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 old line that one should be very careful about what one wishes for – for you may receive it applies to Germany’s installation of Jean-Claude Juncker as head of the EU Commission. Germany’s Prime Minister Angela Merkel has just crushed her UK counterpart (David Cameron) by orchestrating a nearly unanimous vote among EU nations to appoint (not, really, “elect”) Juncker as head of the EU Commission (not, really, “Parliament”).
The old days of needing to hide Germany’s control of the EU through the façade of a German-French partnership are long gone. EU nations know that there will be a high price to pay for attempting to buck Germany – and that the effort will fail. Cameron’s effort to block Juncker is generally viewed outside of the UK as quixotic and humiliating while Merkel is viewed as reigning supreme and serene.
The reaction in the UK, however, to Cameron’s efforts is quite different. Cameron’s efforts are generally viewed favorably and Juncker and Merkel are more unpopular than ever. If a plebiscite were held today the UK would likely vote to leave the EU.
Merkel has two self-created strategic problems with regard to the EU that threaten the EU and Germany’s dominance over the EU. First, Merkel engineered Juncker’s appointment not because even she considers him a good leader but as a reward for Juncker’s leading role as austerity’s hit man. As Ambrose Evans-Pritchard wrote recently:
Italy’s Beppe Grillo, [has] seiz[ed] on Mr Juncker as the face of the scorched-earth policies that have trapped Europe in a Lost Decade. ‘Wherever Juncker goes in Europe, the grass no longer grows,’ he said.
To date, Merkel and Juncker’s infliction of austerity on the eurozone has forced the entire eurozone back into a second, gratuitous, recession and Greece, Spain, and Italy back into a second Great Depression. But the continuing insanity of bleeding the economies of Europe in order to make them healthy may soon gratuitously force France (the EU’s second largest economy) back into a third recession. The Telegraph reported with a strong tone of Schadenfreude that the “IMF warns of negative spiral in France as recession looms again.”
Worse, the EU’s permanent austerity pact will produce lower eurozone growth and many additional recessions over the next ten years. As I have explained in prior columns, this is causing incumbent governments in the periphery to lose popularity and leading to dramatic political gains for parties opposed to the troika (the EU Commission, ECB, and the IMF) throughout the periphery. At the same time, anti-EU sentiment and anti-immigrant phobias are combining even in the core to produce unprecedented gains for parties opposed to increased EU integration. The austerity policies inflicted on Latin America under the Washington Consensus have led to the election of roughly a dozen leaders who campaigned on a promise to oppose that consensus. The Brussels Consensus’ austerity policies may eventually produce a similar reaction.
Taken together, the rapidly growing numbers of Europeans hostile to “Brussels bureaucrats,” the anti-Muslim and anti-immigrant parties, and the parties opposed to austerity pose a grave strategic threat to Merkel’s vision of the EU. The immense human misery she is causing the people of the EU through austerity and her war on worker’s wages are sowing the seeds that will cause her policies to be repudiated.
The second, related, strategic problem she faces is the increasingly likely withdrawal of the UK from the EU. Spain, Italy, and France have large populations. Each of them is likely to turn aggressively against Merkel’s policies within a decade. Cameron’s problems with Juncker have nothing to do with austerity. Cameron is a strong supporter of extreme austerity. He opposes Juncker’s strong support for ever greater EU integration. The UK, particularly under the Tories’ rule, would be a vital ally of Merkel in demanding the imposition of austerity. If the UK withdraws from the EU the core political support for austerity will come overwhelmingly from nations with Germanic populations – against those who speak Romance languages.
Conclusion
The most intense supporters of austerity are eager to share with everyone their utter contempt for the peoples of the periphery. I receive a steady diet of their insults (not directed at me) in my emails. It is bad enough when you are in a nation suffering Great Depression levels of unemployment due to austerity and facing your children’s need to emigrate to find a job as soon as they graduate from school. But it drives humans to rage to see that the response to your pain is derision. Those that sow the poisonous seeds of austerity and demean its victims will reap the whirlwind within the next ten years.
