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Mate

Other than Eurocrats melting down (and hopefully away), you didn't miss much. Oh...Republicans lost their spines as well, re:filibuster.

I know, it's a lousy comparison, cause Euros never had spines in the first place:)

Any news from the Valley?

Leo

I have one more Google interview this Friday. It seems they are trying hard to make me think a position at their company really merits a long and tortuous interview process.



Other than that, it's the same old thing for me. My start-up is actually starting to do much better, which means I'll be staying on for a year or so at least. We'll see.

Anyways, I'll be here tomorrow to post some thougts on Iraq for Barry. I think I upset him the last time we exchanged chatter.

8)

Mate

You cannot possibly upset Barry as much as another Quaran sprinkled with urine story.

It's either urine or toilet flushing process - loonies probably concluded that their best chance to defend Islamofascists is to become loo-minded:)

Synthese:

In fact, the true victim of this fiasco is referenda.

Indeed. When people are asked the question "Do you approve of the Treaty establishing a Constitution for Europe?" and give the answer "Chirac must go", then the concept of referendum has lost.

Despite what the leaders of some EU governments are saying, this version of the Constitution is as dead as a doornail.

Not only this version. The whole idea of a Constitution is dead for the forseeable future, unless it's an anti-freedoms-of-movement, anti-capitalist, anti-Muslim one that declares Chirac and Balkenende unfit to hold office. But a Constitution that takes into account the sentiments of those who voted 'no' in last week's two referenda is a Constitution that I for one don't want.

Raymond Aron and the End of Europe

By Christopher Caldwell
Thursday, April 7, 2005


There are two basic questions that people who write about Europe get asked more than any others. First: Is Europe still Europe? When Americans read in the papers about the wave of mosque-burnings after the murder of Theo van Gogh in Holland last November, those who sometime visit Europe will wonder whether this kind of thing goes on often, and whether it has any connection to the tranquil Europe where they vacation. Those who haven’t been to Europe lately may be thunderstruck to hear that there are mosques in the Netherlands at all. The second question is of interest to all Americans in the wake of the Iraq war: Is Europe still on our side?

These questions go together. The European Union--which now has 25 member states, including 10 new ones mostly from the old Eastern bloc--is supposed to evolve into an “ever closer union,” at least in the minds of its leaders. They eventually want a federal government, with a president and all the trappings of a regular republic. With some friction and much foreboding, a unitary constitution is being submitted for the approval of the member states over the next year. There are referenda in France and Holland seven weeks from now, and they may lose.

But European voters do increasingly tell pollsters they feel a “European identity.” When you ask them what they mean by that, they generally mention one thing or another that illustrates differences from the United States: Europe’s oldness, perhaps, or welfare states, or its secularism. In other words, they mention Europe’s institutions. And this is the big problem. Because those institutions have proved hard to adapt to two phenomena that are characteristic of our global age: (1) open markets, and (2) broad demographic change, including large migrations. There is no prospect of managing that change unless the continent’s social institutions (starting with its welfare states) are reformed. Europeans are afraid that such reforms mean “Americanization.” As they see it, the experts and economists keep telling them that they must destroy their continent to save it. So Europe is now--defensively--asserting an identity without a particularly clear idea of what that identity is.

Raymond Aron

I’d like to spend our time this afternoon trying to figure out what European identity is, and how much of it can reasonably be preserved. There are many ways to do this. My plan, a somewhat arbitrary one, is to use the work of Raymond Aron, the French political scientist, philosopher, sociologist, and historian who died in 1983 and would have turned 100 last month. For the benefit of those in the audience who are under, say, 30, Aron was a brilliant young student at the Ecole Normal Supérieure, studied in Germany during the first Hitler years, established himself as a top-flight academic philosopher, fled to England with De Gaulle, where he was editor in chief of the main resistance publication, La France libre. After the war, at age 40, despite never having written a real news article in his life, he went to work at Le Figaro. He never left journalism, but he did become professor of sociology at the Sorbonne in 1955. He closed out his career at the School of Advanced Studies in the Social Sciences, and founded the truly great French quarterly Commentaire.

Aron was for the French right what Jean-Paul Sartre was to the French left--a standard-bearer matters of both day-to-day political position-taking … and deep theoretical reflection. Sartre, incidentally, was Aron’s youthful friend, and will also have his centenary this year, a couple months from now. Their friendship did not survive Aron’s conversion to anti-Communism. He saw in Stalin’s Russia the same kind of imperialistic insatiability that he had seen in Hitler’s Germany in the 1930s. Aron, I would say, was a rightist only in a French sense. He was probably the pre-eminent Atlanticist in post-war France, keen to correct what he saw as a generalized French ignorance of the United States--although he was not an unthinking supporter of the U.S., either, particularly during Vietnam. That said, he applied the same generally anti-colonialist attitude to France, particularly during the Algerian war. We would consider him either on the far right of the left or the far left of the right.

Aron wrote about 40 books of sociology, history, philosophy, and journalism, and there are another dozen posthumous collections of articles and essays. He has been extremely well anthologized--I highly recommend the 800-page behemoth edited a decade ago by Christian Bachelier called A History of the 20th Century. But the works of Aron are a very large country--and I am a stranger in most of it. I hope you’ll forgive me if my reading of him is selective. And the last thing I want to do is to assume what position Aron would have taken on issues affecting Europe today. As the Harvard professor Harvey C. Mansfield said recently about Aron, we do not “have his advice; we only have his wisdom offered for previous emergencies.”

Aron’s wisdom was, if you’ll pardon the expression, phenomenological. He cared about things and actions more than he did about ideological labels. I’ll give you an example. A key theme in much of his work--and one that I’ll return to before the end of this talk--is that until very late in the 20th century, people were judging events according to 19th-century conceptions. Particularly intellectuals, who had an understanding of socialism that time had already shown to be largely mythological. “In theory,” Aron wrote, “a revolution is defined as a liberation. Yet the revolutions of the 20th century seem, if not revolutions of enslavement, at the very least revolutions of authority.”

Decadence

And he did not spare those he admired from such condemnation--Léon Blum, for instance, the leftist prime minister who led France’s Popular Front government in the mid-1930s. Aron said: “Leon Blum was a superior man, but his intellectual formation dated from before 1914.” That is, he lacked the understanding of aggression surpassing all rationality that Aron had come to know in Hitler’s Germany in the early 1930s, and that he would later recognize in Stalin’s Russia. In March 1936, Blum’s government opposed Germany’s re-occupation of the Rhine by calling it “unacceptable.” This is a word that Aron held in particular contempt. As he put it, “To say that something is unacceptable was to say that one accepted it.” Again, Aron deeply admired Blum. But he noted with dismay that he seemed proud of putting up no resistance. After the German re-occupation, Blum said, “No one suggested using military force. That is a sign of humanity’s moral progress, and the socialist party is proud to have contributed to progress.” Aron added: “This moral progress meant the end of the French system of alliances, and almost certain war.”

We hear an echo of Blum’s words in the self-congratulatory speech that Spanish prime minister José Luis Rodríguez Zapatero gave on the first anniversary of the March 11 Madrid bombings, which brought his Socialist government to power and caused the pullout of Spanish troops from the Iraq coalition. In the course of a speech in which he praised his government’s “inimitable integrity,” Zapatero condemned those who questioned his decision, warning that they would be forgotten. “We reserve our memory for those noble and beautiful things that unite us, that make us rise up and advance in the worst moments, and that earn the admiration of other peoples. Because anyone who looks at us with just and objective eyes cannot fail to recognize the merit of Spain’s actions.”

