unhappy locals as uneducated crazies, I also wonder whether the mainstream media is underreporting the scale and geographic scope of active opposition. There are many stories about protests in Madrid and Athens, but this comment from reader Doly yesterday suggests that the uprisings in Spain are more extensive and have specific obejctives:

Thought I’d report what my mother is telling me in her emails from Spain, mostly the economically relevant bits. (Note – she’s 57 and doing perfectly fine financially. If even some Baby Boomers who are doing well feel like this, imagine the rest.)

I’m delighted with the movement in La Coruña (Note – La Coruña is in the Northwest corner of Spain, on the coast. Not exactly close to Madrid). They’re doing it so well!

There is communication among the camps of all Spain. A couple of days ago two young people from Puerta del Sol in Madrid came here, I imagine to coordinate, advise and provide ideas. I suppose they have sent people to all of Spain.

There are camps in more than 150 Spanish cities, and I’m told also in foreign countries. (Note – Most definitely. I live in Brighton, UK, and there is one here.)

A Portuguese friend tells me that the movement has bloomed strongly in Lisbon, helped by the very difficult economic situation in the country. It started on 19th May, when some Spanish students of the Erasmus program made a demonstration. Now it’s the Portuguese citizens themselves protesting. It’s possible that the example extends to other European cities.

Another thing. The sparkle may also put Buenos Aires on fire. The movement is supported by the Nobel Prize Adolfo Pérez Esquivel and the Mothers of the Plaza de Mayo. Both Spanish residents and Argentinians are joining. They have been in touch with movements in Uruguay, Chile and Mexico to make a joint manifesto denouncing police aggression against the campers in Barcelona.

For the 30th May they have launched an action: everybody take out 155 euros out of their bank account. People are very upset because all the money has gone into saving the banks instead of social support. Besides, when people can’t pay their mortgage, the bank takes the house, sells it at half price, and the families that were foreclosed on, apart from being on the street, still have to pay the mortgage. We ask that if the bank takes the house, people shouldn’t continue paying for a house they don’t have any more.

Tomorrow I’ll be in Madrid (Note – for personal reasons). The train arrives early so I’ll go directly to Puerta del Sol to see that. Your father has made me promise him I won’t go, he was really tiring, because he’s afraid I’ll be mugged or the police start hitting people. But you will understand I can’t miss this, and I have some experience with this sort of thing (Note – she means in times of Franco), though now I know I can’t run as I could. I want to see how the camp is organized there. I’ll tell you all about it.

This is once she arrived in Madrid, 30th May:

The tents where the people who stay to sleep are, are using up all the space, Puerta del Sol is small for such a movement, and they are debating taking out the camp and separate it into the different local areas. Today, 29th May, there have been assemblies in more than 140 places within the Madrid autonomous community, and it’s estimated that more than 25,000 people have met today to form local groups. Many of them will meet one, two or four times a month.

The protest of the indignant have made theirs the objectives of a platform called “Real Democracy Now”. Apparently this was born on the Internet. They say that “Real Democracy Now” is a group born in the University world about a year ago, and it has some notoriety under the slogan “without a home, without work, without a pension and without fear”. Other slogans are “Politicians are guilty”, “Cuts? Theft.”, “This isn’t a crisis, this is fraud.”, “We aren’t anti-system, the system is anti-citizen.” Other platforms have joined, such as “Don’t vote them” and some others.

These are their objectives (I’ve left full details on the economic ones):

1. Removal of the privileges of the political class

2. Against unemployment:

a. Distribution of work, encouraging reduction in work hours until structural unemployment is ended (that is, until unemployment goes below 5%).
b. Retirement at 65 years of age and no going up in retirement age until youth unemployment is ended.
c. Benefits for companies with less than 10% of temporary contracts.
d. Job safety: Mass layoffs should be impossible in big companies while there are profits, taxing big companies to ensure that they aren’t covering jobs that could be permanent with temporary jobs.
e. Bring back the allowance of 426 euros for all long-term unemployed people.

3. Right to a home:

a. Homes that were built and not sold in a long period of time should be taken by the State and put on the market to be rented by Councils.
b. Economic support for young people and all people of low income to pay the rent.
c. Mortgages should be cancelled if the homeowner gives the home back to the bank.

4. Quality public services:

a. Removal of unneeded expenditure in government, and establishment of an independent control of budget and expenditure.
b. Hiring of health workers until the waiting lists are over.
c. Hiring of teachers to guarantee a good ratio of pupils per classroom, and support groups.
d. Reduction in the costs of attendance of all University education, and make the cost of graduate the same as postgraduate courses.
e. Public finance of research to guarantee its independence.
f. Cheap and sustainable quality public transport: return the trains that have been substituted by high speed trains with the original ones and the same prices, make cheaper transport passes, restrict private traffic in town centres, build bike lanes.
g. Local social resources: Effective applying of the Dependence Law, networks of local carers, local services for mediation and tutors.

5. Control of banks:

a. Ban of all sorts of bailout of banks: those banks with problems must go bankrupt or be nationalized to become a public bank under social control.
b. Rising the taxes to bank directly in proportion to the social cost caused by the crisis that was brought about by their mistakes.
c. Banks should return to the government all the public money given to them.
d. Ban Spanish banks from investing in tax havens.
e. Regulation of sanctions to speculation and bad bank practice.

