By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at New Economic Perspectives
The New York Times has provided us with an invaluable column about the interactions of the EU’s rightist and ultra-rightest parties. It is invaluable because it is (unintentionally) so revealing about the EU’s right and ultra-right parties and the NYT’s inability to understand either the EU economic or political crises. The NYT article illustrates its points by presenting a tale entitled “A German Voice, Hans-Olaf Henkel, Calls for Euro’s Abolition.”
Mr. Henkel wants to abolish the euro.
His country, he contends, would be better off returning to the deutsche mark, rather than letting hard-working, disciplined Germans continue spending their taxes propping up laggards in Greece, Italy and other euro zone countries that he says have squandered the common currency’s birthright. And last month he won a seat in the European Parliament that will give him a platform to try to unwind the currency union.
I will return to the euro controversy at the end of my article, but for now we will follow how the NYT and the EU view Henkel.
Mr. Henkel is a rarity in Germany, where there is almost no tradition of business leaders entering politics.
He financed his own successful run for office, in the mode of many American politicians. Mr. Henkel contributed 1 million euros, or $1.36 million, to his party, the Alternative for Germany, which proved crucial to its winning 7 percent of the vote in parliamentary elections last month and seven seats in the European Parliament.
Americans, of course, have a long tradition of rich people using their wealth to fund runs for public office. Here is how Henkel became so wealthy:
Mr. Henkel went on to become head of IBM’s operations in Europe, the Middle East and Africa, but left in 1995. He then became the unpaid president of the Federation of German Industries.
After leaving the federation in 2000, Mr. Henkel emerged as something of a professional contrarian, appearing often on talk shows as an advocate of rolling back Germany’s social welfare system.
Later, he was a board member of mainstream companies like Bayer, the German drug and chemical maker, and an adviser to Bank of America. He resigned from those posts before entering politics.
I return to his resignation from B of A below. The NYT and the EU’s Right assume conclusively that Henkel’s employment background means that he has an impeccable reputation. Indeed, I have to quote extensively from the NYT to demonstrate that this is the central theme of the article.
With his blue-chip business résumé and name recognition earned from years on the German television talk show circuit, Mr. Henkel symbolizes how the anti-euro movement is becoming more socially acceptable — and more difficult for the centrist, pro-euro parties to ignore.
At the same time, though, his particular variety of Brussels bashing is a reminder of how difficult it will be for the euro-skeptic parties to reconcile their eclectic platforms. Although many of the groups share a hostility toward the European Union, they also often foster distinct elements of nationalism and xenophobia, making it a challenge to find common cause on any issue of substance.
Mr. Henkel, a longtime member of the human rights group Amnesty International, strenuously denies that the Alternative for Germany party, known as the AfD in Germany, is a haven for the extreme right. He says such labels come from journalists who “would rather paint us into an anti-immigration corner or a rightist corner so they can ignore us.”
He ruled out cooperating with far-right, anti-immigration groups like the Marine Le Pen’s National Front in France or the U.K. Independence Party, led by Nigel Farage.
Instead, the AfD joined the European Conservatives and Reformists Group, or E.C.R. The E.C.R. also includes members of the British Conservative Party, whose decision to welcome the AfD last week strained already uneasy relations between Ms. Merkel and Mr. Cameron, the Conservative leader. (Britain, of course, has long opposed the euro union, having opted to stick with the pound sterling.)
But membership in the E.C.R. is not likely to quiet criticism that the AfD, led by Bernd Lucke, an economics professor at the University of Hamburg, is a Trojan horse for Germany’s extreme right. The E.C.R. also includes right-wing populist parties like the True Finns of Finland and the Danish People’s Party.
Still, Mr. Henkel may make it harder to stereotype anti-euro forces in the European Parliament as a collection of right-wing cranks.
“It’s a good thing to have a political party from Germany composed of people with reputations like Mr. Henkel,” jan Zahradil, a Czech member of the European Parliament who is first vice chairman of the E.C.R., said by telephone after the group voted to include the AfD. “He really is an asset.”
