Olive tree plantations and wind farms

Lesson From Europe
        No, social democracy doesn't 'work.'

'The real lesson from Europe," wrote Paul Krugman in January 2010, "is actually the opposite of what conservatives claim: Europe is an economic success, and that success shows that social democracy works." 
Here are some postcards from the social democracy that works:

• In Britain, 239 patients died of malnutrition in the country's public hospitals in 2007, according to a charity called Age U.K. And at any given time, a quarter-million Britons have been made to wait 18 weeks or longer for medical treatment. This follows a decade in which funding for the National Health Service doubled. 

• In France, the incidence of violent crimes rose by nearly 15% between 2002 and 2008, according to statistics provided by Eurostat. In Italy violent crime was up 38%. In the EU as a whole, the rate rose by 6% despite declines in robbery and murder. 

• As of June 2011, Eurostat reports that the unemployment rate in the euro zone was 9.9%. For the under-25s, it was 20.3%. In Spain, youth unemployment stands at 45.7%, which tops even the Greek rate of 38.5%. Then there's this remarkable detail: Among Europeans aged 18-34, no fewer than 46%—51 million people in all—live with their parents. 

• In 2009, 37.4% of European children were born outside of marriage. That's more than twice the 1990 rate of 17.4%. The number of children per woman for the EU is 1.56, catastrophically below the replacement rate of 2.1. Roughly half of all Europeans belong in the "dependency" category on account of their youth or old age. Just 64% of the working-age population actually works.

I could go on in this vein for pages, but you get the point. Europe is not a happy place and hasn't been for nearly a generation. It's about to get much worse.

This isn't simply because Europe's economic crisis is still in its infancy, although it is. The tab for bailing out Greece, Portugal and Ireland alone—which together account for about 5% of euro-zone GDP—already runs to hundreds of billions of euros, with no resolution in sight. By contrast, Italy's GDP is more than seven times as large as Greece's. Italy is too big to fail—and too big to save. If the so-called PIIGS wind up leaving the euro zone (or if Germany beats them to it by returning to a Deutsche mark), the dislocations will take years to sort through.

Even then, Europe will still have to address the more profound challenges of economic growth, demography and entitlement reform. But in order for it to do so it must have a clear idea of the nature of the challenges it faces. It doesn't. It also requires political resources to overcome the beneficiaries—labor unions, pensioners, university students, farmers, Brussels technocrats and so on—of the current system. That's not going to happen.

Politics, for starters, prevents it. Whenever a supposed "neo-liberal" comes to power—whether it's Nicolas Sarkozy or Silvio Berlusconi or Angela Merkel—they typically wind up doing no more than tinkering around the edges of regulatory or tax reform. That's because they are stymied by coalition compromises at home, or by European compromises in Brussels, or by some deeper failure of will and character.

Margaret Thatcher was the exception to this rule. But in both Britain and Europe she has had neither equals nor heirs.

Demography also prevents reform. The median age in the EU is 40.6 years. (In the U.S. it's 36.9). Older populations typically resist change, demand the benefits they've been taxed all their working lives for—and vote. The demographic balance is only going to tip further in their favor, and it will change only when younger Europeans decide that children, plural, are worth having. What that will take, only a faith in future prosperity—and in God—can provide. Outside of its growing Muslim population, Europe has neither.

Finally, there is ideology. For the past four decades, "Europeanism" has been an amalgam of Keynesian economics, bureaucratic centralization, and welfarism, corporate and social. Even now, the ideology remains unshaken by events. Though there is plenty of talk about getting spending under control and balancing budgets (typically by way of tax increases), nobody in Europe is proposing a serious growth agenda. At the beginning of the Greek crisis I asked a visiting official from Athens what his ideas were for growth: He suggested olive tree plantations and wind farms. He might as well have thrown a Sicilian Expedition into the mix.

For the U.S., none of this is yet in our cards: That's guaranteed by the tea party that so many Europeans (and Paul Krugman) find so vulgar. But it's worth noting what the fruits of social democracy—a world in which, as Kipling once wrote, "all men are paid for existing and no man must pay for his sins"—really are. And in the wake of the U.K. riots, the rest of his prophecy also bears repeating:

- As surely as Water will wet us, as surely as fire will burn,

- The Gods of the Copybook Headings with terror and slaughter return!

Τhe explosion of the European project

What Comes After 'Europe'?

 The riots of Athens will become those of Milan, Madrid and Marseilles. Border checkpoints will return. Currencies will be resurrected, then devalued.

By B. Stephens

When the history of the rise and fall of postwar Western Europe is someday written, it will come in three volumes. Title them "Hard Facts," "Convenient Fictions" and—the volume still being written—"Fraud."

