As Europe is being pulled apart by its political flanks, some pundits still don't get what is really happening. Can we please try to take this seriously? Europe's future is looking increasingly dire; if we understand the European crisis, we might actually be able to mitigate its repercussions.
---Europe's decline is no laughing matter. A continent of half-a-billion people, with the second largest GDP in the world, is in slow economic, social and political decline. The euro zone is stuck in a macroeconomic quagmire, with non-euro members struggling to utilize their monetary freedom while being forced to comply with the same harsh Stability and Growth Pact that destroyed Greece.
The political fragmentation I analyzed yesterday is conspiring with a stagnant economy to create a fracturing storm across Europe. The consequences will be earth-shattering - perhaps more so than we would be comfortable with. Long term, it is increasingly likely that Europe will descend like South America did in the mid-20th century. The outcome, however, would be far more serious for the global economy and global politics.
In this climate, some people seem to take the whole thing with a laughter. Among them is Josef Joffe, distinguished visiting fellow at the Hoover Institution and editorial council member with Die Zeit (a German political magazine). In a May 27 op-ed in the Wall Street Journal, Joffe casually dismisses the seriousness and depth of the dividing line in European politics. His attitude toward the nationalists is almost condescending in tone:
[As] the rise of the nationalist right shows, the EU suffers from deepening ideological divisions. In the east, Poland, Hungary and the rest are jealously defending the sovereignty they had lost first to Hitler, then to Stalin. They cherish subsidies from Brussels but will not yield to what they see as diktats of liberal goodness. ... Italy has turned into a bizarre political animal ruled by a coalition of right-and left-wing populists - the League and the Five Star Movement. They, too, are happily ensconced in the EU, counting on a bailout when they're no longer capable of servicing their astronomical debt. But they will gladly deploy anti-European rhetoric to score points with Italy's electorate.
Really? Is this the level of analysis we are to expect from Stanford University's premier think tank? Europe's decline is far too serious a subject to dismiss like children trying to get dessert before carrots.
To begin with, the point about EU subsidies is completely moot. Every member state pays a fee for its membership, a fee that comes out of the pockets of the member state's taxpayers. Mr. Joffe forgot to mention that every year Polish, Hungarian, Czech, Slovakian and Italian taxpayers shovel billions upon billions of euros into the bureaucracy in Brussels. What they get back, the subsidies in which the member states are "ensconced", is by and large just a repatriation of tax money going out the door.
Some countries get a bit more than they pay in, others get a bit less. No country will say no to getting money back so long as its taxpayers are forced to pay the membership fee. Yet Mr. Joffe makes it sound as though voters in member states with EU-critical majorities are taking handouts without any balancing obligations to fulfill.
Then there is the point about the Italian government debt. Since the current Italian government came into office, it has tried to break loose from the fiscal shackles that the EU places on them. Their intention has been to initiate growth and get the Italian economy growing. Over the past ten years the Italian economy has not moved at all, averaging 0.16 percent growth per year. In the past three years, while the U.S. economy has revved up to almost decent growth rates around three percent, the Italians have struggled to even reach 1.3 percent.
In the past ten years, Italy has exceeded two percent annual growth in only two quarters. That is five percent of the time - in ten years.
This is an absolutely pathetic growth record, and it is the result of the Italian government being forced to concentrate all its fiscal policy on upfront budget-balancing measures. It was this type of austerity, aimed not at improving conditions for the private sector but at saving the welfare state, that sunk Greece and Spain into macroeconomic hell holes back during the Great Recession.
If the Italian government were free to pursue growth-friendly tax and spending policies, they would be able to grow the economy out of its deficit dungeon. The only real roadblock is the Stability and Growth Pact, the sorely misnamed feature in the EU Constitution that forces countries to raise taxes and cut welfare-state spending in the midst of a recession. Yet Mr. Joffe of the Hoover Institution fails to even mention this feature.
Understandably, in an op-ed you cannot elaborate on finer points, but you can also choose to not make points that are either inaccurate or distortionary with regard to the truth.
Mr. Joffe makes a third point of similarly casual quality, namely the one about the Italian government being a "bizarre political animal". As I pointed out in my analysis of the EU elections, there is nothing bizarre at all in traditional left and right parties finding common ground in European politics. What is it really that separates a "right-wing" party like Italy's Lega from that country's Five Star Movement?
Lega is in favor of limitations on taxes while the Five Star Movement wants a bit more spending on the welfare state. Overall, though, they both want government to provide for people. They both want economic redistribution. Their differences are clearly smaller than the issues they agree on.
Then, of course, Mr. Joffe throws the "populist" epithet around. This is a low ball that I will not go into again; I did cover it in detail in an article last Saturday, where - incidentally - I criticized another Hoover Institution fellow, Larry Diamond, for shallowly defining popular majorities in elections as anti-democratic. In Diamond's case the populist term is crystalized into an almost slanderous label to be slammed onto parties and politicians that Mr. Diamond disagrees with. It is not clear whether Mr. Joffe agrees, but his laid-back use of standardized political lingo suggests he does.
Europe is in systemic decline - a decline that is not helped by repetitive punditry. Europe needs old-fashioned systemic analysis from scholars of all backgrounds, especially social scientists. To waste good opportunities at communicating such analysis is to drive another nail into the Old World's coffin.