6. Taxes:

a. Raise taxes to the most wealthy and to banks.
b. Real and effective control of tax fraud and money going away to tax havens.
c. Promoting internationally the adoption of the Tobin tax.
d. (Some other things specific to Spain that I’m not sure of the meaning).

7. Citizen freedoms and participative democracy

8. Reduction of military expenses

Reader Diego qualified this list a bit, saying that 15-M and Real Democracy Now followers were not necessarily in agreement on the social demands (such as action against unemployment and housing policy) they were united on:

1) real democracy (which means a more representative electoral system, some measures of direct democracy, etc.); 2) fight against corruption (e.g. indicted people being expelled from office) and politicians’ privileges; 3) punishing bankers and regulating finance.

He suggested looking at #consensodeminimos on Twitter.

While it’s hard to discern the state of play from anecdotes, the level of economic distress in Europe and more important, the fact that it is likely to get worse before it gets better, gives every reason to believe that citizens are restless. And with the summer upon us, thing could heat up mighty fast.

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  1. psychohistorian

    I think that this summer will see a lot more heat than light on the problems that confront us. The folks causing the problems are still very much in control.

    1. Francois T

      “They’re still very much in control”

      Chaos theory clearly illustrate how illusory the stability of any system can be. Stability and control musn’t be confounded. Society can appear pretty stable, but on the verge of spinning out of control.

      …in 1987, three physicists named Per Bak, Chao Tang and Kurt Weisenfeld began to play the sandpile game in their lab at Brookhaven National Laboratory in New York. Now, actually piling up one grain of sand at a time is a slow process, so they wrote a computer program to do it. Not as much fun, but a whole lot faster. Not that they really cared about sandpiles. They were more interested in what is called nonequilibrium systems.

      They learned some interesting things. What is the typical size of an avalanche? After a huge number of tests with millions of grains of sounds, they found out that there is no typical number. “Some involved a single grain; others, ten, a hundred or a thousand. Still others were pile -wide cataclysms involving millions that brought nearly the whole mountain down. At any time, literally anything, it seemed, might be just about to occur.”

      It was indeed completely chaotic in its unpredictability. Now, let’s read this next paragraph slowly. It is important, as it creates a mental image that helps me understand the organization of the financial markets and the world economy. [emphasis mine]

      To find out why [such unpredictability] should show up in their sandpile game, Bak and colleagues next played a trick with their computer. Imagine peering down on the pile from above, and coloring it in according to its steepness. Where it is relatively flat and stable, color it green; where steep and, in avalanche terms, ‘ready to go,’ color it red. What do you see? They found that at the outset the pile looked mostly green, but that, as the pile grew, the green became infiltrated with ever more red. With more grains, the scattering of red danger spots grew until a dense skeleton of instability ran through the pile. Here then was a clue to its peculiar behavior: a grain falling on a red spot can, by domino-like action, cause sliding at other nearby red spots. If the red network was sparse, and all trouble spots were well isolated one from the other, then a single grain could have only limited repercussions. But when the red spots come to riddle the pile, the consequences of the next grain become fiendishly unpredictable. It might trigger only a few tumblings, or it might instead set off a cataclysmic chain reaction involving millions. The sandpile seemed to have configured itself into a hypersensitive and peculiarly unstable condition in which the next falling grain could trigger a response of any size whatsoever.”

      Something only a math nerd could love? Scientists refer to this as a critical state. The term critical state can mean the point at which water would go to ice or steam, or the moment that critical mass induces a nuclear reaction, etc.. It is the point at which something triggers a change in the basic nature or character of the object or group. Thus, (and very casually for all you physicists) we refer to something being in a critical state (or the term critical mass) when there is the opportunity for significant change.

      “But to physicists, [the critical state] has always been seen as a kind of theoretical freak and sideshow, a devilishly unstable and unusual condition that arises only under the most exceptional circumstances [in highly controlled experiments]… In the sandpile game, however, a critical state seemed to arise naturally through the mindless sprinkling of grains.”

      Thus, they asked themselves, could this phenomena show up elsewhere? In the earth’s crust triggering earthquakes, wholesale changes in an ecosystem or a stock market crash? “Could the special organization of the critical state explain why the world at large seems so susceptible to unpredictable upheavals?” Could it help us understand not just earthquakes, but why cartoons in a third rate paper in Denmark could cause world-wide riots?

      He concludes in his opening chapter: “There are many subtleties and twists in the story … but the basic message, roughly speaking, is simple: The peculiar and exceptionally unstable organization of the critical state does indeed seem to be ubiquitous in our world. Researchers in the past few years have found its mathematical fingerprints in the workings of all the upheavals I’ve mentioned so far [earthquakes, eco-disasters, market crashes], as well as in the spreading of epidemics, the flaring of traffic jams, the patterns by which instructions trickle down from managers to workers in the office, and in many other things. At the heart of our story, then, lies the discovery that networks of things of all kinds – atoms, molecules, species, people, and even ideas – have a marked tendency to organize themselves along similar lines. On the basis of this insight, scientists are finally beginning to fathom what lies behind tumultuous events of all sorts, and to see patterns at work where they have never seen them before.”

