Why Europe Lays Supine

Abstract: The crisis in Europe is now worse than in the 1930s, in major countries such as Britain, or Spain. So how come, differently from the 1930s, revolutions are not wrecking the streets? The aging of the population does not explain all the torpor. Nor does the fact that Europe suffers from globalization, also known as ‘free trade’, and plutocrats make sure that the Plebs is not aware of what ails them, or even, that they suffer at all: the wealthiest profit from the unfolding catastrophe.

A  most subtle psychological mechanism is at work: Europe already tried something very bold, very virtuous, axed on the sustainable and, not only did it backfire, but it proved… completely unsustainable. A disabling injury joined by an insult to reason itself: no wonder Europeans feel too depressed to do anything about anything anymore.

Why No Panic Yet?

Why No Panic Yet?

***

EUROPEAN PLUTOCRACY: SUBJACENT TO MUCH.

I was reading newly published  conversations of Hitler with his generals. Marshall Edwin Rommel and Hitler, in May 1943, discussed the dislike that “plutocrats” (yes, “plutocrats”, that’s the word they used) had for any social tendencies found in Nazism. In particular Hitler expressed the revulsion he felt in Rome, in 1938, for Italian plutocrats, and the triple game they played, through their control of the military, and double faced diplomacy with Britain, playing everybody against everybody.

Italian plutocracy did not come out whole from WWII. A republic was installed, with a slightly modified version of the French revolutionary flag. The daughter of the king, the one that Hitler gave his arm to, in 1938, died in an extermination camp, victim of an allied bombing…

Fast forward to May 2013, 70 years later. The Dutch are hysterical with joy: they just nominated a new plutocrat to head the Netherlands, William-Alexander, worth at least 300 million dollars. His wife is particularly popular. She is doubly plutocratic; barely twenty year old, before even having an economy degree, she was an investment banker in Argentina and New York (the biggest banks made like bandits from Argentinean default); she is the daughter of another plutocrat, a minister of the dictator Videla (famous for having tortured, before assassinating them, more than 30,000 people).

The hysterical Dutch wear orange. My Mom asked me why. I did not know, but I was correctly suspicious. It turns out that William-Alexander’s family used to rule, more than six centuries ago, the city of Orange… In Provence, France. Unfortunately, for the plutocrats, France is now a republic, sort of, so the followers of William-Alexander are reduced to waving orange flags, instead of waging terror in Orange, as they used to. Of course, Orange was built as one the free cities of the Roman republic, and only later was stolen by the ancestors of William-Alexander.

Kleptocracy or plutocracy? The latter is more general than the former.

I visited a 17 centuries old cathedral, the Saint Sauveur cathedral in Aix en Provence, four centuries older than Islam. Part of the cathedral was built even before Constantine became emperor. Then Constantine, a major plutocrat, if there ever was one, greatly thanks to fiscal measures, imposed Catholicism… The breathing of millennia endows our minds beyond this Earth.

Christianity, like Islam, was instrumentalized. The Saud family is trying to pose as the guardian of pure and hard Islam, but it violates the very foundation of Islam according to Muhammad, zakat (basically an anonymous voluntary tax the pious rich are supposed to impose on themselves, a command of the Qur’an). The Saudis know that they thrive, as long as people think in a way that revere them on top.

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WHO COMMANDS MAKE CIVILIZATIONS MORE OR LESS POTENT & CREATIVE:

That the free are more motivated was already pointed out by Herodotus (see the last essay). What makes the minds of civilizations? Sometimes the oligarchy fabricates thoroughly the minds of the Plebs. Such robots show little mental creativity, even when they are requested to have some.

Indeed, even where they are allowed to be mentally creative, they will tend to be afraid of crossing scarlet walls across the mental landscape. This explains why the Roman empire lost much of its mental creativity, once it became a dictatorship. Even in the arts of war: the adoption of new weaponry in the first seven centuries of the Roman military dictatorship was roughly zero, in sharp contrast with the Roman Republic’s constant introduction of new weapons (although Constantinople introduced a crucial new weapon, Grecian Fire, the Seventh Century equivalent of the nuclear bomb).