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“Italy’s Beppe Grillo, [has] seiz[ed] on Mr Juncker as the face of the scorched-earth policies that have trapped Europe in a Lost Decade. ‘Wherever Juncker goes in Europe, the grass no longer grows,’ he said.”
I remember first hearing about Beppe Grillo when PARMALAT hit the fan. Anyone remember that one? That was where there were supposedly billions in a Bermuda bank backing PARMALAT when there was nothing but air.
Anyway, Beppe has gone on to become a power in Italian politics and, last thing I heard, he refuses to negotiate with Berlusconi and other 1%ers preferring to wait for their downfall.
How about an updated story on Beppe?
wrt Beppe Grillo: I know a family of Italian natives whose parents brought them over as children after WW II. Of the four children, three took advantage of the New York City public college system (in those days CCNY could compare with Harvard) and went on to have professional careers; the fourth started out fixing houses and became by far the wealthiest of the siblings. A bunch of self-made strivers who would have a natural bias toward conservative politics, right? And that’s how they vote in the US; but in Italian elections (where they can vote because of a wrinkle in Italian law that allows them dual citizenship) they’re for Grillo all the way.
They’re not political junkies by any stretch; but they do keep up with the press on both sides of the water. Their sense is that whatever you think of the nonsense in US governance, Italy trumps it in spades.
So I guess we in the US should count our blessings, such as they are. Things could be a whole lot worse.
“Taken together, the rapidly growing numbers of Europeans hostile to “Brussels bureaucrats,” the anti-Muslim and anti-immigrant parties, and the parties opposed to austerity pose a grave strategic threat to Merkel’s vision of the EU. ”
I quibble with that statement. The anti-Muslim & anti-immigrant crowd are just chauvinistic noise makers, who, historically rise from the abyss when there is economic malaise. They appeared to be a threat back in May, but no longer. They are back in their dog houses now without much chance of getting loose or causing a disturbance to their neighbours. They were elected in larger numbers to the EP because they had an easy to understand message for change. In the end, none of them hold a single committee chair seat. That means for another 5-years, you can forget break-up.
In addition, there is no sign of discontent at the head of state level with the way things are going either. When Juncker was nominated overwhelmingly, 26 – 2, the nation heads made it clear the status quo was the way forward and they also sent a message to the world that there would be solidarity if the UK were to exit the EU. Disintegration is out of the question even with economic misery for millions.
For these folks, there is no alternative (TINA). We eurosceptics need to get use to that.
You can quibble right now, but wait until these parties begin to win national elections. This is the strategic threat Black had in mind, I think. All politics are local still, and the message of the LePens is starting to resonate more and more with their national electorates.
Did Cameron ever put forward a credible alternative to Juncker?
I wish that the UK’s ability to bluff Germany into thinking that we might leave the EU was more credible and that it might end up changing German policies (which, as Bill says above — rightly — are now de facto the EU’s policies). There are two humongous snags though.
1) The UK will never leave the EU. It is too deeply enmeshed in our economic functioning that leaving would be a massive wrench. No freedom of movement for people, no single market with free access to goods and services, no support for indigenous agricultural production, no common standards for everything from medicines to toys, no European Court (so where does that leave previous rulings ? how can you be bound by a court which you’ve renounced jurisdiction over you ?) — that’s just for starters off the top of my head. It. Will. Never. Happen.
2) Even if I get temporary amnesia and forget all about 1) above, why is UK Prime Minister Cameron so eager to instigate his “reforms” of the EU ? He’s right with Merkel in thinking austerity is the best thing since sliced bread (now alas all too often only obtained from food banks by its unfortunate victims) so it’s not like he wants that to stop any time soon. He probably thinks it isn’t being done hard enough… No, he thinks the EU is still too lefty and all that social reform \ environmental protection \ consumer protection \ worker protection stuff is too much of a nuisance to big business. If Cameron thinks the EU to far too neoliberal for its own good and has to become a lot more neoconservative, really, he should be thrown in the Thames when the tide is out. Normally I say in this sort of situation “my enemy’s enemy is my friend” but here, my enemy’s enemy is a Victorian throwback and wants to put us all in the workhouse. If we’re running an ugly competition here between Cameron and Merkel, Cameron wins hands down.