      There is only so much ordinary people will tolerate before rebelling “robustly”.

      1. RanDomino

        The inherent contradictions of Capitalism get patched over and patched over, but each time a cost is accrued and the problem is not really solved. The breaking points are the great revolutionary periods which seem to come every 40 or 50 years and are generally crushed with force; but, today, with the system reaching its natural limits, it might not be so easy. A soldier or paramilitary who isn’t getting paid is not likely to come to work!

        1. Africommando

          In central Africa, soldiers are not paid on purpose. Instead, they are told if they want to eat, they have to steal and kill. It helps keep the soliders hungry and helps foment the chaos and abhorrent conditions the Western countries need to plunder the region.

  2. SteveA

    IMarketNews (Deutsche Boerse Group) quoted remarks by the Dutch Finance Minister about Greece on May 29:

    De Jager said “the Greek government has to outperform market expectations, and it means that they have to do at least what’s in the IMF program” of fiscal consolidation and reform. “Rising social unrest is not any excuse,” he said. Greece must follow the program to the letter.

    “If there is anything to do, it’s about more reforms, more austerity measures and more privatization,” he said. “I know the situation, there is unrest, it’s disturbing of course, it’s a sad situation in Greece, but as we know from the past, the most difficult measures…will also be the best ones for the Greek people.”

    “Otherwise I see scenarios that are much worse for the people of Greece,” he warned.

    “Rising social unrest is not any excuse”? Perhaps only a junta will comfort Greece’s creditors?

    1. Yves Smith Post author

      Iceland stared down foreign creditors. It admittedly had its own currency and it did suffer about six months of seriously stressed times, but my impression its citizens think they made the right decision.

      No one is gonna send tanks into Greece, The prospect of stripping it of national assets appears to be galvanizing the locals. Whether they act in a united fashion remains to be seen.

      1. Expatriated

        “No one” could also decide not to send tankers into Greece. Just how much oil will a Cheshire Cat New Drachma buy?

        Ditto for imported kilowatts from the EU’s expanding integrated power grid.

        1. Patricia

          “No one” denies that they are not in huge trouble. The question is which way through will most efficiently provide the greatest possible eventual health for their citizens and land.

          If you think applying the same old methods will be good for the Greeks, you need another read through “Shock Doctrine”. Otherwise, let’s try something else, if for no other reason than that we know the results of the “same old”–chronic ugliness and weeping for nearly everyone and for all their lands.

          1. Expatriated

            I didn’t say any of that or advocate it. I merely pointed out two more forms of coercion that could be employed by determined “international agencies”. And they do seem to be very determined.

            19th Century gunboat diplomacy in the form of foreign collection of Greece’s tax revenue is already publicly discussed as one of the next steps. This is what was done with China and many Latin American countries. The Royal Navy would land Royal Marines, seize the customs houses at the ports and physically collect tariffs until specified debts were satisfied.

            I merely ventured to update that thinking with more modern forms of coercion often used in the 20th Century. “Oil blockade” was a frequently used weapon. If They can think of tax seizure ala landing the Marines They will also look into Blockades of various types.

        2. DownSouth

          If the Greeks defalt on their debt there will be sufficient money to keep the oil tankers and the killowatts coming.

          1. Expatriated

            You seem to be presenting such an event as being consequence free.

            Is it your contention the Greeks can default on their sovereign debt without leaving the eurozone? And if they can do this without leaving (or being ejected from) the euro, what’s to stop other eurozone governments in similar straits?

    2. Foppe

      De Jager is a member of the largest nominally christian party, but he’s just as Neoliberal as the politicians from all establishment parties are. And yeah, the guy doesn’t care one fig about the Greek people (though, to be fair, I’m not really sure he cares about the lot of members of the Dutch working class either). But the reporting in all Dutch newspapers is very heavily slanted against the “irresponsible”(think thieving) Greeks/Irish/Southern Europeans, so this is not all that surprising..

  3. Diego Méndez

    Yves, thanks for the post.

    Economic distress does play a part, indeed. The political system’s contradictions are more easily felt during stagnation, e.g. politicians say cuts are unavoidable, but cuts always fall on others (social benefits) while they keep a legion of non-elected, highly-paid “consultants” and over 70,000 expensive cars with choffeur.

    But, I insist on this, the political system is the rotten one. You could argue peripheral Europe can understand this more easily than, say, Germany, since corruption, privileges, nepotism, etc. are more painful in times of economic stagnation. (I wouldn’t say they are more widespread here than there, just look at some recent scandals).

    However, Germany (and many other EU countries) has similar problems of lack of accountability. Do Germans think their bankers should be rewarded with multi-million bonuses, despite massive public subsidies? If they cannot decide on this, the system is not so democratic as they may think. And, sooner or later, they’ll wake up to reality.

    I am re-reading these days a 1997 book, “The post-democratic revolution”, written by Spanish author Javier Tusell (I don’t think there is an English edition). Tusell argued people wanted more democracy; he compiled a full list of then-recent signals and electoral revolts all over the developed world that pointed to a revolution for more democracy.

    14 years later, it is pretty obvious he was right. The middle 90s malaise gave way to the internet bubble and the home bubble; economic growth served as anesthesia for democratic urges. However, with the advent of social networking, the financial crisis exposing the limitations of the political system, and the spark of the Arab spring, the post-democratic revolution foreseen in 1997 is making its entry on scene.