Sometimes the oligarchy is ejected by a new, larger oligarchy, or several variants, in quick succession: this happened in England in the 17C.  Sometimes the revolt is even larger, encompassing much of the middle class: that’s what happened in France in 1789. The American Revolution was still something else, as it was more of a civil war.

Who leads is who gives the minds to the commons. If only a few lead, little mind is to be had. The wider the leadership, the more mind for the commons. This explains why the French republic of 1792 was able to defeat the coalition of all European plutocracies that tried to crush her, including Britain, Russia, Austria and Prussia. French research in new high explosives and superior artillery was crucial in defeating the invading Prussian army at Valmy in September 1792 (same story as Captain napoleon’s artillery defeated the British at Toulon, a few weeks later).

***

WHY EUROPE TOLERATES AUSTERITY:

The lack of vision in Europe is, colossal. And not just from the leaders, but also from the Plebs. But how come is austerity still proceeding apace? Why, as jobs are dying, not enough people are screaming for work? Is it just because the more people are out of work, the more stabilizers of the welfare state are at work?

The control of the EU by right wingers is still a fact, except, in appearance, for the French Socialists (but most elected socialists are right wingers in disguise). Many European leaders are tied to Wall Street.

This explains why Mario Draghi, ex-partner at Goldman Sachs, is still practicing the strong Euro policy (that takes away millions of European jobs; the Euro ought to be half the value it’s at, right now). That favors his masters on the other side of the ocean.

All these facts are known, but why no truly massive demonstrations? In May 1968, just because the state was too authoritarian, all of France went on strike, for a month (something similar happened in Czechoslovakia, and, in the USA, and LBJ declined to be candidate to the presidency again).

OK, people are older now, their anger hormones less in control.

Yet another fact is at work.  Europe made a giant effort, 25 years ago. Europe had two visions: the free market, “libre concurrence”, and ecology. Both visions have failed. The free market, it turns out mostly meant that banks were free to exploit the consumers and the states, and that plutocrats could live, tax-free, more powerful every year.

Many of those on the deep left said:”we told you so!” But even them have run out of critical steam. Indeed, they wanted to help the Third World, desperately. Now the Third World is helping itself with second, third, and actually, all servings. So what are European progressives going to say? Take jobs away from the Vietnamese, give them back to the French, who are paid twenty times more? Do they want to exploit the Third World, like the colonialists they used to criticize?

Sustainable energy is an even more painful subject, a wreck of European hopes and struggles. Ecological virtue has made European disadvantage even worse. Huge investments and efforts were engaged, great hopes raised, to curb the rise of the CO2. The rest of the world, led by the USA, refused to collaborate.
Thus, that vision has been a disaster. First, industrial production was delocalized in places that did not mind using the cheapest energy. Hence the global CO2 production was in no way impacted.

Secondly, European sanctions against energy production hobbled European industrial production and enabled those others, led by the USA, to get immense economic advantages, while the seas and temperatures rose, and Europe economic advantage sank.

British electricity prices have tripled in less than ten years. Even Germany, right now, having decided to get out of old fashion nuclear energy is finding the going tough, increasingly intolerably expensive. The French have wrecked their car industry by imposing tough CO2 standards.

Overall, because of Euro (and pound!) over-evaluation, the European economy has become uncompetitive (in spite of the German ‘success’, which is more appearance than reality).

Result? Now the Europeans are scared of any new vision, embarking in the many new ventures that really getting out of austerity would entail, lest something even worse comes about. They  suffer from a subconscious feeling that they did something uncomprehendingly, immensely bad, by showing too much initiative. Hence a dreadful determination to not go grandiose again. And thus the willing, collective wearing of the hair shirts.