I’m always left with the feeling that it is a battle between the City of London and Frankfurt. It is a battle of the big banksters. Sort of going along with the theme of the Twilight of European Imperialism. Before, in 2008 or 9 when Cameron made a fool of himself it was all about getting a pass for British banks. So no austerity for the banksters, but crush the poor all you want Angela.
In the UK the commercial power is in the hands of the bankers, in Germany/Northern Europe, the commercial power is in the hands of the industrialists (Siemans, Bosch, Daimler, etc)
So to be a bit pedantic it’s London’s City v. the German Ruhr belt. And given the conservative finances of the German big non-financial corporations, they can tell the London financiers to sod off….as Germany rather sell goods to the Chinese instead of trading Yuan bonds.
” It. Will. Never. Happen. ”
Just like Scotland will never hold a vote on whether to leave the UK, with a real chance of it winning, and the Soviet Union will never break up.
In other words, that’s just silly. Much more difficult breakups have happened.
The Germans are surely ambivalent about the EU; they would be just fine without it. But if it is ever to evolve into anything worthwhile then the EU must rid themselves of the UK — whose only purpose is to act as a fifth column for US interests. And if it did evolve into something worthwhile, the Germans could play a leading role in it.
So in that sense Juncker’s appointment is a good thing. If the UK ever actually did move towards a referendum (the US will NEVER allow this) then Europeans would be best served to make the most provocative statements about Britain in order to ensure a UK departure (but again the US will not allow this to happen).
A federal European nation state should be the ideal strived for. As process of globalization continues to send European wealth to the third world, as the European standard of living continues to decline relative to the rest of the world, these inevitable consequences of globalization that get called austerity will continue to drive Europeans smash through the post WW2 taboos against nationalism and ethnocentrism; especially as they see their ideological and economic rivals using exactly these policies to make standard of living gains against Europe. This process will either end up with a reversion to individual nation states in Europe, or more likely, into a federal European nation state – a United States of Europe.
Germany could play the leading role in such a state if they take part. It would not be dissimilar to the role Prussia played in the newly founded German Empire. There is a geographic split in Europe in how badly globalization is impacting the various countries. Very generally, the northern, Germanic, protestant, to highly-industrialized nations such as Germany, Sweden, Belgium, Holland, etc, are being hurt to a smaller extent when compared to the southern, Latin, Catholic, less-industrialized countries such as Greece, Portugal, Italy, and Spain. And so one could see a USE split politically between a more open and globalization-friendly North and a closed, protectionist South. Of course if things go too far, we could ultimately end up with two federal states, a United States of Northern Europe (USNE) and a USSE.
Ultimately univeralism and particularism need to be in a yin-and-yang type balance. Going too far in either direction is bad. To totally abandon nationalism and ethnocentrism leaves people vulnerable to those who practice it. To go too far in the particularist direction leaves people cut off from the rest of the world.
But the current problems clearly involve the masses from wealthy western being the victims of elite imposition of universalist globalization where western people are forbidden to look after their own particular interests (such as avoiding offshoring of good jobs and inshoring of cheap labor). So the longer the pendulum continues to swing in the universalist direction, the stronger the correction will be when it finally swings back towards particularism.
Hate to break the news to you old bean, but of all the Federal States I’m currently aware of, namely: Australia, Belgium, Canada, Germany and the USA. All, and I mean all of these Federal constructs are captured by neoliberal economic forces.
Indeed, and as a UK citizen who would like to have his own independent nation state free of England, this being Wales, I can assure you that the thought of a European Federation fills me with horror. And it fills me with horror that despite all the checks and balances that have been written into these Federation, every one of them are captured by forces economically opposed to the wellbeing of the commonwealth.
Indeed, as a committed anti-European Federalist, my poster boy is none other than the USA. Do you in a million years believe this is what the majority of European citizens want. Its bad enough that most of the legislatures in each country is captured by forces of a neoliberal disposition, to increase the magnitude of this borrow by putting another layer of supranational governance on top is beyond belief.