The NYT is relentless on the subject of where Henkel stands: he is a “contrarian” (the article uses that term twice to describe his views). He has “a blue-chip business resume,” whose support makes parties who support his positions “more socially acceptable.” Other members of his Party may be “xenophobic,” but Henkel is a member of Amnesty International who opposes “anti-immigrant” policies and he “ruled out” cooperating with UKIP (the rabidly anti-immigrant party of the United Kingdom). Henkel is so obviously opposed to such xenophobic views that he “make[s] it harder to stereotype anti-euro forces in the European Parliament as a collection of right-wing cranks.” Indeed, Henkel is so respectable that a leader of the ECR labels him “a real asset” not simply to Henkel’s party (the German AfD), but to the ECR. As a result, the ECR recently voted to allow the AfD to become part of its bloc.
A little background is required about the ECR. David Cameron, the UK’s extremely conservative Prime Minister, led a split from the main center-right group, the EPP-ED group. Cameron is eager to expand the ECR’s membership in order to have more power relative to its more powerful rival on the right, the EPP-ED.
The article notes that the ECR “also includes right-wing populist parties like the True Finns of Finland and the Danish People’s Party,” but fails to explain why the significance of a self-described “center right” group including these three parties. The so-called EU center-right (dominated by the EPP-ED), on economic issues, already champions ultra-right policies that only a small subset of economists support. As I have explained many times and will briefly reprise when I return at the end to discussing the euro, those policies have proven catastrophic – and the EU Rights’ response has been to double-down on the policies and go into deep denial. The formation of the ECR pushed the EU right much farther to the right than the already catastrophic EPP-ED economic policies. Willingly adding the AfD, The Finns (as they prefer to be called in English) and the Danish People’s Party to this already hard right bloc means that the “center” of the EU’s right is a misnomer and is moving rapidly to make it impossible for the ECR to even see the center without the aid of high power binoculars.
The Finns had the third-highest vote total in Finland, the Danish People’s Party and UKIP were the top vote getters in their countries, and the AfD had the fifth-highest vote total in the recent European Parliament elections. The AfD’s success was greater than may be apparent because the Party was formed only the year before the election. The ECR courted The Finns and the Danish People’s Party – convincing them to leave the euro-skeptic bloc in the European Parliament. All three of the Eurosceptic parties that the ECR has sought to recruit are virulently anti-immigrant.
In the U.S., the term “anti-immigrant” typically means “anti-illegal immigrant.” That is not the case in the EU’s anti-immigrant parties. These parties also oppose legal immigrants, including legal immigrants from one EU Nation to another. Legal immigration is the cause célèbre for the anti-immigrant parties of Denmark, Finland, and Germany.
The Danish People’s Party is avidly anti-immigrant.
The AfD and UKIP
Henkel may say he doesn’t want to ally with UKIP, but the AfD’s youth wing is an active collaborator with UKIP.
Members of the Young Alternative, the youth wing of [the AfD], recently held a joint event with the heads of UKIP in Cologne.
When Did “Contrarian” Become Code for “Racist?”
Reporters use the term “populist” to describe EU parties that use bigotry as a major part of their appeal. When Europeans use the term “liberal” they mean what Americans would consider anti-liberal and when they use the term “populist” they mean what Americans would consider anti-populist. U.S. populist movements are often intended to aid minorities that suffer discrimination.
Henkel is an old-fashioned bigot, as I have explained in detail on several occasions.
Henkel claims that the global crisis occurred because the U.S. banned “redlining” by banks. Redlining refers to the practice of home lenders circling communities in red on a map based on where blacks live. The lenders would refuse to lend for home purchases in those communities. The context is that Henkel was debating with James Galbraith the causes of the crisis. Henkel made this argument in writing. He did not make some spontaneous error in an oral debate.
Mr. Galbraith should familiarize himself Jimmy Carter’s “Housing and Community Development Act” where in Section VIII Banks were prohibited the practice of “red lining” which until then enabled them to distinguish “better living quarters” and “slums.”
This is a common meme among ultra-right-wing Europeans in finance. The head of the oldest private bank in Switzerland, Dr. Hummler (he has a Ph. D in economics from U. Rochester) infamously claimed that:
It is said that the vast majority of insolvent home-owners belong to ethnic minorities.