The hardest fact on which postwar Europe was founded was military necessity, crisply summed up by Lord Ismay's famous line that NATO's mission was "to keep the Russians out, the Americans in, and the Germans down." The next hard fact was hard money, the gift of Ludwig Erhard, author of the economic reforms that created the Deutsche mark, abolished price controls, and put inflation in check for generations. The third hard fact was the creation of Jean Monnet's common market that gave Europe a shared economic—not political—identity.

The result was the Wirtschaftswunder in Germany, Les Trente Glorieuses in France and il miracolo economico in Italy. It could have lasted into the present day. It didn't.

In 1965, government spending as a percentage of GDP averaged 28% in Western Europe. Today it hovers just under 50%. In 1965, the fertility rate in Germany was a healthy 2.5 children per mother. Today it is a catastrophic 1.35. During the postwar years, annual GDP growth in Europe averaged 5.5%. After 1973, it rarely exceeded 2.3%. In 1973, Europeans worked 102 hours for every 100 worked by an American. By 2004 they worked just 82 hours for every 100 American ones.

It was during this general slowdown that Europe entered the convenient fiction phase.

There was, for starters, the convenient fiction that if you just added up the GDP of the European Union's expanding list of member states, you had an economy whose size exceeded that of the United States. Didn't this make "Europe" an economic superpower? There was the convenient fiction that Europe didn't need robust military capabilities when it could exert global influence through diplomacy and soft power. There was the convenient fiction that Europeans shared identical values and could thus be subject to uniform regulations governing crime and punishment. There was the convenient fiction that Continentals weren't lagging in productivity but were simply making an enlightened choice of leisure over labor.

And there was, finally, the whopping fiction that Europe had its own "model," distinct and superior to the American one, that immunized it from broader international currents: globalization, Islamism, demography. Europeans love their holidays and thought they were entitled to a long holiday from history as well.

All this did wonders, for a while, to mask European failures and puff up European pride. But there is always a danger in substituting grandiosity for achievement, mistaking pronouncements for facts, or, more generally, believing in your own nonsense.

Here is where Europe slipped from convenient fiction to outright fraud.

There was the fraud of Greece's entry into the euro, a double-edged affair since Athens lied about its budgetary figures and Brussels chose to accept the lie. There was the fraud of the so-called Maastricht criteria—the fiscal rules that were supposed to govern the euro only to be quickly flouted by France and Germany and then junked altogether in the current crisis. There was the fraud of the European Constitution, overwhelmingly rejected wherever a vote on it was permitted, only to be revised and imposed by parliamentary fiat.

What is now happening in Europe isn't so much a crisis as it is an exposure: a Madoff-type event rather than a Lehman one. The shock is that it's a shock. Greece was never going to be bailed out and will, sooner or later, default. The banks holding Greek debt will, sooner or later, be recapitalized. The recapitalization will be borne by German taxpayers, and it will bring them—sooner rather than later—to the outer limit of their forbearance. The Chinese will not ride to the rescue: They know not to throw good money after bad.

And then Italy will go Greek. Europe's crisis will lap on U.S. shores, and America's economic woes will lap on Europe's—a two-way tsunami.

America will survive this because America is a state. But as Bismarck once remarked, "Whoever speaks of Europe is wrong. Europe is a geographical expression." The "fiscal union" that's being mooted will never come to pass: German voters won't stand for it, and neither will any other country that wants to retain fiscal independence—which is to say, the core attribute of democratic sovereignty.

What comes next is the explosion of the European project. Given what European leaders have made of that project over the past 30-odd years, it's not an altogether bad thing. But it will come at a massive cost. The riots of Athens will become those of Milan, Madrid and Marseilles. Parties of the fringe will gain greater sway. Border checkpoints will return. Currencies will be resurrected, then devalued. Countries will choose decay over reform. It's a long, likely parade of horribles.

Where is the Europe of Ismay, Erhard and Monnet? It's there in memory, if anyone cares to recover it. Give it another 50 years, and maybe someone will.

The wisdom of the governing elites

Greece And The Crisis Of The Governing Elite

By C. Kadlec

“Everyone wants to live at the expense of the state.  They forget that the state lives at the expense of everyone.” — Frederic Bastiat

Europe’s governing elite – and those who believe in the superiority of government in the management of the economy – is in crisis.   Their visions of a more just society and economic security are being shredded by the stark reality that the governments they run are running out of money.

