In its May 26, 2012 issue, The Economist has several excellent lead stories on the European crisis. It argues for democratic reform, political integration, and EU-wide supervision of banking. It suggests that the costs of an EU break-up would be high, but the European public lacks an appetite for additional integration. Besides a European banking bureaucracy, The Economist argues for a European assumption of debt, which it calls mutualisation. Quoting Professor Vernon Bogdanor of King's College, London, its writers remind us that Alexander Hamilton fashioned American federalism through the federal government's assumption of debts.
Europe needs Ron Paul, not Alexander Hamilton.
I do not doubt that a breakup of the European Union would be costly. As well, I do not doubt that most Europeans, especially the innovative and hardworking ones, would have been better off without it. In a letter to the editor in the same issue, Alexander Singer of Athens points out that the use of the catchword austerity with respect to recently mandated Greek reforms, in effect rejected in the May 6 election and now being re-polled on June 17, is misguided. Peloponnese garbage truck drivers are paid monthly pensions that are 50% above the wage of starting schoolteachers, according to Singer.
Regardless of the merits of Greek public pension policies, they are not market driven. A garbage truck driver who has saved and accumulated a fortune of one million dollars is entitled to an $80,000 pension. One who has spent 15 years' worth of wages on hookers while sleeping in the back of his truck, only to retire at age 50 on a generous public pension, is not.
Nevertheless, the question is not whether a garbage truck driver should be paid a generous pension, but rather whether the driver produced value to justify it. Decisions about the equilibration of supply and demand are best left to markets; unions' political power allows them to divert wealth from poorer and less politically influential workers to themselves.
The Greek government has made no attempt to equilibrate marginal wages and productivity, nor does the question matter to most Greeks, who are like children harping for an extra candy bar without an inkling as to from whence candy bars spring. It is evident that, to gratify a nation of childish fools, the Greek government has, in yet another display of failed democratic processes, stolen the wealth used to pay that garbage truck driver from French banks. Now, French workers will be asked, through a ridiculous election outcome in France, to subsidize the French banks through monetary expansion, supposedly a "growth" strategy.
The economic incompetence advocated by the world's economists offers a convenient rationale for bankers to force workers to pay for their frivolous errors. Workers pay through inflationary policies that reduce real wages. This is done in the supposed name of the workers themselves. Of course, The Economist's readers (bankers, lawyers, politicians, public employees, executives, and university professors) are the true beneficiaries of stimulus policies and monetary expansion. Since the ending of the world's reliance on gold in 1971, workers' real wages here in the US have not increased.
The solution to Greece's and Europe's problems is recognition that more government causes greater harm. The way out is through stabilization of money and long term stimulation of innovation and hard work through elimination of unnecessary government bureaucrats, starting with pointless institutions like the European Commission, a body whose purpose requires a Kant-sized metaphysics tome to explain.
Although there were inequities in the federal assumption of the Revolutionary War debt in the United States, there was at the time no doubt that every state had to some degree contributed to the war. There were reasons for states like Virginia and Maryland, which had repaid their war debts, to object to paying off less conservative states' debts. Nevertheless, Hamilton asked none of the states to subsidize unearned pensions for 50-year-old buffoons. In fact, many of the valiant soldiers were deprived of their pay, which was in by-then-valueless continentals.
To stabilize Europe's monetary system, the gold standard should replace the euro. The European Central Bank should be shuttered, and the profligate French and German banks, which respectively lent to Greece and Spain, according to The Economist, should be put into whatever European equivalent to chapter 11 there may be.
One of the great ironies of the 1980s was that just as the USSR had proved itself a failure, Europe adopted a central authority akin to the Soviet Kremlin's. Every step of the way infertile bureaucratic wasters in the EU have advocated increasing government, regulation, and bureaucracy. These privileged halfwits, who have produced nothing of value and have overseen a massive real estate bubble and debt collapse, have destroyed value.
As a European currency, gold is a better alternative than the euro because it is not subject to quack economic theories advocated in places like The Economist, The New York Times, and most university economics departments. Not one important economist in the world, including The Economist's staff, which spends all its time studying Europe, foresaw the current default-and-banking problems. The European bankers who lent to Spain and Greece are almost as dumb as the bankers in the US who have made one failed investment after the next for the past 60 years and who have survived only by means of one public subsidy after the next. It is time that the global banking cancer was excised. Businesses that do not produce value, and $29 trillion in subsidies from the Fed so far say that the US banking system has not, need to die.