As for the supposed benefits of EU membership, at this juncture in time it has as many negatives as positives, however, if the Transatlantic Trade Agreement is negotiated successfully and signed by the EU, on top of the other 50 nation state neoliberal trade agreement under discussion presently – neoliberalism on crack cocaine – we all become serfs in Europe for the pleasure of transglobal corporations and the 0.1% global ruling elite.
As the Soviet Union taught us with its Constitution, you can have as many guaranteed liberties and freedoms codified, but they stand for zero in the real world. And lets be blunt, the real world ain’t nice. Indeed its an anathema to the hope and aspirations of millions in Europe, and billions globally.
I lived in Wales and the benefits of EU membership (and UK membership) were and are overwhelming. Wales is the best place I’ve ever lived, and the closest to home I’ve ever felt, but it is an economic backwater and culturally deeply conservative (I’m not talking politics, I’m talking attitudes towards change) and the antithesis of entrepreneurial. How is Wales going to makes its way in the world? Adapt to rapid global changes? How is it going to negotiate with players like the Germans, Chinese, Americans, and the English? How does it not wind up an even poorer, more dependent Ireland?
The thing I liked best about Welsh nationalism when I lived there was that it was so wonderfully indifferent to finger-pointing. It was a quiet nationalism, a prideful nationalism, not a hate-filled nationalism.
James Sir,
First and foremost Wales has not really received funding from Wales, rather funds are paid from the UK into the EU’s coffers and then the EU repatriates some of these funds back to areas of extreme poverty and industrial decline in the UK – Wales has specially designated areas, the same applies to the South West, Scotland, North East and North West – and when I say extreme economic dislocation, one means it.
So, what are the options, my country already has the lowest rates of pay in the UK, some of the highest levels of poverty and some of the highest levels of ingrained multigenerational unemployment – much of this courtesy of nearly 40 years of neoliberal economic experiments, and this timeline coincides with the UK’s membership of the EU, or EEC as it was when my parents voted on the issue in the mid-70’s.
Given the above facts, and despite some good, viable businesses, my nation suffers greatly and whilst from where I live Westminster is but 140 miles away, it may as well be on the moon – that’s how remote and ignored we are by our Unionist governments. I could give you a list of grievances and real entrenched problems as long as my arm, these have existed for a generation, and no amount of handouts from the EU or Westminster will solve these – only the Welsh people can solve their own issues, and please, lets not get carried away with globalisation and all the nonsense that entails economically.
The reality is wales economically can be a viable nation, first and foremost, like Ireland, it needs to stop the brain drain, where our brightest and best end up in the South east, or like me, living overseas, and in my personal instance, actually exiled overseas by dint of marriage to a non-EU citizen – you gotta be rich to be allowed to enter the UK with your family says Westminster – thus denying my daughter her Welsh heritage and her Welsh language – but, its been like this since the 1840s when the English stamped out our beautiful language.
Being brief and to the point, essentially I’m a Luddite with anarcho-syndicalist leanings ( or a traditional democratic Socialist in my neck of the woods). I wish to see a return to localism and community, and because of our small size, and relative small population – approx. 3 million people – this is a distinct possibility.
Despite some positives associated with the EU, the fact remains that the EU has morphed into the beast that our old traditionalist Labour politicians warned us about, and this is epitomised by all the supposed “free trade” agreements being negotiated in total secrecy by our own Westminster elite and EU elite. Thus to think the EU benefits its citizenry smacks of ignorance. Does it not strike you as odd that without dynastic monarchy the celts throughout Europe and other old Europeans used to get on fine, commerce and intercourse were great and then the Romans came alone, followed by the Normans in my neck of the woods – effectively, my country has been under siege and occupation for approx. 2000 years, we were the first colony of the Norman English and remain a colony. I just want my country back for me, my offspring and my fellow Welsh, which means no to Westminster, no to the EU and no to the United States.