Again, I don’t mean to enlist Aron on any side of any question. But I do mean to show that, long ago, he was mulling over themes that seem to the rest of us to have cropped up only the day before yesterday. In a book he published in the 1970s called In Defense of Decadent Europe, he praised Western Europe’s wide scope for freedom and its superior economic management. He preferred it not only to the Soviet Union--of course--but also to the United States. But he warned that democracies tend to push their taste for comfort and freedom beyond what is tolerable for national unity. Elsewhere, he wrote, “Democracies have to do more to justify themselves than simply invoke the values that their adversaries hold in contempt; democracies have to show themselves capable of the virtues on which totalitarian regimes claim a monopoly.” Aron even dealt specifically with the theme we’re taking up today, the idea that Europe was somehow being turned into something other than itself. In a 1981 interview, he noted that the Soviet Union’s goal was to turn France into a place like Poland. Asked to lay odds on the chance that France would remain France, he refused. He said, “When the choice is between survival and death, you don’t calculate. You fight.”

A big quandary for Europe--in Aron’s times as now--is that, as he said, “It is hard to be strong politically when you are weak militarily.” Europe’s fate in the Cold War was partly out of its hands. The continent was subject to the fluctuating strength of the U.S., the fluctuating goodwill of the USSR, and of course the moods of respective Euro governments. In my view, the entire point of the EU is to bring Europe’s fate back into its own hands. How would Aron have seen it? He had both allegiances. He was a French patriot who was quite at home in all of European culture. But certain of Aron’s preoccupations can tell us something about Europe’s potential to recapture some control of its fate.

One is that Aron had what you might call an awe at the binding power of nationalism. He would probably consider the European project in big trouble if it could not harness it. He wrote tellingly about nationalism on the eve of World War I, and its superiority over the alternative--which at that time was the international socialist movement that Aron himself grew up in. “The war of 1914,” he wrote, “was a rude shock for the socialist religion. Because it showed that in spite of words and appearances, at the inevitable moment of choice, the country won out over the party--effortlessly. In an instant, patriotism ruled over crowds of people who the day before had proclaimed their indifference to their homeland, and their undivided devotion to the Workers’ International.”

A very similar leakage of Europeanist passions back into nation states is clearly visible today. Two examples. For the last decade, immigration has been the most passionately debated issue at bars and over dinner tables--but not in Brussels. Yet if this isn’t a Europe-wide policy issue, then nothing is. European integration has erased most border controls between countries. You’d think that was progress, but almost every country behaves as if it is getting the short end of the stick. Northern Europeans complain that Italians are allowing Mediterranean immigrants to pass through to countries with more generous welfare states. Italy complains it foots the bill for guarding a vulnerable coastline. Swedes complain that Danish welfare cuts are dumping undesirable immigrants. And everyone complains that Spain’s instant legalization of thousands of immigrants last winter is exporting social problems. Harmonization of immigration policies is imperative. And yet it is political suicide for most nationally elected politicians to propose ceding that authority to Brussels.

Another example: the killing of Theo van Gogh last November was news internationally, but the concrete political debate over it was limited to the Netherlands. The Dutch minister of the interior battled to keep his job. The immigration minister fought with the justice minister. And everyone proposed legislation in the national parliament. But that was it. A lot of Dutch politicians talked about the “international dimension” of Islamist terrorism, but this talk was purely a way of passing the buck. There was no European dimension to the response to the van Gogh killing and the riots that followed it. In fact, two days after the murder, Dutch prime minister Jan Peter Balkenende went to Brussels to address European heads of state (the Dutch held the EU presidency at the time) and didn’t even mention it.

Aron was given to wondering whether NATO was not the beginning of an erosion of national sovereignty. In very clever apercu, he noted Europeans’ desire to have it both ways. Europeans in the Cold War were searching for an organization that simultaneously, “surpasses them and respects them.” But when push comes to shove--as we see in the EU and as we saw in the difficulties surrounding the formation of the Iraq coalition two years ago--the respect is more important than the surpassing.

A Fictive Economy

There is one thing that separates Aron from the run of political journalists in France and the United States. He actually knew something about how a modern economy worked. Although he was prescient about the global economy, he did not live to see globalization in full flower. What would he have made of it? We can get an approximation by way of an analogy. The change in economic organization that results as we move from a state-based to a global economy is structurally similar to the change in diplomacy as one moves from a state-based to an Empire-based foreign policy (“Empire,” by the way, is a word that Aron was quite comfortable using to describe both of the nuclear-armed blocs in the Cold War--he called the United States an imperial republic--but he did not use the term, by any means, the way today’s hard left uses it). For Aron, the Eastern European nations in the aftermath of the war were only “fictively restored.” There was no real Poland in 1945--there was a space run by the Soviet army in which Poles lived. “Political units, such as they exist according to international law, are national,” he wrote. “Military units, such as they exist in reality, are imperial.”

The national economies of Western Europe have today become similarly “fictive”. Nowhere is this clearer than in the parts of Europe that present themselves as most typical. You go to an Italian wine town and think, “Wow! Now I’m in the real Italy!” But then you realize the winery is owned by Germans, the town is inhabited by English vacationers, and the people who clean the dishes in the French-owned restaurant are all Romanians. The Italians who used to live there have had to move to poorer towns, maybe along some highway near fast-food restaurants.

This is just life in the global economy, but it matters more to Europeans than it does to Americans. The ability to control a national economic space is central to creating a welfare state, and the welfare state, as I have said, is central to European identity. You see the paradox. There is a very interesting book by the Harvard economists Alberto Alesina and Edward Glaeser, called Fighting Poverty in the U.S. and Europe. It compares American and European welfare policies, and finds that one of the very important reasons that American benefits are relatively low is that America is both a diverse and an immigrant-based country. The taxpaying natives suspect that their money is going to people who are not like them, and may be ripping them off. Whether American voters are right or wrong, they will not vote for European-level welfare benefits. The question is whether, as Europe becomes demographically more like America--both through immigration, and through internal migration within the EU--it will lower its benefits. The answer is, yes, it will.

Demographic change as a policy issue did not really enter public discussion until after Aron died--in fact, in some places, it is creeping into the debate only now--but it is so central to Europeans’ idea of what is de-Europeanizing them that we need to make a brief excursion into it.

An excellent guide to the scope of European demographic change is an AEI paper published by Nicholas Eberstadt last November. It notes that Europe’s population is the world’s oldest, and in little more than a decade its median age will begin creeping towards 50. The continent’s birthrate is well below replacement. In fact, it is the lowest birthrate ever recorded for a major geographical area. Other studies show that Europe’s population is going to start shrinking extremely rapidly by 2015. And as social science statistics go, demographic projections, at least over the short and medium term, tend to be quite accurate. So Europe faces a choice: either allowing massive immigration--and some estimates are that the necessary levels will be around 50 to 100 million over the coming decades. Or … permitting the economy to go massively out of whack, through both unfunded welfare mandates and skyrocketing labor costs. A lot of people up until about 5 years ago held out hope that Europe’s immigration needs could be met through the new member states of Eastern Europe. But in 2002, a book by the German economist Meinhardt Miegel called The Deformed Society showed that the former East Bloc’s birthrates were in most cases even lower than Western Europe’s. Any significant migration from the Eastern European countries would cause a brain drain that would badly damage even the healthiest Eastern economies.