This is why there is no explosion yet. And why the bought off right-wingers, the Barrosos, Rehn, Junkers,  German central bank head, and other austerians, keep on talking loud and strong. All the more as they have to disguise how wrong they were. And what better disguise for error than to keep on insisting that they were right?

And what of the USA? The sequester may bring a disaster: it’s pretty similar to what happened in Europe in the last few years.

When Roosevelt became president, he advocated to have no fear. Indeed one can hardly expand an economy when everybody is hiding below a rock.

***

Patrice Ayme

***

Patrice Ayme

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7 Responses to “Why Europe Lays Supine”

  1. Dominique Deux Says:

    Bravo.

    It is especially galling that as austerian dogma crumbles down under our eyes, the most audacious response some countries (including France) can come up with is “we believe! we believe! just don’t beat us too hard please massa”. Meanwhile The Economist is reduced to acknowledge anti-austerians, whining about their arrogance.

    http://www.economist.com/comment/1996436#comment-1996436

    Of course the sight of the mace-wielding Walkyrie in Berlin is enough to instil the fear of God in the European leaders’ feeble hearts. But blaming Merkel is an easy way out. She, too, is really a captive of her fellow countrymen’s prejudices (North virtuous, South slothful) and smugness (who cares about the facts, we’re right); re-election is her primary goal. Analysts even whisper that she would be prepared to ease the yoke in deed, but never to drop the fiery discourse.

    • Patrice Ayme Says:

      Yes, Dominique, indeed! You depicted it perfectly. Mekler is doing fine wielding her spiky mace, Germans love it. Maybe they should be reminded that their ancestors loved their Hitler Guide the most in 1945…

      Even the French, satyrical, highly critical Canard Enchaine’ is espousing the line that one should criticize NOT Merkler, lest one be anti-German. I don’t give a hoot about not being anti-German, because I am not anti-German. Part of my character and culture, Beethoven, Nietzsche, Einstein, Leibnitz, etc. is clearly German. Also i speak German. Even some of my family was related to Von Molkte (conspirator in chief, WWI), and i heard stories about that when I was 6. Does that make me German, or anti-German?

      But I am furious that the Euro is at 1,30 Dollar instead of $.70, as it should be! I maintain that the way out is to nationalize banks, as needed, while providing liquidity, as needed. It’s both the correct socialist and free market way of doing things. And of course prosecute all criminals, and change fiscality enormously.
      PA

  2. Jeff McG Says:

    Patrice,

    Nial Ferguson has issued a more strident attack on Krugman’s criticism of Rogoff-Reinhart’s work.

    http://www.bloomberg.com/news/2013-05-01/reinhart-rogoff-uproar-settles-nothing.html

    Reinhart-Rogoff Uproar Settles Nothing
    By Caroline Baum May 2, 2013

    By now, you’re probably tired of all the back-and-forth on Reinhart and Rogoff. That would be Harvard University’s Carmen Reinhart and Kenneth Rogoff, the economists who co-authored the 2009 best-seller, “This Time Is Different: Eight Centuries of Financial Follies,” and who are now on the firing line because of minor data errors in a 2010 working paper.
    That paper, “Growth in a Time of Debt,” found that high public debt was associated with slower growth. Specifically, when a nation’s gross public debt exceeds 90 percent of economic output, the median growth rate falls by 1 percentage point, and average growth drops considerably more. The U.S. crossed that debt threshold in 2010.

    About Caroline Baum»
    Caroline Baum, a columnist for Bloomberg News since 1998, is the author of “Just What I Said: Bloomberg Economics …

    Last month, three University of Massachusetts at Amherst researchers accused Reinhart and Rogoff of a “series of data errors and unsupportable statistical techniques.” In an April 17 response, Reinhart and Rogoff acknowledged the spreadsheet data error, which didn’t alter the conclusions to a significant degree, and disputed allegations of “selective omissions” in their work. The challenge set off a political firestorm, with critics blaming the two for everything from creating mass unemployment to maliciously influencing Europe’s policy debate to producing global warming. (OK, I made up the last one.)
    A few brief points before I get to my analysis.
    First, Reinhart and Rogoff didn’t imply causality between debt and growth. In fact, they claim that it goes both ways, with slow growth leading to an increase in public debt, and high debt in turn impairing economic expansion.