    1. readerOfTeaLeaves

      I’m not at all familiar with Tusell, but I’d offer a couple bookmarks that, in my view, in tiny ways support what I think you are saying.

      The first is an interview with former Portugese Pres. Mario Soares at RealNews Network, titled “Financial ‘monsters’ threaten democracy”; this older gentleman has a very interesting perspective. It’s an interesting perspective in the sense that he speaks about the conflict between markets-banks and nation states-governments. He seems to think the Arab spring may float into Europe, and that people want more democracy, more participation. [8 minutes]

      The other is a <2 minute video at New Deal 2.0 from last week, put together by a group of millenials. Every member of Congress should pay attention to this video, but of course they won't (at their peril).
      “Millennials to Politicians: Listen to Us”

      Granted, these are only two random videos, but what struck me about both was the historical perspective of Soares, and the phenomenal imbalances in political life that a quick, 2 minute ‘millenial’ video point out. The ‘millenial’ video speaks to how silenced and ignored these 20-somethings feel in a world where the politicians appear to think in sound bites. And it’s conveyed in the ‘grammar’ a lot of these 20-somethings speak: video.

      Hope these are helpful for whatever you are thinking through.

    2. bmeisen

      I like your optimistic fatalism. I think Spain has come a long way since the dictatorship and I would like to know more about where the Spaniards want to go and if it is possible for them to get there. I note that dumping the Euro is not among the points listed above. Stable public finances should benefit the Spaniards, not penalize them.

  4. attempter

    The trilemma looks good on paper, but in reality “deep economic integration” is mutually exclusive with either national sovereignty or democracy.

    The “golden straitjacket” refers to how a handful of the most powerful corporate/government nexuses (here fraudulently referred to as representing the “nation-state”) control the globalization regime. As history has proven since the classical imperialist era, this imperialist integration can exist only at the expense of the integrity of democracy and the nation at home.

    Similarly, democracy has always and everywhere rejected “economic integration” in its more aggressive manifestations. Even conceptually they’re antithetical, since how can this integration be established and enforced other than through some top-down anti-democratic Gleichschaltung? The reference to “global federalism” is a scam. How could democratic communities across continents federalize in any but the most loose way? Certainly they could never come close to the “integration” global corporations want to impose. That’s why in practice it’s always done tyrannically, from the top down.

    The clearest example is how food markets are naturally local/regional. Anything close to true federalism would have only a miniscule market in foodstuffs beyond the regional. But globalization seeks the radical opposite – to force all of humanity into the strait jacket of globally commodified agriculture; to enslave all of humanity to a purely artificial, alien, bizarre pseudo-market prerogative.

    That’s the worst example, but all of globalization follows that pattern.

    So the trilemma is really an obfuscation needlessly rendering a simple dilemma more complex. The truth is, in globalization both nationalism and democracy see their mortal enemy, just as these both saw that enemy in the old feudalism. That’s no coincidence, as globalization represents the restoration of an even more vicious feudalism.

    1. Susan Truxes

      Yes. One can only anticipate. Present indicators are very disturbing. Globalism seems to regard nations only as tax bases. Creepy. But probably the key to the whole damn scam.

  5. ax

    “I also wonder whether the mainstream media is underreporting the scale and geographic scope of active opposition. ”

    Whose mainstream media? American, for sure, because it underreports anything outside the borders of the U S of A. The movement is being reported if not overreported in Europe.

    1. Yves Smith Post author

      I did a search on Google News, which picks up foreign press. Lots of reports on Athens and Madrid, but no hint that there are actions elsewhere as Doly’s mother indicates.

  6. AMB

    “Perhaps I am projecting US tendencies onto the EU, but I see the same signs of elite isolation ther as we have here (in the US, it’s a New York-Washington bubble that includes finance, government officials, and major media).”

    You are not projecting. There is really a huge gap between elite thinking and isolation and the population at large. All you have to do is read establishment press like Le Monde, to see that dissent and discontent are treated as a somewhat cooky pathology. The collapse of the neo-liberal economic paradigm and policies of full economic integration is there for all to see, but how will people that invested so much intellectual capital (as well as standing to gain) reverse long held positions, challenge the moneyed interests that benefited the most from that paradigm overnight. It will take more and broader distress and upheavel to get Brussels and Frankfurt to pay attention to what is happening.

  7. Angus Wright

    I was impressed by a formulation which says: ‘the consequence of globalisation is that economies become privatised, and democracies become financialised.’ This is the latest form of a long evolutionary struggle which is not new. It is, however, painful and profoundly opposed to the democratic ideal. How it is to be reversed this time seems entirely unclear right now, but the process seems to be speeding up.