Now, Europeans are not, for the most part, panicking over this. A Eurobarometer poll showed recently that 56 percent of Europeans recognize the need for immigrant labor, while 80 percent favor more stringent border controls. That sounds self-contradictory, but maybe it’s not. Europeans, it seems, are neither so naïve as to think they can maintain the ethnic and cultural make-up of their countries, nor so politically correct as to admit any reprobate who shows up at the gates of Europe. Their problem is they’re having trouble figuring out where the gates of Europe are.

Islam

What worries them is Islam. Americans often snicker at Europeans for having allowed so many Muslims to immigrate over the last three decades. But such snickering is misplaced. I’m reminded of an article Midge Decter wrote a few years ago about the young crowds of Catholic youths who would gather in public squares whenever the late Pope showed up, shouting, We want God! We want God! This was true of immigrants, too, and she said, “Who even knew--or what is more to the point, who even cared--whether they were Catholic or not?”

That is more to the point. I have never heard any American comment in a negative way on the overwhelming Catholicism of our Latin American immigrants. This is somewhat surprising. After all, there are organized forces in this society--such as feminists--whose interests clash with those of believing Catholics, if they stop to think about it. But no one ever did stop to think about it. And Europe behaved as we did. When they began admitting guest workers from North Africa and Turkey in the 1960s, and 1960s, Islamic radicalism was not on anyone’s list of worries. No one considered that these people had a religion at all.

The fact that Europeans have a much, much more serious immigration-and-assimilation problem than Americans is largely an accident. But it has been made worse by a failure to assert European culture and values. That failure, again, comes from an inability to define what European identity is. At the end of his book on Clausewitz, Aron wrote, “Europeans would like to exit from history, from la grande histoire, from the history that is written in letters of blood. Others, by their hundreds of millions, wish to enter it.” This is the central issue when we think about the immigration to Europe. The big question may be not whether these immigrants convert from Islam to secularism (nobody is seriously suggesting that they will convert to Christianity). The question is whether, in coming to Europe, they believe they are immigrating towards, or away from, history, la grande histoire, and whether, once they’re present in Europe, they feel a nostalgia for history or are content to live without it. It’s an open question. The French unease with the veil has always reminded me of the American unease with graffiti in the 1970s--it is not such a serious problem in itself, but it is a sign that those who used to be considered the public authorities have lost control of the public space, and thus are authorities no more.

The scope of immigration is something Aron did not live to measure against his theses on the enduring nature of nationalism. It is, again, hard to say what he would have thought of it. Aron frequently compared Communism to a religion de salut, or religion of salvation, and when he did, the specific religion to which he referred was Islam. He is not the only Frenchman to have done this: Jules Monnerot, a Caribbean intellectual who started his life as a hard-line communist and ended it as a member of the National Front, wrote a strange but very interesting study of the linkages back in the 1940s in a book called the Sociology of Communism. Jean-Paul Sartre, when he attacked Aron for his anti-Communism, often said that he had no right to criticize the Communist movement because he was not in it--which is a religious, not a political attitude. However he addressed this issue, it is probable that Aron would have considered the issues raised by Islam in Europe inseparable from the issues raised by Islam abroad. One thing he understood in the immediate aftermath of World War II, and that Sartre did not, is that French domestic unity was peculiarly dependent on international developments. (The same is true of the EU today.) At the end of the War, the resistance (around which any French government would have to be built) was divided between Communists who sympathized with the Soviet Union and others who had fought alongside, or at least sympathized with, the Americans. As Aron remembered it, “What I was always explaining at the time, to Sartre for example, was that there is such a connection between international relations and the domestic politics of France that, in the case of tensions between the two great powers, the unity of the French Resistance would not survive it.”

Aron and the Iraq war

This allows me to address briefly, before I close, my second question, which is whether Europeans remain basically as sympathetic to American foreign-policy aims as Aron was. And here is something that ought to give us pause. Among Aron’s students were a couple dozen of the most prominent philosophers and political scientists in France. Most of these self-identified Aronians were against the Iraq war, and some of them vehemently so. Why is this?

No one can say how Aron would have reacted to September 11. He was no fair-weather friend of the Atlantic alliance, but there are a couple of principles in Aronian thought that might have made him skeptical that the road to victory in the war on terror led through the democratization of Iraq. One is his distrust of utopias, and his phenomenological insistence on actual behaviors. When he looked at the actual behavior of the Muslim world, he found it big, immovable and unchanging. Writing about the early twentieth century, Aron said, “The Arab states resembled the Muslim states of the past, created by force of arms, superimposed on multiple tribes, without any equivalent of the European middle classes, made up of bourgeois, bureaucrats or intellectuals capable of running a constitutional state.” The description is not particularly out of date.

For a tough-minded person, Aron had a real horror of war, because he had a particularly vivid conception of its unintended consequences. Some of these were moral. He opposed the Algerian war, writing at the time: “The French pacification must be understood as including torture, true; but the war of liberation must be understood as including terrorism. When you have torture in the interest of an Algérie française against terrorism in the interest of Algerian independence, it is the ends that decide it, not the means.” Aron said that if France had wanted to stay in Algeria with 400,000 men, it could have done so. But it could never have carried off a total victory.

On a larger scale, Aron early on developed out of World War I a theory of “guerres en chaîne,” or chain-reaction wars, which he made the subject of one of his most enduring books. The difficult-to-break cycle of chain-reaction wars, comes about for a couple of reasons. First, people tend to fight present, nearby enemies with the aid of future, distant enemies, and can unwittingly strengthen the hand of their opponents in the next war. This happened with Russia in World War II, and--as it turned out--with Islamists in the Cold War. Second, under modern conditions. the ideological claims of war tend to grow to match the carnage that modern war brings with it. World War I was not meant to be a revolutionary war, Aron wrote, but “starting in 1917, when they launched the rhetoric of ‘liberation of the nationalities,’ the statesmen of the Entente gave their enterprise a revolutionary character.” Both dangers are present in Iraq, even if the revolutions the invasion gave rise to are ones we look upon favorably, such as Lebanon’s.

But I would add that it is just as easy to find skepticism in Aron about the kind of human-rights based thinking that provided the European alternative to the Iraq war. Aron was sympathetic to human rights, to the aspiration that Europe could recover its greatness by, as he put it, “adapting itself to the spirit of the new times, and [could] help cure other civilizations of the childhood diseases of modernity.” But while he had a deep respect for human rights as rights, he was inclined to think that human rights as politics were Baby Boomer stuff--a substitute ideology for socialism that was not very rigorously thought out. He called it “a search for something that was neither acceptance of the government, nor revolution, nor terrorism. It was a way for the generation of 1968 to feel they were being true to themselves while doing something completely different.”

Beneath the flux of wars, Aron detected a larger trend. In a great lecture delivered in London 45 years ago, called “The Dawn of Universal History” he said: “For the first time, the so-called superior societies are starting to live an identical history.” That is, they are beginning to run along the ruts that technological efficiency dictates. It was the 19th-century ideologues of industrial society, of rationalization and progress--particularly Karl Marx and Auguste Comte--who provided Aron with his most useful analytical tools. They got a great deal right. But, Aron complained, “They underestimated the persistence of history’s traditional side, the rise and fall of empires, the rivalry of regimes, the disastrous or beneficent exploits of great men.”