Hummler then claimed that this explained why Obama was bailing out homeowners.
There is something particularly wonderful about Bank of America’s top European advisor praising racism in lending – and telling an American academic he needs to read up on how wonderful racism was for America.
Henkel’s Ode to German Bigotry
Consider the policy advice that Mr. Henkel gives in the German context. By way of background the reader needs to know that at the time of these events (2009), Dr. Thilo Sarrazin was one of German’s most senior central bankers. Like so many of the ultra-right economists who inflicted austerity on the eurozone, Sarrazin is also ultra-right-wing in his politics.
“Dr Thilo Sarrazin, a member of the executive board and head of the bank’s risk control operations, told Europe’s culture magazine Lettre International that Turks with low IQs and poor child-rearing practices were ‘conquering Germany’ by breeding two or three times as fast.
‘A large number of Arabs and Turks in this city, whose number has grown through bad policies, have no productive function other than as fruit and vegetable vendors,’ he said.
‘Forty per cent of all births occur in the underclasses. Our educated population is becoming stupider from generation to generation. What’s more, they cultivate an aggressive and atavistic mentality. It’s a scandal that Turkish boys won’t listen to female teachers because that is what their culture tells them’, he said.
“I’d rather have East European Jews with an IQ that is 15pc higher than the German population,” he said.
Yes, he actually said that things had gotten so bad that he’d prefer to have Jews, rather than Arabs and Turks, move to Germany. (Because, as we all know, Jews are 15 percent smarter.) How did Henkel, Bank of America’s senior advisor, respond to this delusional hate speech (made public in early October 2009)? He began an immediate media crusade in support of Mr. Sarrazin’s bigotry. He gave video interviews and sent (and published widely on the web) an open letter to “Lieber Herr Sarrazin” to express his unqualified support for Mr. Sarrazin’s bigoted statements. He entitled it: “Ich unterstütze Sarrazin ohne Wenn und Aber” (I support Sarrazin without any “if” or “but.”)
German speaking rightists love this rhetorical formulation. There is a Swiss scholar who urges tax competition as a means of depriving governments of revenue so that they cannot fund social programs. He loves bank secrecy in Switzerland as a device to encourage tax fraud by foreigners. His version is: “Der Schutz der Privatsphäre geht vor, ohne Wenn und Aber.“ The right of privacy (in the form of bank secrecy) comes before everything without any “if” or “but.”
The reality, as even the NYT admitted is that the AfD’s support comes overwhelmingly from the German regions in which the ultra-rightists are most common.
Güllner, head of the Forsa polling firm in Berlin, pointed out that in the May elections for the European Parliament, the AfD did especially well in voting districts seen as bastions of far-right sympathy, such as a region in southeastern Germany known as Saxon Switzerland. While Mr. Henkel helps lend the party an air of respectability, Mr. Güllner said, ‘in my eyes it’s almost an extreme-right party.’
If the AfD has to rely on Henkel and his ilk for “an air of respectability” it is not “almost an extreme-right party,” it is an ultra-right party.
The AfD’s Gain is Bank of America’s Gain
Bank of America chose Henkel as its senior advisor in 2006. I wrote an open letter to B of A’s Chairman of the Board of Directors explaining his racism and bigotry. Naturally, I never got a response. The good news is that Henkel’s decision to run for the European Parliament led to him finally resigning from B of A. Unfortunately, he picked B of A’s team of European advisors, so the B of A’s rot continues.
Bank of America has Forgotten its Roots, but American Must Not do So
June Carbone (my spouse) and I lived in the San Francisco area for 20 years. We are steeped in the proud history of the origins of the Bank of America. Mr. Giannini’s Bank of Italy was proud to lend to “fruit and vegetable owners.” Many of these small entrepreneurs were recent immigrants from Italy. Like the “fruit and vegetable” entrepreneurs that Mr. Sarrazin and Mr. Henkel despise, they often faced deep suspicion because of their accents, their national origins, and their religion (Catholicism). This was the era of “scientific racism” and educated people “knew” that immigrants from Southern Europe, and Italy in particular, were inferior.