    Dueling Ideas
    Second, the idea that European budget policies relied on Reinhart and Rogoff’s 2010 findings is nonsense. The 1992 Maastricht Treaty outlined four criteria for joining the European monetary union, including specific thresholds for debt (60 percent) and deficits (3 percent) as a share of gross domestic product. The International Monetary Fund often makes its loans conditional on achieving fiscal targets.
    Third, claims that the data errors exposed a serious flaw in the research are preposterous. The paper by UMass’s Thomas Herndon, Michael Ash and Robert Pollin does more to confirm Reinhart and Rogoff’s findings on the relationship between high debt and slow growth than to upend it. In a subsequent 2012 paper, Reinhart and Rogoff found that the average growth rate during sustained high-debt periods was 2.3 percent — the UMass study’s average was 2.2 percent — compared with 3.5 percent otherwise.

    • Patrice Ayme Says:

      Dear Jeff:
      Thanks for this. Interesting, be it just for the intensity of the propaganda. This is just, indeed, plutocratic propaganda. Even before she gets started she speaks about “minor data errors” Not so. Countries excluded or data transmogrified included Netherlands, UK, USA….
      The graph at the begining of my own essay http://patriceayme.wordpress.com/2013/04/20/indebted-to-lies-plutocracy-is/
      said it all.

      Clearly, the RELATIONSHIP BETWEEN DEBT & GROWTH EXIST, BUT IS MINOR. Staring the economy of money is not minor. But it’s an application of Pluto; all the money to the worst and wealthiest.
      I will read Ferguson, if I find time, but I find him not very deep as a historian. He is from Harvard, need I say more?

      I buy his books, but they are generally boring, fashionable, AND besides the points.
      PA

  3. pshakkottai Says:

    Hi Patrice:
    The equations are simple; for states
    tax +net export = spending + govt_savings = spending – govt_debt.

    Before 1971 with the gold standard, the equations for USA economy and states are the same.
    After 1971 with ability to create money,
    Govt_spending- tax = Deficit = private savings + net imports; for monetary sovereign USA. The old operations are still retained in federal reserve bank operations for no reason (except possibly to confuse us).

    The sum of all annual (deficits – net_imports ) = net worth of all household and non_profits = gross national wealth = about 70 trillion dollars at present. See the plot (a straight line with negligible scatter) in
    http://pshakkottai.wordpress.com/2012/07/31/cumulative-deficit-vs-household-net-worth/
    R&R showed whatever they showed based on the economy of the gold standard (before 1971) which does not apply to USA (after 1971).

    For a monetary sovereign economy ONLY deficits matter
    deficit = private savings + net imports
    and deficit must exceed net imports for growth. You don’t need excel to see this. The more deficits the merrier.

    I say R and R wasted their time (at best) and deliberately pursued an agenda to serve the plutocracy by cooking data (at worst).

    Partha

    • Patrice Ayme Says:

      Thanks Partha! I will have to think to all you wrote. I agree with the end. They, A-A, and R-R, were paid by Pete Peterson, a billionaire, among other interested plutocrats. Clearly a fraud.

      At this point austerians are in the process of BREAKING some socio-economies (say Portugal). They talk about growth rates, but people are dying.

      The source of the problem is that plutocratic madness was recovered by huge state spending, creating giant current account problems, esp. as the debt is traditionally rolled forward.

      My ultimate drastic solution is just default. That was the creative act at the birth of the USA. And it was proposed by deep thinkers to Louis XVI. No default made the UK weak relative to the USA. But by then the UK was led by obsequious servants of the powers that were…
      PA

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