There are two powers in the twentieth century, Aron thinks, that wreaked havoc by--as a matter of ideology--taking the insights of the industrial age and put them to the service of primitive barbarism: Nazi Germany and imperial Japan. Like al-Qaeda today, they assumed technology brought only quantitative changes. They wanted to pursue an archaic, tribal kind of power politics, but with modern implements. Here Aron’s thinking anticipates that of Robert Cooper, the adviser to Tony Blair who is one of the EU’s most sophisticated foreign policy thinkers. Out of WWI, Aron insisted, Europe drew the lesson that war doesn’t pay. But there was a hitch. Paradoxically, the more people draw this lesson, in fact, the more war does pay for those willing to pursue it.

With the death of the Pope this week, there has been a great deal of talk about the German phenomenologist Max Scheler, on whom Karol Wojtyla, before he became Pope, wrote his dissertation. Aron, who wrote widely on German thought, was also a big fan of Scheler, and I’d like to leave you with something he wrote about him in 1951: “It could be,” Aron wrote, “according to a theory of Scheler, that all the different philosophies are available to every generation, and ‘material factors’ open or close the locks that permit them to penetrate into the real.” This view is at the heart of Aron’s work. It may make him frustrating to some, Europeans as well as Americans, since it doesn’t permit us to see any philosophy as permanently the best, or free us from second thoughts about the path we’ve chosen. But it also means that good philosophies are always there to be chosen, which ought to be as much a consolation to our generation as it was to his.

Christopher Caldwell is a senior editor at The Weekly Standard, a columnist for the Financial Times and a contributing writer for the New York Times magazine.

When people are asked the question "Do you approve of the Treaty establishing a Constitution for Europe?" and give the answer "Chirac must go", then the concept of referendum has lost.

You keep insisting naively that politics should be rational. Perhaps that is a Norwegian virtue, but it is decidedly not a Latin one or, evidently, Dutch either.

The people said what was on their mind and since the constitution was written in such a manner as to inspire a bookworm, both countries took advantage of the occasion to send a powerful message that shook the foundations of the EU. Highly salutary, I'd say. It had got moribund.

Bollux the constitution, which was simply a document to please Brussels/Strasbourg bureaucrats.

Back to basics, regardless of Chirac or Schroeder or even Tony Blair. (They are talking heads living a brief moment of transient glory. Who ever will remember them?) What can be done to mend the situation in Europe? Even if the French are recalcitrant idiots, their vote was not necessarily ONLY for a "social Europe", but a Europe that works.

Until someone comes up with a credible answer to that question, then all the rest is moot.

As for refenda, that is a matter of practice and practice makes perfect.

The whole idea of a Constitution is dead for the forseeable future

Perhaps you are in your dotage, but the foreseeable future is not that far away. Five, maybe ten years.

Next time around, get it right. KISS and screw the bureaucratic jargon. Even Giscard had said, at the very beginning, he would have liked a constitution that an intelligent secondary school student could understand.

They were actually paid to write this sort of rot? Will wonders never cease .. ?

http://www.economist.com/displaystory.cfm?story_id=4055221

The European Parliament is the big loser from the rejection of the EU constitution

This article displays wonderfully how hidebound MEPs let their pride get in the way of writing a constitution that the people could understand.

It shows how the view from Strasbourg is myopically restrained to a very short distance beyond that city. And, as for Brussels ... well, that city's EU institutions are even more hopeless. It is time for a reality check.

With Italy in the Doldrums, Many Point Fingers at the Euro

By GABRIEL KAHN and MARCUS WALKER
Staff Reporters of THE WALL STREET JOURNAL
June 13, 2005

CAPOLONA, Italy – Rossano Soldini, the 60-year-old head of a family-owned shoe factory in this tiny Tuscan town, is getting creamed by Chinese imports.

But Mr. Soldini isn't only blaming China. He also wants to give Europe's common currency the boot.

Like other shoe manufacturers across Italy, Mr. Soldini says the euro's sharp rise against the dollar inflated the price of the shoes he ships to the U.S. and left him defenseless against Asian rivals. Italian shoe production dropped almost 8% last year, the fourth straight year of declines. In 2004, Italy imported more shoes than it exported for the first time.

In the past, Italy would devalue its old currency, the lira, to help businesspeople claw back to competitiveness against other countries. But since Rome gave up control of currency policy to join the euro in 1999, Mr. Soldini, who also heads the National Association of Italian Shoe Manufacturers, has watched his fortunes slide. Having the euro has been like "wearing handcuffs," he says, adding: "Without a doubt, I'm nostalgic for the lira. Europe is not listening to us."


Six years ago, 11 European nations made a bold bet that a common currency would unify and fortify the continent from Sicily to Helsinki. Now, as many of the nations in what is known as the euro zone slog through an economic funk, the experiment is helping to drive countries further apart -- and fueling a growing resentment of the wider European Union.

In Italy, an anti-euro backlash is ricocheting up and down the peninsula as the country sinks deeper into a recession. Consumers, businesspeople and some politicians now bemoan a currency they claim has left them poorer and less competitive. Earlier this month, the welfare minister, Roberto Maroni, called for a referendum to bring back the lira. The daily newspaper of his party, the Northern League, has just begun rendering prices in euros and lira in its news columns, even though the lira no longer exists.

The euro-bashing isn't confined to Italy. A poll for Stern magazine this month found that 56% of Germans want the mark back.

The mounting dissatisfaction is another blow to the authority of the EU. The 25-member union was pitched into confusion two weeks ago by the rejection by French and Dutch voters of a proposed new constitution for the union. Underpinning those votes and the grousing over the euro are deep anxieties about slow growth, high unemployment and the future of Europe's generous welfare states.

The anti-euro feeling also underscores just how hard it is to forge a common currency. It took the U.S. nearly a century to create a truly national currency. Before the Civil War, thousands of American banks issued notes that in effect worked like independent currencies, varying widely in value from state to state. Only in the midst of war was the Union finally able to impose a uniform greenback.


The euro has faced different but daunting challenges since the experiment was launched in 1999. The U.S. has one national government that can direct aid to depressed corners of the country; the euro zone has 12, each with its own fiscal policy. Workers in the U.S. can freely move from a slumping area to seek jobs in a prosperous one. Europeans, tied down by different languages, pension plans and legal systems, are far less mobile.

Still, the euro is in many ways a triumph. It is so sound that it has quickly emerged as the world's second-most-widely-held currency by central banks after the dollar. The euro has brought big benefits for companies trading across European borders by eliminating currency swings and foreign-exchange fees. It created huge, unified capital markets akin to the U.S.'s, which have helped many European companies raise capital. Returning to a weaker currency would mean returning to higher interest rates.

Thus no one is expecting Italy or any of the other 11 euro members to bolt any time soon. And many analysts say Italy's problem doesn't lie with the euro, but with Rome, which has failed to slim down the country's vast bureaucracy or break down the barriers to competition in big parts of the economy. "The remedy is not to leave the euro, but to correct the structural issues," says Patrick Artus, an economist at French bank Groupe Caisse d'Epargne.

But the chafing of Italians and Germans at the euro, coupled with the anti-EU feeling exposed by the French and Dutch "no" votes, have raised questions about long-term political support for the currency. All four countries are euro members. "Breakup is back on the radar screen as a theoretically possible option" for the monetary union, says Holger Fahrinkrug, an economist at Swiss bank UBS in Frankfurt.

When the new currency was launched on Jan. 1, 1999, it was greeted with champagne toasts in Rome, Paris and Frankfurt. Economists and politicians predicted the euro would one day rival the dollar as a benchmark currency and, consequently, Europe would one day rival the U.S. as a superpower.