The looming Greek default and the nascent financial crisis in Europe is a symptom of this crisis of the governing elite.  At risk is the background consensus that supported the expansion of government to the point that public spending now accounts for roughly half of all economic activity among the 17 nations in the eurozone.  A destruction of that consensus would imply a massive loss of power by the elites who for decades have declared that given the power, they could produce an economy with less risk and more fairness than free market capitalism.

The pending failure of the governing elites to deliver on their most basic promises is setting off alarm bells in Washington. Treasury Secretary Timothy Geithner, former Treasury Secretary Larry Summers, and World Bank President Robert Zoellick have admonished the Europeans to move forcefully to resolve the European debt crisis lest it threaten the already meager U.S. economic recovery.  Unsaid is the concern that Europe’s failure will tarnish America’s governing elite, providing additional energy to the Tea Party’s call for restoring limited, constitutional government in the U.S.

There is no one to blame for Europe’s debt crisis other than its political class. They are the ones who borrowed extravagantly with the pretense that good intentions trumped fiscal responsibility, who set the rules that require banks to hold zero capital against government debt, and who permitted the European Central Bank to buy billions of euros of that debt from banks.  That has endangering the euro itself, which has fallen 20% against gold since the beginning of the year, signaling that higher inflation and increased economic turmoil in the euro-zone may lie ahead.

In the absence of the next, 8 billion euro loan from its European partners and the IMF, the Greek government will soon simply run out of money to pay public sector wages and pensions. That reality last week triggered a run by dollar depositors on European banks with exposure to government debt prompting the U.S. Federal Reserve to make emergency loans to the European Central bank so it, in turn, could provide dollar liquidity to its member banks.

There appears to be no way out. The economic policies imposed on Greece by the governing elite have made things worse.  The combination of spending cuts and massive tax increases slammed the economy, which shrank 7% in 2010, and 5% in the year ending June 2011.  As a consequence, tax revenues last year fell by 2 billion euros, or 8.3%, instead of rising 3.3 billion euros to 27 billion euros. Social spending rose as unemployment jumped from around 9% to 16%, and the government’s debt became an even greater percentage of a now smaller GDP.

Italy, Portugal and Spain are headed down the same destructive path. Last week, Italy increased the value added tax a full percentage point to 21%. Portugal has increased its value added tax by 1 percentage point across all categories, while increasing the top marginal tax rate by 1.5% on top earners and by 2.5% on corporations. Spain just announced it would reinstate a wealth tax on approximately 160,000 taxpayers with more than 700,000 euros ($972,000) in declared assets in hopes of raising a little over a billion euros in revenue.

Awakened to Bastiat’s warning by these tax hikes, individuals are rioting in Athens and Rome, diving into the underground economy thereby starving the state of revenue, and rebelling at the polls.  All of this is especially galling to Germans, who can’t help but notice the fundamental unfairness of the welfare state writ large.  In reaction to German Chancellor Angela Merkel‘s support of the Greek bailouts, which effectively punish German taxpayers in favor of irresponsible governments in southern Europe, her party has been handed significant electoral defeats in 6 out of 7 state elections in the past year.

Finnish voters have prompted their government to require collateral in exchange for any additional loans to Greece, further complicating efforts to cobble together a package in time.

The governing class’s response is a call for yet more power through a centralized European government, or institutions that would be able to exert direct control over the budgets of the zone’s member states. Treasury Secretary Timothy Geithner’s advice is for the Europeans to borrow more money by permitting the existing European bailout fund to use leverage to increase its own lending capabilities.

Others call for Greece to withdraw from the euro so it can devalue its currency.  But a plummeting Greek currency would rapidly reduce the government’s revenue in terms of the euro, guaranteeing a massive default on its outstanding euro denominated debts.

All of these proposals are desperate measures designed to cover up the fundamental failure of the underlying political economic model, which assumes that those who govern can provide free goods and services to the population at large, lavish pensions for government employees, impose rigidities onto labor markets and otherwise achieve social goals through their management of the economy.  What we are now seeing is that good intentions are and never were sufficient.  That so-called “rights” to jobs, health care, housing and pensions require real resources that cannot be conjured out of nothing by a good speech or a government decree, but must be taken from those who produce in the private sector.

Yet, the taxes and other exactions used to take those resources have reduced economic activity and income so much that the private sector can no longer fund current government outlays.  Now that investors are less willing to lend money, a rapid, jarring adjustment in which expenditures are brought down into alignment with receipts seems unavoidable.

The promises broken during this adjustment will betray the fundamental belief by many in the wisdom of the governing elites and the benevolence of government. The result may be a new background consensus that recognizes the limits of what governments can do, and the cost of empowering them to do more.  Or, supported by mobs in the streets, the governing elite may declare a state of emergency and seize businesses and property, consuming capital in the name of the greater good.  Either way, the European experience is sure to influence the U.S. political debate swirling around 2012 presidential election.