Recall that it was Hamilton, advocate of federalism, who favored central banking and opposed hard money. Today, Ron Paul and his colleague Gary Johnson offer a set of solutions that can free Europe from the Carolingian dream of its uniting under a central authority. Let Europe free itself from the medieval ideas of the Council on Foreign Relations, The Economist and The New York Times.
A gold standard is how Europe should begin to reform itself.
Showing posts with label Europe. Show all posts
Showing posts with label Europe. Show all posts
Friday, June 1, 2012
Thursday, May 22, 2008
Institutional Death in America and Europe
The new and old worlds are divided not just by their relative emphasis on flexibility and markets, but also by their openness to change. Radicalism in Europe has generally taken the forms of Hegelian emphasis on historicism. Marxism and its derivatives while pretending to advocate radical change are romantic reassertions of medieval stability and security. The chief outcomes of Russian and eastern European communism were societies that had difficulty with flexibility and change, that could not integrate information about price and consumer demand intelligently and that placed political stability before economic change. As well, Europe has emphasized the Nietzschean will to power and minimized liberal openness to change.
Both Americans like Europeans have revealed prejudices but while Americans are discarding them, Europeans are not. In the 19th century the people of California hated Asians and passed discriminatory laws against them. The first immigration law in America, the Chinese Exclusion Act of 1882, excluded Chinese mining labor from immigration under penalty of law and required that Chinese immigrants obtain certification of their qualification to immigrate. In 1902 Chinese immigrants were required to register with the government and obtain a certificate of residency. Similarly, antagonism and hatred toward African-Americans following Reconstruction led to passage of Jim Crow laws by post-Reconstruction redeemer governments beginning in 1876 and the laws continued in force until passage of the Civil Rights Act in 1964. The northeastern Mugwumps, the educated post-reconstruction Republicans who preceded the Progressives around 1884, did not advocate the Jim Crow laws aggressively but did not oppose them aggressively either. The Jim Crow laws were primarily the product of southern Democrats. The northern Democrats did not oppose them either. As president, Woodrow Wilson intensified the Jim Crow laws and supported them. During the Progressive era, imperialist sentiment fit the racism of the Jim Crow laws. Progressivism was very much associated with racism.
In Europe, there was a parallel history of anti-Semitism. Jews were banned from England, France and Spain in the middle ages and were forced to migrate to Asia Minor and eastern Europe. In Germany and Italy they were forced to live in ghettos. During the Crusades, Crusaders murdered tens of thousands of Jews (along with eastern Christians, southern French Christians and Muslims). There was a brief period of liberalization in the 19th century, but in the twentieth the rise of Nazism, a derivative of Marxism, led to the murder of the majority of European Jews.
Despite this history of bigotry in both continents, in recent decades Americans have reduced but not eliminated the degree of anti-Asian and anti-Chinese racism. In contrast, anti-Semitism is more intense in Europe than it has been since World War II. The European addiction to anti-Semitism attends a deeper inability to overcome antiquated traditions and class structures that inhibit change.
Americans' ability to create and accept change may in part be the cultural residue of the American frontier. The open frontier led this people to see the possibility of the new. As well, the science and technology that freedom made possible, the inventions and progress that came from laissez faire capitalism, led to an openness to change. Perhaps the openness to change went to far under the philosophy of modernism, but it is preferable to the alternative, which is the stagnation of bigotry, impoverishment and lost economic opportunity. The degree of tradition and change is best balanced through private decision, not through bureaucratic laws that require landmark preservation.
As well, Americans are a religious people, and their acceptance of change is likely linked to their faith. In America, religious tolerance has been the norm and religion has been a matter of belief and conscience rather than social imposition and structure. Many Americans have believed that material rewards reflect divine grace. Since belief in God is a matter of conscience, not social institution, and since material rewards reflect divine election, in many Americans' view, American are likely to pursue and feel comfortable with such rewards and with the change that they require.
Since the creation of wealth requires the creation of change, of new ideas, of new markets and new technology, the converse of new ideas, the death of old ones, is critical to change. Europeans are reluctant to give up old prejudices like anti-Semitism and tribal social arrangements like socialism. Firms cannot in the European model be allowed to go bankrupt. Business executives must be permitted to maintain their social position and employees must be secure in their jobs.
To the extent that Americans adopt such tribal, European views they will be unable to change. Change depends on death. The growth of the economy depends on the death of failed firms. Incompetent managements like Bear Stearn's or Enron's do not deserve subsidies. Their managements have failed and deserve the economic returns that failure implies.