The euro was all things to all nations. Italians thought the euro would let them trade their feckless politicians in Rome for technocrats in Brussels. The French gambled that monetary union would enhance their own power. Newly reunified Germany, haunted by Europe's history of wars, thought giving up the mark was a necessary sacrifice for durable peace and acceptance by its neighbors.

Euro advocates vowed Italy would emerge as a big winner from the new money. Ceding monetary policy to the European Central Bank and joining the euro would usher in stable interest rates, which in turn would help Italy pay down its crushing public debt, the third largest by value after Japan and the U.S., and larger than Italy's entire gross domestic product.

Much of that came true. Interest rates fell and Italy cut in half the interest it pays on its debt. But adopting the euro had two downsides.

First, the euro shot up in value against the dollar -- by nearly 50% since 2000. Three of Italy's biggest exports -- shoes, clothing and furniture -- are facing huge competition from China, which pegs its currency to the dollar. That currency swing priced Italian exports out of the market, and gave an extra advantage to already-cheap Chinese products.

More fundamentally, joining the euro took away Italy's trusty safety valve of devaluation. Large parts of the Italian economy, from trucking to electricity, are clogged by red tape and cartels, which hold down competition. That pushes up costs for Italian businesses, hurting their ability to compete with rivals from Germany or France.

In the past, when the prices of Italian exports got too high, currency markets would adjust, sending the lira lower and spurring demand. That would give Italian exporters a quick shot of adrenaline, but it didn't cure the economy's underlying problems.

Now, the only way Italy can compete is to cut prices. The only way it can cut prices is to cut costs. But the opposite is happening. Inefficiencies in Italy's cartel-pocked economy have caused prices of everything from electricity to zucchini to shoot up faster than elsewhere in the euro zone.

Unions began demanding higher wages to offset lost spending power. Companies had to grant raises that outstripped any gains in worker output. Adjusted for productivity, Italian labor costs have risen 17% since the euro came in, while German labor costs have risen only 1%, according to Barclays Capital. Italian productivity grew just 0.5% a year in the past decade, compared with 1.6% in Germany, and 2.4% in the U.S., according to the Organization for Economic Cooperation and Development.

The result: Italy is falling further behind other countries inside the euro zone. The euro's one-size-fits-all value was supposed to be the glue binding the currency zone into a whole stronger than its parts, but instead has highlighted the discrepancies among the European economies. Sluggish euro members like Italy need low interest rates, while faster-growing ones like Ireland could use higher ones.

The OECD says the 12-nation euro zone is the weakest major component of the global economy, and predicts it will grow only 1.2% this year, compared with 3.6% in the U.S. Italy's economy contracted 0.9% over the most recent two quarters, and the OECD forecasts that it will shrink 0.6% in 2005.

All that is prompting a rethink of the logic underlying the single currency. "It would have been better for Italy to stay out [of the euro] for a few years," says Julian Callow, chief European economist at Barclays Capital in London. "There's no easy solution now."

The risk: The weaker countries in the euro zone will return to heavy deficit spending, undermining the euro's strength. With Italy's public debt already at 106% of its GDP, rampant deficit spending could mean other euro members would have no choice but to bail Rome out.

Italians had worked hard just to get into the euro club, fearing that if they didn't get their act together Europe's third-largest economy would be shunted to the sidelines. The race to qualify, which forced Italy to cut its budget deficit to under 3% of GDP in 1997 from over 11% in 1990, galvanized Italians to act. The government was able to levy new taxes to pretty up Italy's books ahead of the entry into the euro.

When Rome made the cut, by a hair, on May 1, 1998, Italians were elated. But there was little political will left over to tackle the root causes of Italy's inefficiency: a huge and stifling public bureaucracy, and vast swaths of the economy that were still insulated from competition.

"Our mistake was thinking that joining the euro was the solution, the end to our problems," says Vincenzo Visco, a silver-haired politician who served as finance minister and then treasury minister from 1996 to 2001. "Instead, it was only the beginning."

One problem never fixed is the country's creaky infrastructure. Andrea Tomat, president of sport-shoe maker Lotto Sport Italia SpA, is dealing with the consequences. To ship its goods, the company, based in Treviso near Venice, must truck them about 170 miles to the nearest international air hub in Milan. The only highway is usually clogged, meaning the journey often takes six hours. To be sure of catching flights, Lotto's delivery trucks leave during the night -- or arrive a day in advance. "This basically doubles our cost of moving goods," says Mr. Tomat.

Another drag, he says, is Italy's bureaucracy. Lotto is trying to bring two employees from China, where it produces 60% of its goods, to work in Italy, but getting the paperwork approved will take six months. "In a world where in six months you can develop whole new stores over there, we are traveling by bicycle when everyone else has a car," he says.


Other business owners feel like they are in a losing battle. Maurizio Brevini, an engineer in Reggio Emilia, runs a 130-person maker of specialized hydraulic pumps founded by his father. Over the past five years, he has boosted his revenue by 13%, to €18.4 million, or $22.3 million. But his costs have risen even faster in the same period and his profits have fallen more than 10%, he says. Part of the problem: two wage increases for his workers.

"I feel badly for them because they have lost spending power," he says. But the salaries are rising faster than worker productivity. "This is like poking holes in the bucket," he says.

Federica Mongiello, a 31-year-old mother from Rome, was shocked when, traveling in the Austrian Alps last year, she discovered that baby formula cost the equivalent of about $10 for 2.2 pounds, when she was paying $48 in Italy. The reason for the huge difference? In Italy, baby formula can be sold only in pharmacies, where discounting is rare.

"Fa schifo," she says, Italian for "disgusting." Some friends have since joined Internet-based collectives of mothers who import baby milk from Austria and sell it for sub-Italian prices.

After years of trying to adhere to the euro zone's strict fiscal criteria, which require that deficit spending not exceed 3% of GDP, Rome is now letting down its guard. The EU estimates Italy's deficit will hit 3.6% of GDP in 2005 and 4.6% in 2006. France and Germany have already busted through the 3% limit, but Italy, with much higher public debt, presents even more of a risk of destabilizing the currency's soundness.

Brussels has been urging Italy to pass a new round of spending cuts to keep its budget in line. Prime Minister Silvio Berlusconi has rejected the idea. Instead, Mr. Berlusconi has argued that a just-approved law that will, among other measures, make it easier for many of Italy's small companies to merge will improve the country's competitive position.

Despite the chorus for a return to the lira, an Italian exit from the euro zone looks extremely unlikely. For now, such a move would cause interest payments on public debt to skyrocket and might force more onerous taxes on Italian citizens and businesses in order to cover the cost.

Nonetheless, a growing number of Italians profess a new affection for their old currency. After stocking up on cheap baby formula in Austria, Mrs. Mongiello's enthusiasm for the euro has waned. "There's no doubt," she says. "We were richer when we had the lira."

Synthese:

This article displays wonderfully how hidebound MEPs let their pride get in the way of writing a constitution that the people could understand.

Nope, it doesn't, because the Convention was largely made up by representatives from national parliaments and governments. That is partly reflected by proposed reforms to strengthen the role of national parliaments. Alas, voters didn't want that.

The Economist has got the Consitution completely wrong. And in the latest issue they concluded that Chirac should resign. How they came up with that answer to the question "Do you approve of the Treaty establishing a Constitution for Europe", is a mystery. Referenda are far too important to be hijacked by populists who can't wait for the next election to throw the president out of office. One thing is ignorant voters who are misled by a cynical no campaign, but I would have expected more from The Economist than siding with French communists and fascists in trying to sidestep democratic rules and bring down the president mid-term.