Definitely Evil and Stupid

Wind farm paid £1.2 million to produce no electricity

 

A wind farm has been paid £1.2 million not to produce electricity for eight-and-a-half hours.

By Edward Malnick and Robert Mendick

The amount is ten times greater than the wind farm's owners would have received had they actually generated any electricity.

The disclosure exposes the bizarre workings of Britain's electricity supply, prompting calls last night for an official investigation into the payments system.

The £1.2 million will go to a Norwegian company which owns 60 turbines in the Scottish Borders.

The National Grid asked the company, Fred Olsen Renewables, to shut down its Crystal Rig II wind farm last Saturday for a little over eight hours amid fears the electricity network would become overloaded.

The problem was caused by high winds buffeting the country in the wake of Hurricane Katia.

In total, 11 wind farms were closed down last week, receiving a total of £2.6 million. The money - detailed in calculations provided by National Grid - will be added on to household bills and paid for by consumers.

As Britain pushes for more and more wind farms, critics claim the size of the 'constraint payments' will grow accordingly - raising serious concern about the long-term suitability of wind power to meet Britain's energy needs.

Crystal Rig received by far the largest single payment because the National Grid runs an auction, inviting energy companies to say how much they want in compensation for switching off.

Crystal Rig's owners asked for £999 per megawatt hour of energy they would have produced had they been switched on. Incredibly, the figure Crystal Rig had bid was accepted by the National Grid.

Had the turbines remained on, Crystal Rig's owners would have received the going rate of about £100 per megawatt hour instead. Half of that is in the form of a generous consumer subsidy.

Tim Yeo, chairman of the Energy and Climate Change Select Committee, called for an urgent inquiry into the prices paid to the wind farms.

"The very principle of paying wind farm owners for not producing is one that is offensive to consumers," said Mr Yeo, "It looks like a new version of the Common Agricultural Policy where people are paid not to produce things.

"It looks on the face of it like an extraordinary overpayment by National Grid, for which an urgent explanation is required. This requires an immediate investigation by the energy watchdog Ofgem."

The National Grid runs a 'balancing mechanism' to ensure electricity supply meets national demand. Electricity cannot be stored.

In a further twist, traditional coal- and gas-fired power stations were also running on reduced power last week - but energy companies actually paid the National Grid to do so. That is because the companies made savings by not having to burn as much fossil fuel.

Dr John Constable, director of the Renewable Energy Foundation, an energy think tank which spotted the size of the payment at Crystal Rig, said: "This system appears to be unreasonable, is certainly not in the consumer interest, and requires the urgent attention of the regulator, Ofgem.

"These very high constraint payments show that the scale and pace of government's subsidy-driven push for wind has outstripped National Grid's ability to integrate this uncontrollable source of energy at tolerable cost. A pause for thought would seem to be wise."

The National Grid spokesman said: "The payments are based on what the operators bid and how many megawatt hours are constrained off."

The spokesman said they took the cheapest bids first before being forced to accept the Crystal Rig bid in order "to operate the network safely".

A spokesman for Fred Olsen Renewables said: "Crystal Rig is one of the largest wind farms in the UK so it is one of the last farms we intend to get switched off, so the price is set that high.

"There are about four or five developers who do the same thing, set it at the £999 level to try and keep it up as long as possible. Crystal was one of the last to be shut off."

An Ofgem spokesman said: "We routinely monitor the market and over the past few days we have been looking carefully at the bidding behaviour of generators behind constraints, including wind generators.

RenewableUK, the industry trade body, said wind farms were not the only sources of energy to be occasionally paid to be shut down.

A spokesman said: "Wind turbines are generating a great deal of clean, green energy – the problem is that the National Grid simply doesn't have the capacity to take it all in.

"This shows that we urgently need the National Grid to be upgraded to cope with the extra electricity that the wind industry is generating with increasing efficiency."

Evil or Stupid ?

"Missing" global heat may hide in deep oceans

By Reuters

The mystery of Earth's missing heat may have been solved: it could lurk deep in oceans, temporarily masking the climate-warming effects of greenhouse gas emissions, researchers reported on Sunday.

Climate scientists have long wondered where this so-called missing heat was going, especially over the last decade, when greenhouse emissions kept increasing but world air temperatures did not rise correspondingly.

The build-up of energy and heat in Earth's system is important to track because of its bearing on current weather and future climate.

The temperatures were still high -- the decade between 2000 and 2010 was Earth's warmest in more than a century -- but the single-year mark for warmest global temperature was stuck at 1998, until 2010 matched it.