  8. Foppe

    I am also not crazy about this trilemma, I suspect because it stresses “economic” integration over a much broader notion of social integration. I’m not sure if the author supposes Deep Economic Integration automatically leads to better outcomes for all participants, but the fact that he so stresses the nation state as a source of “transaction costs” makes me suspect that he doesn’t really believe in the right of a state to collect taxes and redistribute them either.
    Globalization thrives on the existence of political variation between different sovereign entities, because that way states can be played against each other when lobbying for (e.g.) lower corporate tax rates. At the same time, the “straitjacket” formed by institutions like the IMF and the WTO — as well as, to a slightly lesser degree, EU membership — is used (often by local neoliberal politicians) to force through decreased labour protection/worker rights, in order to guarantee more profits for the capitalists. That is, parties inside the nation state are divesting the state of the right to self-determination in order to limit the influence of democratic politics on economic policy. (You see this most starkly in South Africa). But they don’t do this to guarantee better “world” outcomes, but just to benefit local elites. Therefore, it is highly beneficial to only have social/economic integration in some areas (such as relaxed capital controls, lowered import tariffs) while maintaining barriers in others (migration, right to vote in country of residence, national determination over taxation levels).
    There is no principled reason not to have democratic control over, e.g., EU-level legislation, just implementation problems, and the nonexistence of an EU public sphere, yet it only exists in anemic form. (Probably because not having it is deemed advantageous by our increasingly Neoliberal, and still unelected EU “politicians”). But more broadly speaking, deep economic integration will be impossible so long as there are differences in the standard of living. Yet a lot of these differences come from the current taxation trends worldwide, combined with the repeated financial meltdowns the world has been seeing since the 1970s.. But how do you imagine you can have “deep integration” between greece and Germany when the economy of the former country requires an entirely different monetary policy than that of the latter?
    Deep integration in Africa has meant the dumping of Western food surpluses, which immediately destroyed local economies because those agriculture-based economies could not compete with the free food on offer. yet because of the free food those industries disappeared, while no others could take its place because of the lower level of social development. So long as such differences at the social level exist, you cannot integrate, yet at the same time our world economy seems only to function when there are these opportunities for double digit profit margins, which only occur in bubble or devastated economies with no social protection against employer abuse.

  9. Doly

    Some more reporting from my mother:

    I’m excited about Greece. The Greeks had to join, democracy was born in Greece.

    In the blogs about the camps they say the movement has arrived at Paris and the French police have been hitting people in the Bastille, and they have arrested several people. This was confirmed by the Spanish paper El País (in a small corner), giving the number of 1,000 people in Bastille, but the demonstrators give the figure of 3,000 or 4,000.

    El País says: “The demostrators were shouting slogans like “Paris, stand up!” and the signs in French and Spanish said things like “May 1968 asked for the impossible, May 2011 will make the impossible reality.” The protest also extended to other big cities of the country, such as Toulouse, Bayone and Lyon.”

    The camp in Madrid continues, but they have eliminated the free food because they couldn’t cope, logically people who didn’t belong to the movement were coming to eat for free.

    My perception is that the movement will continue. There isn’t much risk that it goes out of hand, the press isn’t saying much about it. If they published it on the first page this would have exploded already and they would have to start the political reform. But keeping quiet works.

  10. Random Lurker

    I have a very different opinion about the “euroskepticism” of the “masses” in the EU.
    I live in Italy, and I can remember that, at the time of the adoption of the euro, everyone was pro EU, political parties both of the left and of the right boasted their pro-EU-ness and accused their opponents of being anti-EU or of have been anti-EU in the recent past. Most “common people” were also pro EU.
    However, mostly because of linguistic barriers, political discourse still exists almost only at national level.
    This means that the only important politician are national politicians.
    Those national politicians usually keep the merit for positive results for themselves and blame the EU for negative results: for example, when the stability pact forced the (at the time leftish) italian government of Prodi to “not go keynesian”, Prodi kept at bay his internal opposition sayng, basically, “we are forced by the EU”. When italian deficit actually diminished, then, leftish parties took the merit for the shrinking (instead of saying, it’s beacuse of the EU that the deficit shrank).
    This kind of “blame the EU” political posturing creates a lot of popular backlash against the EU.
    Today, many Greeks, Spaniards and Irish blame the EU for their economic woes, however Ireland, Spain and Greece were much poorer before entering the EU tha now. How many Irish, Greeks and Spaniards thank the EU for their fast growth in the last two decades?

    1. baghot

      I agree. And, I think it’s fine that people are starting to wake up a little bit and demand more democracy. It would be especially good for Italy IMO.

      The structures are all in place. People just need to care more about who they send to the EU parliament, and they need to not be so easily taken in when lied to by politicians.

      Even if every country left the EU, it wouldn’t solve the mismanagement by the national politicians (only mismanagement by EU politicians).

  11. Viator

    Looks like a fine national socialist program to me. Now all they are going to need is a “strong man” in each country to accomplish their goals.

    One thing they may accomplish. The irresistible undemocratic tendencies of the European technocrats and privileged classes are coming up against the burgeoning and immovable resistance of the European people. Soon some key group will say nein and mean it. Then the whole house of cards of European insolvency will come tumbling down. CDS will kick in. Trillion upon trillion of wealth will evaporate very quickly. Then we will really see some manifestations.

    1. Doly

      As far as I can tell, yes, some people did it. I got an email myself, completely unconnected to my mother, from the local Spanish activists in Brighton, forwarding the 155 euro action. I was surprised to get it, because I’m not generally politically active like some people are, I’m involved in one specific environmental group (Transition movement) and that’s pretty much all I do. It looked like people were forwarding the email to anybody they knew who might reasonable be interested, and I guess Spanish and active in some way was all it took. I doubt banks will give figures on how many people actually did it, but I wouldn’t be surprised if it came out in some way that the action was quite widespread.