About the only thing that they've got right with regard to the Constitution is that it would be contemptuous for the EU to take out some parts of the Constitution and implement them now in a separate treaty. Some people have suggested that e.g. transparency in the Council of Ministers could be brought in regardless. But the people have voted 'no' to that as well so the Council of Ministers should keep on bargaining behind closed doors, out of respect for the people's 'no'.

When people complain about the democratic deficit in the EU, smart pro-Europeans will remind voters who campaigned against reforms to make the EU more democratic, more transparent and less beaurocratic. Maybe then next time, whether that be in 10 or 15 years, people will better understand the consequences of their vote.

Nope, it doesn't, because the Convention was largely made up by representatives from national parliaments and governments.

As you like, Boye. Remain attached to a ship that is not only sinking but sunk.

The conclave was an admixture, it is true, of national representatives. Now under microscopic inspection, the dynamic of the affair shows how, as usual, there were two kinds of participants. To use an analogy that you might understand better: There were "players" and "spectators" at the sport of constitution making. It is was NOT as universal an effort as one might think.

That's understandable: Constitution making is not for debutantes. It takes some real "facilitating" from experts; which had not been adequately taken into account, one may assume.

It was also an occasion for some individuals, beginning with Giscard, to enter into the history books and ... well, the attraction was simply too strong for those who succumbed to the temptation. The result is history. Dustbin history.

Next time around we might just get it right?

The Economist has got the Consitution completely wrong.

Yah, sure. A year ago the Economist, having seen a final draft, said it was rubbish. They noted correctly that it was the product of EU "bureaucratese", a cocktail to suit one and all, and that, given the negative sentiment in some countries, it would not likely pass in ALL countries - which was the primary playing rule.

What the bureaucrats expected was, like in the past, those silly enough to refuse it would be smaller countries. They thought that once the founder members approved it, the rest would fall into line in a second vote.

What they did not consider for a moment was that the content was badly flawed in most parts and, apart from the nice bits that are sound building blocks for the future, there was a great deal of "Brussels blather". The champion race horse turned into a overburdened caravan camel.

They had got it wrong. Dead wrong.

Referenda are far too important to be hijacked by populists who can't wait for the next election to throw the president out of office.

Success has a thousand fathers, but failure is an orphan.

Blame whomever you like and why not the "populists"? I suggest the result is more complicated. The media campaign, particularly the Bolkestien sidetrack, was a sham. The mix of sentiment between two very different peoples indicates as well that more profound sentiments were also at play besides simply base feelings. It is the latter that threw the vote into the negative in both countries.

What happened is a classical marketing failure. A bad product and no assessment of customer mood/requirements. Politicians rarely understand that selling ideas is just like selling products. The failure of representative governments is that they pass laws in camera and the people accept them passively - because they are never asked for feedback. This is pricely what happened, and the result was volcanic after much pent up resentment to the EU bureaucracy.

Do you see, now, what referenda (if instituted properly) can do to the political process? It is a net improvement. Politicians have to work harder at getting it (laws) right.

You get the product wrong, and it just wont sell. Don't take people for fools, and they will reciprocate. Take people for fools and ... assume the consequences.

And, above all, don't blame the customer/voter if YOU got the product or the marketing wrong.

http://edition.cnn.com/2005/WORLD/europ ... index.html>Blair stands firm in EU budget row

Tony Blair:
"We can't discuss the British rebate unless we discuss the whole of the financing of the EU, including that 40 percent of the budget goes on agriculture which employs only 5 percent of the people.

Common sense in an EU suddenly devoid of it?

Blair is trading off the UK rebate for a CAP reform - and Chirac will have none of it.

Chirac has got to go, and the sooner the better. The wooly-haired mammoth of French politics has been around far too long.

http://www.iht.com/articles/2005/06/14/news/union.php

Blair sees Chirac but fails to end differences:

Opinion polls have shown a surge in negative feeling about the constitution in countries where referendums are planned, among them Britain, the Czech Republic, Denmark, Luxembourg and Poland.

"The mood has changed," Verheugen said. "A feeling of discontent that has been building up for a long time has spilled over."

Enough said.

http://www.nytimes.com/2005/06/15/inter ... rance.html?

The Wall Street Journal Europe

A Sick Continent

By PAUL JOHNSON
June 17, 2005

That Europe as an entity is sick and the European Union as an institution is in disorder cannot be denied. But no remedies currently being discussed can possibly remedy matters. What ought to depress partisans of European unity in the aftermath of the rejection of its proposed constitution by France and the Netherlands is not so much the foundering of this ridiculous document as the response of the leadership to the crisis, especially in France and Germany.

Jacques Chirac reacted by appointing as prime minister Dominque de Villepin, a frivolous playboy who has never been elected to anything and is best known for his view that Napoleon should have won the Battle of Waterloo and continued to rule Europe. Gerhard Schröder of Germany simply stepped up his anti-American rhetoric. What is notoriously evident among the EU elite is not just a lack of intellectual power but an obstinacy and blindness bordering on imbecility. As the great pan-European poet Schiller put it: "There is a kind of stupidity with which even the Gods struggle in vain."

The fundamental weaknesses of the EU that must be remedied if it is to survive are threefold. First, it has tried to do too much, too quickly and in too much detail. Jean Monnet, architect of the Coal-Steel Pool, the original blueprint for the EU, always said: "Avoid bureaucracy. Guide, do not dictate. Minimal rules." He had been brought up in, and learned to loathe, the Europe of totalitarianism, in which communism, fascism and Nazism competed to impose regulations on every aspect of human existence. He recognized that the totalitarian instinct lies deep in European philosophy and mentality -- in Rousseau and Hegel as well as Marx and Nietzsche -- and must be fought against with all the strength of liberalism, which he felt was rooted in Anglo-Saxon individualism.

In fact, for an entire generation, the EU has gone in the opposite direction and created a totalitarian monster of its own, spewing out regulations literally by the million and invading every corner of economic and social life. The results have been dire: An immense bureaucracy in Brussels, each department of which is cloned in all the member capitals. A huge budget, masking unprecedented corruption, so that it has never yet been passed by auditors, and which is now a source of venom among taxpayers from the countries which pay more than they receive. Above all, règlementation of national economies on a totalitarian scale.

The EU's economic philosophy, insofar as it has one, is epitomized by one word: "convergence." The aim is to make all national economies identical with the perfect model. This, as it turns out, is actually the perfect formula for stagnation. What makes the capitalist system work, what keeps economies dynamic, is precisely nonconformity, the new, the unusual, the eccentric, the egregious, the innovative, springing from the inexhaustible inventiveness of human nature. Capitalism thrives on the absence of rules or the ability to circumvent them.

Hence it is not surprising that Europe, which grew rapidly in the 1960s and 1970s, before the EU got going, has slowly lost pace since Brussels took over its direction and imposed convergence. It is now stagnant. Growth rates of over 2% are rare, except in Britain, which was Thatcherized in the 1980s and has since followed the American model of free markets. Slow or nil growth, aggravated by the power of the unions, fits well with the Brussels system and imposes further restraints on economic dynamism: Short working hours and huge social security costs that have produced high unemployment, over 10% in France and higher in Germany than at any time since the Great Depression which brought Hitler to power.