Not too much to ask for, and believe me, once the effects of global warming sets in, we will be in a far stronger position than many other regions – so best prepare for it now, and this requires longterm planning and infrastructure investment – all anathema to neo-liberals and the Tories – sorry to hark on, but as you can see, in reality I’m an economic nationalist fused with a dystopian sentiment and if the shit future that awaits many is to be avoided, we need our freedom and need to use this to stand on our own two feet pround.
Typo alert,
Opening sentence should read: “First and foremost Wales has not really received funding from the EU”
I see your point, but it is not an uncontestable one. First, everyone in Wales will have to learn English anyway, just as the Irish do, because it is the international language of trade, business, and academia. And my dear friend, whose family was from the Forest of Dean and married a girl from Cardiff, his son learned Welsh in school (mandatory), so I don’t think your language is being extinguished by anyone–like most languages on Earth, it’s being pushed out of existence by factors beyond your control, even if you were an independent nation. Making every station S4C isn’t going to do it.
Can Wales feed itself and export enough to pay for fuel, medicines, spare parts, machinery, etc.? Perhaps. But perhaps not. London sucks but the IMF sucks worse. And good luck finding politicians who can’t be bought off by foreigners with loads more money than any local group can mobilize. It’s happened everywhere else.
Nevertheless, I miss Wales terribly and wish you all the luck there is.
Hear hear. More and more i see parallels between EU and pre civil war USA.
To me the extreme right wingers have a “interesting” similarity to the states rights people of the south that eventually attempted to form the confederacy.
Sure, there was the whole slavery issue. But as best i can tell, said issue was the straw that broke the camels back. They where simply tired of more and more dictates coming from DC that overruled state governance.
“Merkel has two self-created strategic problems ”
feature not a bug. Merkel is a product of 1990’s-austerity Germany. I wonder if there is a long German word that translates as ‘adversity/austerity/deprivation is good for the soul’….or did I just describe Goethe or Nietzche? …my memory is getting rusty.
Amazing how many Americans are such experts in all-things-Europe and so good at analyzing Germany’s, France’s, Russia’s, even China’s actions, motives and visions while remaining completely impotent in affecting one bit of change in the situation of their own country… Serious case of “No one is a prophet in his own land”. Ditto for Europeans understanding so well where we went wrong here and having all the solutions.
I’ve got an idea: since Europe knows so well how to “fix” the US economy and the US appear so well-versed in “fixing” European quandary, why not swap leaders? We’ll borrow theirs so they can come clean up here and we’ll send ours overseas for the same purpose.
Worth a trial. What do we have to lose that we already haven’t? And who knows… we might even gain in the trade.
You appear to have missed that Black writes extensively, and very critically, on what is wrong with US policy and regulations, as do his colleagues at the New Economic Perspectives site. And with the US as with his occasional pieces on Europe and Latin America, Black takes the same posture, so your charge that he behaves one way in his writings on the US and another way on his foreign writings is patently false.
As for action, Black is creating a new discipline of criminologists to tackle white collar fraud, so your beef that he is not effecting change in the US is another flat out lie.
Please take your national chauvinism elsewhere.
On the opposite to Bill Black I see Cameron’s position as reinforcing Merkel’s. By refusing increased integration Cameron helps to settle the austerian satus quo, Avoiding banking and fiscal integration helps the Troika to “persuade” periphery nations to follow their recipes. I think that Merkel and Cameron play the game of the bad cop and the worse cop. The theorecically anti-european stance in the UK migth be just a political pose that is used in other countries to discredit political options that do not agree with the conservative consensus as “antieuropeans”. This is not to say that the stablishment is not worried with new political movements that are skeptical about the political drift of the EU, on the contrary. In Spain the ruling party is doing its best to try to discredit the new party “Podemos” (“Yes, we can”) accusing their leaders of any sin they can imagine. This indicates that they are worried.
Indeed. Cameron-Juncker was a mass distraction from the real issue:
“Merkel’s priority became increasingly to stop Schulz, believing that having a social democrat at the top of the commission would imperil her euro crisis austerity and structural reform prescriptions. Merkel did not particularly want Juncker. But she wanted Schulz a lot less.”
http://www.theguardian.com/world/2014/jun/27/eu-democratic-bandwagon-juncker-president-wanted