B of A is no longer B of A. It’s a North Carolina bank that acquired B of A and decided that the name “Bank of America” was a superior marketing tool. Today’s senior management at B of A sought out Henkel to be their face in Europe and never publicly criticized his odes to U.S. racism or German bigotry.
The NYT and the Struggle Against Stereotypes
The NYT can’t even be bothered to use a search engine before it canonizes Henkel as the exemplar of the ultra-rightist free from any tint of bigotry. The NYT’s talent for unintentional self-parody grows by the day. Recall that part of its ode to Henkel is his ability, due to his stellar reputation, to prevent the AfD, The Finns, and the Danish People’s Party from being “stereotype[d]” as “right-wing cranks.”
Still, Mr. Henkel may make it harder to stereotype anti-euro forces in the European Parliament as a collection of right-wing cranks.
We certainly wouldn’t want to “stereotype” “populists” and “contrarians” whose standard operating procedure is stereotyping blacks, immigrants, Muslims, Italians, and Greeks. When Henkel says that the global crisis was caused by banks lending to blacks and agrees (“ohne Wenn und Aber”) that “Arabs and Turks” are worthless for any task beyond being a fruit and vegetable vendor, are debasing German IQs, and outbreeding native Germans while Jews are vastly smarter we know that we can with confidence denounce anyone that would stereotype the eurozone’s ultra-right.
The Right and the Ultra-Right’s War on the People of Europe
Henkel, Sarrazin, Hummler, and Bernd Lucke (a macroeconomist formerly employed by the German central bank, the founder and leader of the AfD).are representative of the Germanic economic consensus in favor of the self-destructive austerity regime that thrust the eurozone back into a gratuitous second recession and Spain, Greece, and Italy – with one third of the total population of the eurozone – into Great Depression levels of unemployment. The NYT sees none of this.
“The introduction of the euro was and remains the right thing,” said Ulrich Grillo, president of the Federation of German Industries, a group that Mr. Henkel led from 1995 to 2000. “Especially for Germany and its export economy,” Mr. Grillo said in an email exchange, “the common currency is the foundation of prosperity and employment.”
The euro is not “the foundation of prosperity and employment.” For the periphery of Europe, the euro is the foundation of massive unemployment and the loss of their children through emigration as soon as they graduate from the university. By giving up a sovereign currency the nations of the eurozone have given up an essential requisite of national sovereignty. They have ceded monetary and fiscal policy to Berlin (which is addicted to austerity) and eliminated their ability to devalue their currency to respond to a severe financial crisis. Angela Merkel’s monstrous lie – “there is no alternative” (TINA) to austerity – is the result of an insane system that systematically removes the normal, highly effective, alternatives to her quack cure that calls for bleeding the patient to make him recover. The IMF agrees that stimulus programs proved even more effective than economists had anticipated. (The great majority of economists in the United States believe that austerity in response to a recession is self-destructive.
The NYT remains blind to the crushing damage that the austerity regime has inflicted. The suffering of the peoples of the eurozone disappears from the NYT narrative.
The [AfD’s] delegation is tiny in an assembly with 751 members. But Mr. Henkel was part of a wave of discontent that delivered unprecedented power to euro-skeptic parties in Brussels, posing a political threat to the currency union even as euro zone leaders were dealing with financial and economic threats that nearly destroyed it.
As self-destructive as the euro and Berlin’s austerity provisions have been, Henkel and Lucke’s goal is to make things even worse.
“With echoes of the Tea Party in the United States, Mr. Henkel and a small army of other newly elected members want to curtail what they see as the overarching power of the European Union and abolish the euro, or at least expel members like Greece and Italy, which they regard as chronically irresponsible.”
I personally think that Greece and Italy would gain in the long run if they left the euro, but leaving the euro would cause great suffering in the short term and being expelled from the euro with no chance for preparation would greatly magnify those harms. But Henkel does not want to help Greece and Italy – he wants to punish them. Henkel and Lucke do not simply lack sympathy for the people of the periphery, they repeatedly attack them.