It is natural that high and chronic unemployment generates a depressive anger which finds many expressions. One, in Europe today, is anti-Semitism and anti-Americanism. Another is exceptionally low birthrates, lower in Europe than anywhere else in the world except Japan. If present trends continue, the population of Europe (excluding the British Isles) will be less than the United States by midcentury -- under 400 million, with the over-65s constituting one-third of that.

The rise of anti-Americanism, a form of irrationalism deliberately whipped up by Messrs. Schröder and Chirac, who believe it wins votes, is particularly tragic, for the early stages of the EU had their roots in admiration of the American way of doing things and gratitude for the manner in which the U.S. had saved Europe first from Nazism, then (under President Harry Truman) from the Soviet Empire -- by the Marshall Plan in 1947 and the creation of NATO in 1949.

Europe's founding fathers -- Monnet himself, Robert Schumann in France, Alcide de Gasperi in Italy and Konrad Adenauer in Germany -- were all fervently pro-American and anxious to make it possible for European populations to enjoy U.S.-style living standards. Adenauer in particular, assisted by his brilliant economics minister Ludwig Erhardt, rebuilt Germany's industry and services, following the freest possible model. This was the origin of the German "economic miracle," in which U.S. ideas played a determining part. The German people flourished as never before in their history, and unemployment was at record low levels. The decline of German growth and the present stagnation date from the point at which her leaders turned away from America and followed the French "social market" model.

There is another still more fundamental factor in the EU malaise. Europe has turned its back not only on the U.S. and the future of capitalism, but also on its own historic past. Europe was essentially a creation of the marriage between Greco-Roman culture and Christianity. Brussels has, in effect, repudiated both. There was no mention of Europe's Christian origins in the ill-fated Constitution, and Europe's Strasbourg Parliament has insisted that a practicing Catholic cannot hold office as the EU Justice Commissioner.

Equally, what strikes the observer about the actual workings of Brussels is the stifling, insufferable materialism of their outlook. The last Continental statesman who grasped the historical and cultural context of European unity was Charles de Gaulle. He wanted "the Europe of the Fatherlands (L'Europe des patries)" and at one of his press conferences I recall him referring to "L'Europe de Dante, de Goethe et de Chateaubriand." I interrupted: "Et de Shakespeare, mon General?" He agreed: "Oui! Shakespeare aussi!"

No leading member of the EU elite would use such language today. The EU has no intellectual content. Great writers have no role to play in it, even indirectly, nor have great thinkers or scientists. It is not the Europe of Aquinas, Luther or Calvin -- or the Europe of Galileo, Newton and Einstein. Half a century ago, Robert Schumann, first of the founding fathers, often referred in his speeches to Kant and St. Thomas More, Dante and the poet Paul Valery. To him -- he said explicitly -- building Europe was a "great moral issue." He spoke of "the Soul of Europe." Such thoughts and expressions strike no chord in Brussels today.

In short, the EU is not a living body, with a mind and spirit and animating soul. And unless it finds such nonmaterial but essential dimensions, it will soon be a dead body, the symbolic corpse of a dying continent.

Mr. Johnson, a historian, is the author, inter alia, of "Modern Times" (Perennial, 2001). His most recent book is "Washington," due to be published this month by HarperCollins.

Above all, règlementation of national economies on a totalitarian scale.

More turgid bullshit from the WSJ (Wall Street Jerk).

Bullshithese

Can't you do your kneejerking alone and quietly? Thanks a bunch:)

http://news.yahoo.com/s/nm/20050618/wl_ ... MlJVRPUCUl

EU deeper in crisis after summit budget failure

More journalistic bullshit.

When the US government was grid locked some years ago because the two parties could not agree on a budget, was there a government "crisis"? The threats of "shutting down government" came to what? Nothing but journalistic blather.

First "Bolkenstien" and now "EU Crisis". Tomorrow, "The Sun Refuses to Rise!". How boring. It's a sad day for journalism when this sort of crassness is reached by dredging the bottom.

Either these journalists are myopic and do not understand how governments in a democracy work, in which case they should be posted to Pyongyang. Or, they refuse to understand because they prefer to scare monger in order to sell newspapers, in which case they should be posted to Pyongyang.

I suspect the latter.

http://www.iht.com/articles/2005/06/18/news/union.php

French-British spat deepens EU's crisis:

The specter of the meeting's collapse signaled a second failure for European integration after French and Dutch voters repudiated a suggested constitution.


The EU budget this year is estimated to reach €101 billion, according to the European Commission.

That makes about 43B Euros to support a farm population which employs barely 5% of the total EU workforce, which is tantamount to a massive unemployment benefit.

The money is ill-spent because it simply encourages farmers to trod along in well-furrowed ways and means. The same crops, year round, that cannot be exported since they do not compete and tired ideas about transforming corn into diesel fuel - a good idea that no one has the gumption to seriously fund into a technical reality.

Blair is suggesting that the monies be spent more sanely, and he is right. Chirac is being blamed of vote catching, since he is very much attached to his roots in a farming community - aside from the fact that he was once a Minister of Agriculture. Chirac is a tired and bloody-minded politician who simply cannot understand that his time has come and gone.

Blair is in the same chair. His time has come and gone as well, though it is less apparent. Gordon Brown is looking keenly at Number 10 Downing from the place just next door. Blair's countdown is ticking.

So, why do these two titans of political power, Blair and Chirac, clash? They represent basically different cultural realities, that's true. Beyond that, and despite the cultural difference, there is also male pride interfering in the political equation. In all this brouhaha, there is not one single cool head amongst the lot of them and, little do they realize that, with the frothing volatility of sentiment within the EU, their chairs are at stake.

Something has to be done and the agricultural nostrums of yesteryear are tired and belabored. They did not work then, leading to butter mountains and wine lakes - but tax revenues were heady and could cover all sorts of sins from the political leadership. They will certainly not work in the future. Those birds have come home to roost as tax revenues decline and the principal of a "social Europe" is increasingly questioned, not in terms of depth but breadth. It cannot pay for everything since tax revenues are stifling consumer demand, thereby postponing any effective relaunch of the EU economies. (Not to mention the fact that if Europe is to work, then Europeans have got to accept longer working hours annually.)

There are simply no funds left to cover everything and choices have to be made if post-war Europe, now mostly the EU, is to remain the outstanding contribution to basic human decency it has become. Better, at least, than the plutocracies to be seen elsewhere.

http://news.yahoo.com/s/afp/20050619/bs_afp/eusummiteconomyreformpolitics;_ylt=Aqxl3.zCDg3fAkavfqtPeypvaA8F;_ylu=X3oDMTBiMW04NW9mBHNlYwMlJVRPUCUle

Junkers : "There are those who want the big market and nothing but the big market, a high level free trade zone, and those that want a politically integrated Europe," he said.

This remark was made by the PM of Luxembourg, presently the President of the EU.

It is dangerous, because it is politically simplistic and inaccurate. At issue is the leadership of the EU for the forseeable future in terms of its economic philosophy.

The old cronies of the past as embodied by the Franco-German tandem is increasingly in question. These two powerhouses of Europe, usually the central economic motors of Europe, are mired in a pathetic political philosophy that is bankrupt. After more than two decades of exceedingly high unemployment, nobody in their right mind believes in their kind of "social Europe".

So, people are rummaging about for new leadership ideas, and Blair's manner of running a country with "Anglo-Saxon" liberalism seems attractive. After all, Britain is a close to full employment as it has ever got since WW2. Somebody must be doing something right.