      1. readerOfTeaLeaves

        That’s actually an ideal Open Source project.
        You’d need some way to verify that people had actually taken the money out (some way of identifying a receipt, that still protects the privacy of the person reporting).

        If someone in your organization can set up a blog or an Open Source website, you could figure out a way to aggregate the data by having people self-report. (The website could even add in a layer for putting dots on a Google map if someone in the group has the technical skills to do it.)

  12. Jon

    The ‘Best 2 of 3’ Trilemma nicely captures one of the reasons that voters are increasingly fed up with the EU. As currently constituted, we are getting economic integration and nation state control (as captured by elites) at the cost of a loss of democracy. To some extent voters are renouncing those other two ‘options’ as a way of saying ‘No’ to a further loss of their rights.

    For myself, I guess I fall into the elite group as I see good reasons for the EU and its broad project (freedom of movement has clearly benefitted some of us here in the UK much as it has also benefitted the ‘Polish plumbers’ who came here to learn English and then return to Poland with more marketable skills). But the EU is clearly unaccountable to voters on any level (look at the way they handle expenses and at the way the Council largely ignores the only vaguely democratic bit of the whole enterprise) and there is not meaningful attempt to balance out the plusses and minuses of globalisation for local workers.

  13. Sungam

    One thing that has always frankly pissed me off about a large part of the anti-globalisation movement is the nativism of it all. Globalisation has allowed many Asian countries to first become major exporters, then saw their own domestic markets grow and who are now increasingly challenging the “natural dominance” of the US and Europe on the world stage (see new IMF head debate et al).

    Yes, this large a supply of unskilled labour suddenly appearing on the market created a huge shock but you can see there is a natural end point to it. Starting from Japan, Korea the general trajectory has been starting from low cost manufacturing and then moving up the value chain. Already there are significant wage pressures in China cutting out that advantage there. There is increasing talk of bringing manufacturing back on-shore. Some might move to the next low wage country after China however that number of countries is finite.

    The final point I’d like to make is that I hate the way you presented that trifecta as a choice between three extremes. That you can only have two out of the three at any time. These three pillars are not absolutes but continuums. At the simplest level I could point to the US pushing strongly for trade globalisation but having no truck with the Hague Tribunal.

    1. Foppe

      Asian countries to first become major exporters, then saw their own domestic markets grow and who are now increasingly challenging the “natural dominance” of the US and Europe on the world stage

      But this doesn’t tell you anything about the income and wealth distribution inside those countries. The US is very influential world-wide, but that doesn’t tell you one bit about the question how they treat their population. And so far, the growth has been very one-sided even in neoliberal/communist China.

      Some might move to the next low wage country after China however that number of countries is finite.

      Is it? Because unless I’m missing something, the dynamic is that investors settle somewhere to invest until they can’t get their 10%+ growth rates any more, then move somewhere else in order to develop that place, compete the first site into the ground, let it burn for a while, and then start over. And this is possible precisely because underdeveloped or depression-hit countries (think here of states like Mexico or Latvia) experience huge drops in their standards of living, expectations, and labor protections, so that it becomes profitable for investors to invest there again for a while, on wages that are slightly above subsistence. Now, I’m sure the investors think this is great, but I’m having trouble seeing why only they deserve that ‘higher standard of living’..

      1. Sungam

        “But this doesn’t tell you anything about the income and wealth distribution inside those countries. The US is very influential world-wide, but that doesn’t tell you one bit about the question how they treat their population. And so far, the growth has been very one-sided even in neoliberal/communist China.”

        Income distribution wise South Korea, Japan and Indonesia for example are far more egalitarian than the US,as are most European countries… Brazil is well below the People’s Republic of china but with Bolsa Familia and other initiatives it is starting to shift in the right direction.

        Is far as invest and burn is concerned neither Latvia nor Mexico are good examples of that. China could fall foul of thatif the balls up the transition to greater domestic consumption. Latvia’s current crash was due to a credit bubble, they never became a major outsourcing based exporter. Mexico was reliant on low margin tradeables but again the industrial activity there was more in thrall to the PRI than Global Multinationals. Carlos Slim is one of the products of that.

    2. Patricia

      “One thing that has always frankly pissed me off about a large part of the anti-globalisation movement is the nativism of it all.”…. “These three pillars are not absolutes but continuums.”

      It is also absolutist to see the issue as either globalism or “nativism”. It has become obvious that there needs to be a great deal more “localism” (a word that I like better than “nativism”) and less globalism, if one wants to care for humanity/planet rather than mere efficient acquisition. Since life is largely lived locally, to have economic life locally centered is common sense. From there, it reaches out, in ever thinning lines, to state/district, national, continental, intercontinental.

    3. DF

      …but their domestic markets haven’t grown enough, as these countries continue to maintain large trade surpluses. Also, many of the Asian countries espouse this same “nativism” that you lament, and keep out foreign goods/services/people.

      1. Sungam

        China excepted most of these are not much more protectionist than the US as far as trade is concerned. They are all (China included) members of the World Trade Organisation. They were far more protectionist in the past but trade barriers around the world have been dropping. Several of these countries put very strong restrictions on immigration however.