Likewise, the introduction of Progressive and New Deal institutions were significant not so much because they reflected change, but rather because the institutions reflected the tribal views of German historicism and so became institutionalized as reaction to change. Few Progressive institutions have been overturned and those New Deal institutions that were not rejected by the Supreme Court have remained in place for the past 70 years. When change in proposed, the American people's reaction is not the openness to change that characterized America in an earlier era but a European-style tribal reacton, a fear of change and a hostility to the possibility that failed institutions ought to change. Likewise, when American business has failed, as it increasingly often has in the past decade, the American people's reaction has been to protect the wealth of those whose businesses failed to produce value for investors or for the American people and so shore up a class system that is decidedly non-American in nature.
Both Americans like Europeans have revealed prejudices but while Americans are discarding them, Europeans are not. In the 19th century the people of California hated Asians and passed discriminatory laws against them. The first immigration law in America, the Chinese Exclusion Act of 1882, excluded Chinese mining labor from immigration under penalty of law and required that Chinese immigrants obtain certification of their qualification to immigrate. In 1902 Chinese immigrants were required to register with the government and obtain a certificate of residency. Similarly, antagonism and hatred toward African-Americans following Reconstruction led to passage of Jim Crow laws by post-Reconstruction redeemer governments beginning in 1876 and the laws continued in force until passage of the Civil Rights Act in 1964. The northeastern Mugwumps, the educated post-reconstruction Republicans who preceded the Progressives around 1884, did not advocate the Jim Crow laws aggressively but did not oppose them aggressively either. The Jim Crow laws were primarily the product of southern Democrats. The northern Democrats did not oppose them either. As president, Woodrow Wilson intensified the Jim Crow laws and supported them. During the Progressive era, imperialist sentiment fit the racism of the Jim Crow laws. Progressivism was very much associated with racism.
In Europe, there was a parallel history of anti-Semitism. Jews were banned from England, France and Spain in the middle ages and were forced to migrate to Asia Minor and eastern Europe. In Germany and Italy they were forced to live in ghettos. During the Crusades, Crusaders murdered tens of thousands of Jews (along with eastern Christians, southern French Christians and Muslims). There was a brief period of liberalization in the 19th century, but in the twentieth the rise of Nazism, a derivative of Marxism, led to the murder of the majority of European Jews.
Despite this history of bigotry in both continents, in recent decades Americans have reduced but not eliminated the degree of anti-Asian and anti-Chinese racism. In contrast, anti-Semitism is more intense in Europe than it has been since World War II. The European addiction to anti-Semitism attends a deeper inability to overcome antiquated traditions and class structures that inhibit change.
Americans' ability to create and accept change may in part be the cultural residue of the American frontier. The open frontier led this people to see the possibility of the new. As well, the science and technology that freedom made possible, the inventions and progress that came from laissez faire capitalism, led to an openness to change. Perhaps the openness to change went to far under the philosophy of modernism, but it is preferable to the alternative, which is the stagnation of bigotry, impoverishment and lost economic opportunity. The degree of tradition and change is best balanced through private decision, not through bureaucratic laws that require landmark preservation.
As well, Americans are a religious people, and their acceptance of change is likely linked to their faith. In America, religious tolerance has been the norm and religion has been a matter of belief and conscience rather than social imposition and structure. Many Americans have believed that material rewards reflect divine grace. Since belief in God is a matter of conscience, not social institution, and since material rewards reflect divine election, in many Americans' view, American are likely to pursue and feel comfortable with such rewards and with the change that they require.
Since the creation of wealth requires the creation of change, of new ideas, of new markets and new technology, the converse of new ideas, the death of old ones, is critical to change. Europeans are reluctant to give up old prejudices like anti-Semitism and tribal social arrangements like socialism. Firms cannot in the European model be allowed to go bankrupt. Business executives must be permitted to maintain their social position and employees must be secure in their jobs.
To the extent that Americans adopt such tribal, European views they will be unable to change. Change depends on death. The growth of the economy depends on the death of failed firms. Incompetent managements like Bear Stearn's or Enron's do not deserve subsidies. Their managements have failed and deserve the economic returns that failure implies.
Likewise, the introduction of Progressive and New Deal institutions were significant not so much because they reflected change, but rather because the institutions reflected the tribal views of German historicism and so became institutionalized as reaction to change. Few Progressive institutions have been overturned and those New Deal institutions that were not rejected by the Supreme Court have remained in place for the past 70 years. When change in proposed, the American people's reaction is not the openness to change that characterized America in an earlier era but a European-style tribal reacton, a fear of change and a hostility to the possibility that failed institutions ought to change. Likewise, when American business has failed, as it increasingly often has in the past decade, the American people's reaction has been to protect the wealth of those whose businesses failed to produce value for investors or for the American people and so shore up a class system that is decidedly non-American in nature.
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