But, it need not look only to Britain. Sweden, with very high tax rates and a "cradle to grave" welfare system, has comparatively low unemployment.

I doubt that the "social Europe" currently in place is anywhere near danger of being dismantled. Yes, there will be some sacrifices, but if that means increasing hours worked across Europe in order to generate the wealth necessary to pay for the social subsidies ... then so be it. Anybody who believed that they could have more free time without working for it has their head stuck in the ground like an ostrich.

Over the past two decades Europeans (meaining principally the French and the Germans) came to believe that their economic miracle was due to "hard work" and "dynamism". (This was true in the post-war reconstruction period but has not been the case for the past two decades.) It was due principally to the fact that there was no labor-rate competition from the Eastern Block countries or China. It was due as well to tariff barriers to trade established by the nascent Common Market. Both conditions no longer prevail.

The paradigm has shifted and our lives have changed along with it. It's time to look at other viable means of renewing Europe and getting it back to work. That will be difficult without sacrifice.

And, Junker missed an excellent opportunity to keep his mouth shut.

The above pie chart shows exactly where the budget is going or, as some would read, being wasted.

The budget issue, dangerously sullied by the constitution fiasco, is where the heart of Europe is. That is, when one follows the money trail, one understand what is really going on beyond the political rhetoric.

EU budget spending goes in two giant chunks to agriculture and regional aid. Few would dispute the latter, since it means the rich countries giving to the poorer countries to build infrastructure (roads, telecommunications, etc.) This is investing in the future, which is so necessary for durable employment.

Where it is debatable is in the 46% allocated to farming. This is nothing less than welfare and it goes to a community that represents 3 to 5% of the employed workforce, depending upon the country.

Blair is saying, "Let's not touch the budget, because some countries (meaning France and Germany) are already over the deficit limit. Let's simply reallocate these monies to where they can do more good. I.e., not maintain jobs in a sector that cannot possibly compete because it has too little production capacity for the people it must employ."

He is saying also, "Let's put the money in ameliorating our base skills, our technologies, our research to create the new industries that will employ our children".

It is as simple as that.

http://www.iht.com/articles/2005/06/19/news/view.php

Budget clash heralds battle over EU's economic future

Another simple explanation of what is happening and how it is key to the destiny of the EU.

http://www.iht.com/articles/2005/06/20/news/eu.php

Rival views on EU are out in the open : "There are two ideas of Europe, with some countries wanting to have just a European market with a big and free trade zone and others who want an integrated Europe," said Jean-Claude Juncker, the Luxembourg prime minister who led the summit meeting.

Junker gets it wrong ... again.

It just isn't that simple. Its a bit of both that is necessary and anyone who can see beyond the Brussels rhetoric understands the extent to which the EU political class is out of touch with new realities.


Europe will be an economic giant meaning that it can generate a self-sustaining internal market that guarantees long-term, durable employment. The US is not a "free trade zone" but an homogeneous market, to which the EU must still aspire. And, to get there, it needs to be reformed.

The "integrated Europe" that Junkers is talking about is that of Chirac and Schroeder - a "social Europe" where taxes generate subsidies that pay for non-work, keeping people imprisoned in industries with products that can no longer sustain a market preference.

Reforming Europe begins now. Getting it of the dole, getting it away from government handouts to dead industry sectors that simply procrastinate and worsen the inevitable pain.

Next in line for a radical rationalization, for instance, is the automotive industry. It is years now that its sole energizer has been rebates, lowering the average price of cars, which does not stimulate sales but simply preserves production levels. What should Europe do? Come up with a version of the PAC to keep people working in the automotive industry on the job? We should tax citizens even more so that cars can be "made in Europe"?

Wouldn't it be better to rationalize the industry by accepting the inevitable, which the industry, in part, has already done by moving its production centers east. Don't the Slovaks, Poles and Hungarians have an equal right to work? By doing so, these eastern European countries will develop consumer economies that buy more products from Western Europe - the so-called "virtuous cycle".

Let's get Europe away from subsidizing a farming sector such that it may rationalize itself around larger farms exploited by fewer people ... which is happening ineluctably but not fast enough.

Let's take the money and put it into R&D such that Europe can continue to develop winners like the A380 or, an even better example, Linux - which was invented in Helsinki but had to go to the US to be recognized, accepted and finally do battle with Windows.

It can be done ... and without the Brussels rhetoric of crisis and dismantling of Europe's social model and most certainly without Junker's jaundiced view of a binary world.

The Daily Telegraph

An everyday fantasy of farming folk
By Mark Steyn
(Filed: 21/06/2005)

My favourite headline last week was in the International Herald Tribune: "EU leaders and voters see paths diverge." Traditionally in free societies, when the paths of the leaders and the voters "diverge", it's the leaders who depart the scene. But apparently in the EU this is too vulgar and "Anglo-Saxon", and so the great permanent Eurocracy decided instead to offer up Euro-variations on Bertolt Brecht's jest about the need to elect a new people. Whatever the rejection of the European constitution means, it certainly doesn't mean the rejection of the European constitution.

"I really believe the French and Dutch did not vote no to the constitutional treaty," insisted Jean-Claude Juncker, the "President" of "Europe", continuing to celebrate his stunning victory in the referendum. Even if the French and Dutch had been boorish enough to want to vote no to the constitution, they would have been incapable of so doing, as the whole thing was designed to be way above their pretty little heads.

"It is not possible for anyone to understand the full text," declared Valery Giscard d'Estaing. "Europe's Jefferson" has apparently become Europe's Jefferson Airplane, boasting about the impenetrability of his hallucinogenic lyrics. The point is the French and Dutch shouldn't have read beyond the opening sentence: "We the people agree to leave it to you the people who know better than the people."

The Guardian is still sufficiently Anglo-Saxon that it's not entirely comfortable signing on to such exquisitely Gallic disdain, so yesterday they settled for that familiar refuge of the pompous - the old lofty sonorous plague-on-both-their-houses shtick: "The European democratic deficit is not only a matter of secretive or unresponsive leaders but of muddled and unrealistic citizens, and both must change their ways."

The Guardian seems to resent the way Europeans refuse to vote as "Europeans": instead, Britons vote as Britons, Dutch vote as Dutch. For years, Britain's Eurosceptics were presented as some kind of aberration in a union of sophisticated continentals at ease with their European identity. But it turns out even the principal beneficiaries of the European Union aren't that European: French farmers vote as French farmers. The thinness of the veneer of European identity among its core demographics ought to bother the Europhiles far more than the UKIP voters do.

In that sense, who's being "unrealistic"? The European political landscape is like a reverse version of Hans Christian Andersen - the Emperor's subjects' new clothes. "To a fool, Your Majesty, the people in the streets as your carriage rolls by will appear as gnarled old French rustics grasping for their Euro-booty or German racists twitchy about Turks. Only a wise man such as yourself and the Guardian's editorialists will see them as sophisticated post-nationalist Europeans fully committed to pan-continental institutions."

Oh, to be sure, there are a few genuine "Europeans" - commissioners and their staffs, Ken Clarke, Ted Heath, Guardian and Independent writers and many of their readers; the sort of people who scoff that it's impossible to get Sunni, Shia and Kurds to come together in a functioning democracy without noticing that their preferred unit of political identity is far more tribal and incoherent.

Nevertheless, something has changed. "Europe is faced with a fundamental choice," says Peter Mandelson. "One way, we sink into economic decline, losing the means to pay for our preferred way of life. The other way, we press ahead with painful economic reforms that can make us competitive once again in world markets." The big