        Personally I find immigration limits irksome as I tend to see them as another way in which people are kept (in this case literally) in their place. I could now start my rant about how the disenfranchisement and isolation of illegal immigrants from the justice system is a cause of all sorts of issues…

        And yes, even greater domestic demand in Asia would be a boon. The last thing we want to happen is for the rest of the world to crash once the US stops being able to sustain its current account deficit.

      2. Sungam

        China wise you can probably ignore what I just worte above. Medium term wise the biggest thing will be whether they’ll be able to cope with their looming demographic crisis. Unless their one child policy is made more lenient they’re on a nasty trajectory since they’re already pretty far below replacement level.

        Of course since they’re a semi totalitarian regime I’m sure they’ll pull out some family and motherhood plan out of the bag before things get too far out of hand…

  14. DF

    This is slightly off topic, but I found the part on high-speed rail interesting. There seems to be growing skepticism about the utility of HSR in China, now it looks like a lot of Spanish are skeptical too.

    These are useful data points in the US debate on how much we should develop/expand HSR here.

    1. bmeisen

      Not just slightly off topic – it’s downright strange to use this discussion to launch an attack on high-speed rail. Do you want to suggest that Spain should not develop high-speed rail? Are you concerned that high-speed rail will undermine automobile sales? If so then you might recall that it wasn’t until Spain joined the EU and benefitted from EU transfers that it was able to attempt to develop a genuine national highway system. The northeast corridor was a 2-lane highway until the 90’s.

      1. DF

        What Spain does is their business, but I’m kinda concerned about the cost of it, too. I’ve looked at trips between Washington, DC to NYC, and I can’t see the justification to spend $100-$130 to take the Acela (high-ish speed) over the $50 for the NE Regional (regular speed) or $20-$30 for something like BoltBus or Megabus.

        I thought the HSR comment was interesting because some HSR detractors say that HSR is really, for the most part, a taxpayer subsidy to well-heeled business travelers (i.e., a handout to the elites), rather than something universally beneficial.

        1. Jim

          HSR should definitely factor into the discussion, DF. Only three HSR routes are profitable; the rest are subsidized on an operating basis. Makes no sense.

          One of the reasons why HSR has had problems gaining traction in the US is the aversion to the taxpayer subsidy. In California, for example, no private company has come forth to run the proposed HSR line. Why?

          Because the referendum that enabled HSR prohibited the taxpayer from subsidizing operating losses.

          1. bmeisen

            Thanks for the insight on why HSR hasn’t happened in CA.

            A government subsidy may be necessary and if so that’s OK. Unlike many subsidies paid by the gov’t to corporations in the US, this one would benefit everyone to the extent that everyone would have more transportation solutions to choose from. Right now Americans effectively choose between cars and planes. Public subsidized transit solutions are not available to most Americans. They drive, sometimes to the airport where they get on a plane. This policy has created the impression that transportation in the US is an almost purely private issue while ignoring negative externalities including the lack of choice of transport solutions.

            By the way, a year’s pass for Germany’s rail system, including HSR costs Euro 3800, about $4300. It effectively includes the major local mass transit systems.

    2. Hillary

      I’m not sure how relevant European data points on HSR really are to the US. The distances involved are completely different, messing up both the cost to build and the consumer interest comparisons. A European consumer is presumably comparing cost to slow passenger rail tickets. An American consumer (outside the Northeast) would compare to flying or driving.

      For example, a friend blogged last year about his incredibly long drive in England, all the way from the Channel to Scotland. My reaction was that’s nothing, that’s how long it took to get to Grandma’s house.

      1. bmeisen

        The distance argument is pure bait and switch. The moon was far away too. Paris – Marseille isn’t exactly a hop either.

        Transportation policy in the US is cut and pasted from the business plan of Big Energy and its gophers, the auto and aviation industries. Conscientious governments consider the long-term interests of their citizens and produce transportation policy that observes notions of community and is committed to maintaining diverse transport alternatives. See virtually any northern European country. Transport policy in the US consists of cheaper gas, pothole repair and coding that will predict the drift of the next Icelandic ash cloud.

        Aviation as an industry is unlikely to survive much more than 10 years: What’s the alternative to kerosene if you want to transport 40 tons at 500 mph? Before that point arrives, it would be smart for the US to have high-speed rail.

  15. Viator

    Greece Stands on the Edge of Civil War

    “One third of people in Greece now want a revolution, and 98% and 89%, respectively, hold the government and speculators responsible for the crisis. Almost none of them have confidence in their leader’s ability to solve the financial crisis, and most of them have negative opinions of the European Central Bank, the International Monetary Fund, and the big EU nations, such as Germany. And this not mere talk: Greek revolutionary groups – and there are tens of them – are already well-armed with basic weapons and bomb-making equipment, as attempts to assassinate various world leaders showed. They have also committed at least one terrorist atrocity – a bombing of a bank in which three people were killed – and have carried out a series of bomb attacks across Greece. They have also carried out gun and grenade attacks on police stations.”

  16. Hugh

    The “construction” of Europe was always a top-down, elite enterprise. Even in much better economic times, there was a lot of popular opposition to it. This opposition tended to be minimized or ignored by the elites. I’m not saying that there wasn’t some popular support. There was. But the key selling point was that Europeans would see tangible benefits from integration. Well, they did on the upside of the world financial bubble. And now they don’t on its post-burst downside. But more than this, we can see clearly the fundamental failures of this elite experiment, or if you are less kind, like me, kleptocratic con. Not only did the Eurocrats fail to contain, or more importantly prevent, serial bubbles. They promoted them. At the same time, currency union lacked the necessarily concomitant debt union. The result has been the current spectacle of the stronger members dumping the weaker ones from the lifeboat. Try to reconcile that with grand visions of a unified Europe. Instead we are seeing it unravel as populations fall back from the European level where they have neither control nor benefits to the nation-state where at least they have some, or a chance of some, if they can displace the local kleptocrats.

  17. Leverage

    As Spaniard I can tell you people is getting tired of crony capitalism around here. The assemblies and demonstrations are very encouraging, maybe we still have some of the anarchist spirit with us.

    Hopefully we won’t get fucked up by our own elites as usual when we get confronted with external powers, which historically have been overthrown out of Spain at any trial of violating sovereignty, but keeping ruthless exploiting national elites in power.

    This time it looks like the lack of real democracy and the political system (more like a particracy in whole Europe except Switzerland, but specially corrupt in souther countries) is in line along with financial system; as it should.

    But still we have to wait to see if this will evolve to something and there will be enough inertia to change things. Right now the two major votes have lost votes even if the pool of electorates has increased, but it’s too early to measure it in electoral and political terms.

  18. Susan Truxes

    I’m sympathetic with Germany. Look at all they have gone through for the last 100 years. And they finally reunite after buying back East Germany for two arms and a leg and they go on to create their dream: a unified Europe. Ode to Joy. And now this. Basically, banker blowback. Admittedly the German banks were in it up to their eyeballs, but so were French, Dutch, Italian and Spanish banks – all in cahoots with American banks. Blah blah blah. It is incongruous that Germany is such a well run, socially conscious country and is marching toward globalism in jackboots. The Germans are the greenest of all the developed countries of the world. They would be the model for everyone else at this point in time. But they have been walking sideways for a while. There is a deep rift in their psyche. If Merkel listened to the people, my guess is that Germany would not carpetbag Greece. If we are looking for the reason for the mess we are in we need to look first at warmongering.

  19. Binky the Bear

    So it is looking like 1847 with no United States to soak up the socialist malcontents?

  20. LRT

    Its extraordinary, this nostalgia for the Europe of nation states and national currencies. Can’t you, any of you, remember it? It was a continent of elites, widespread poverty, incredible restrictions on movement and business activity which no American would even think of tolerating. It was countries with central banks and their own currencies that were the size of a small American city. Within these countries, you could even find yourself locked into one of the crazed divisions within them. Like, were you a Walloon or Flemish? Were you a Catholic or a Liberal?

    The question you should all ask yourselves is, would Los Angeles or America be better off it LA were an independent nation state? And if the number of nation states in America were to proliferate so that it consisted only of independent countries as big as LA?

    Think about it for heavens sake, and stop ranting about bankers and globalisation. The problem is how many independent countries you want to see, and what terms of trade.

    Do you really want to see customs barriers and import duties at the entrance to the LA territorial boundaries? Money changing booths? Qualifications that are not recognised from LA to SF?

    No? Then why do you want to see Belgium or Greece running its own currency, central bank, tariffs….etc? Why not Scotland, London, Burgundy? Then they could all run huge deficits and protect their industries, and have huge public sectors with wonderful pension plans and very little work and we would all live happily ever after?

    Are you guys totally nuts?

    1. Foppe

      The question you should all ask yourselves is, would Los Angeles or America be better off it LA were an independent nation state? And if the number of nation states in America were to proliferate so that it consisted only of independent countries as big as LA?

      Maybe not LA, but I have little doubt that the southern states would be better off if they had their own currency and monetary policy.

      Nor does the rest of your post contain much of merit. Apparently you feel that less trade is inherently bad, whereas I’m not really convinced either way. The answer to the question depends on the implementation, and the current one can certainly be improved upon. Free movement for goods and finance capital, heavy lobbying and nonexistent corporate taxation in combination with heavy restrictions on migration and rights to vote on changes aren’t the way to go, though.

  21. Max424

    “The distance argument is pure bait and switch.”


    “Transportation policy in the US is cut and pasted from the business plan of Big Energy and its gophers, the auto and aviation industries.”


    Aviation as an industry is unlikely to survive much more than 10 years…”

    Certainly not in its present form. I think what we’ll see in the near future, however, is the usual: underwater taxpayers will subsidize insolvent airlines so they can fly rich people around.

    “…it would be smart for the US to have high-speed rail.”

    It would, and it would be cool as hell, but it’s not going to happen. I think “they” (Big Auto, Aviation, & Oil; plus neo-liberals, Republicans, privateers, & Obama) are finally going to get Amtrak.

    I don’t follow US passenger rail that closely, because I find it kind of boring (let’s face it, there haven’t been too many exciting developments over the last 150 years), but I believe if “you” (see parenthetical above) can eliminate Amtrak, once and for all, you can eliminate the dream of alternative transportation — in this country — for the remainder of the century.

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