The world temperature should have risen more than it did, scientists at the National Center for Atmospheric Research reckoned.

They knew greenhouse gas emissions were rising during the decade and satellites showed there was a growing gap between how much sunlight was coming in and how much radiation was going out. Some heat was coming to Earth but not leaving, and yet temperatures were not going up as much as projected.

So where did the missing heat go?

Computer simulations suggest most of it was trapped in layers of oceans deeper than 1,000 feet during periods like the last decade when air temperatures failed to warm as much as they might have.

This could happen for years at a time, and it could happen periodically this century, even as the overall warming trend continues, the researchers reported in the journal Nature Climate Change.

"This study suggests the missing energy has indeed been buried in the ocean," NCAR's Kevin Trenberth, a co-author of the study, said in a statement. "The heat has not disappeared and so it cannot be ignored. It must have consequences."

Trenberth and the other researchers ran five computer simulations of global temperatures, taking into account the interactions between the atmosphere, land, oceans and sea ice, and basing the simulations on projected human-generated greenhouse gas emissions.

These simulations all indicated global temperature would rise several degrees this century. But all of them also showed periods when temperatures would stabilize before rising. During these periods, the extra heat moved into deep ocean water due to changes in ocean circulation, the scientists said.

White lies

Times Atlas 'wrong' on Greenland ice

 

Leading UK polar scientists say the Times Atlas of the World was wrong to assert that it has had to re-draw its map of Greenland due to climate change.

By Richard Black, Environment correspondent, BBC News

Publicity for the latest edition of the atlas, launched last week, said warming had turned 15% of Greenland's former ice-covered land "green and ice-free".

But scientists from the Scott Polar Research Institute say the figures are wrong; the ice has not shrunk so much.

The Atlas costs £150 ($237) and claims to be the world's "most authoritative".

The 13th edition of the "comprehensive" version of the atlas included a number of revisions made for reasons of environmental change since the previous one, published in 2007.

The break-up of some Antarctic ice shelves due to climate change, the shrinking of inland waters such as the Dead and Aral Seas, and the drying up of rivers such as the Colorado River are all documented.

But the glossy publicity sheets begin with the contention that "for the first time, the new edition of the (atlas) has had to erase 15% of Greenland's once permanent ice cover - turning an area the size of the United Kingdom and Ireland 'green' and ice-free.

"This is concrete evidence of how climate change is altering the face of the planet forever - and doing so at an alarming and accelerating rate."

The Scott Polar group, which includes director Julian Dowdeswell, says the claim of a 15% loss in just 12 years is wrong.

"Recent satellite images of Greenland make it clear that there are in fact still numerous glaciers and permanent ice cover where the new Times Atlas shows ice-free conditions and the emergence of new lands," they say in a letter that has been sent to the Times.

"We do not know why this error has occurred, but it is regrettable that the claimed drastic reduction in the extent of ice in Greenland has created headline news around the world.

"There is to our knowledge no support for this claim in the published scientific literature."

Many of the institute's staff are intimately involved in research that documents and analyses the impacts of climate change across the Arctic.

As such, they back the contention that rising temperatures are cutting ice cover across the region, including along the fringes of Greenland; but not anything like as fast as the Times Atlas claimed.

"It is... crucial to report climate change and its impact accurately and to back bold statements with concrete and correct evidence," they say.

The Times Atlas is not owned by The Times newspaper. It is published by Times Books, an imprint of HarperCollins, which is in turn owned by Rupert Murdoch's News Corporation.

A spokesperson for HarperCollins said its new map was based on information provided by the US National Snow and Ice Data Center (NSIDC).

"While global warming has played a role in this reduction, it is also as a result of the much more accurate data and in-depth research that is now available," she said.

"Read as a whole, both the press release and the 13th edition of the Atlas make this clear."

The Importance of Culture

It is culture that creates economics, and not the other way around.

By ROGER SCRUTON

I first visited Greece 50 years ago, hitchhiking with a school friend from England, in search of the glorious world of Homer, Plato, and Thucydides. Of course, we didn't find that world. But we found something almost as remarkable, which was a place where the church and the priesthood dominated rural life, where villages were self-contained communities, where local saints enjoyed their festivals and where the old dances were still danced in the village squares, men in groups, and women in groups, dressed in the costumes that survived from Ottoman days, and rehearsing the old drama of the sexes with marriage as its eternal dénouement. It was a country that had yet to enter the modern world. Its rhythms were those of the village, where debts and duties were local, and where sun, sleep, and surrender managed the day. It was inconceivable to a young Anglo-Saxon visitor that such a country could be judged in the same terms as Germany or France, or that it could play a comparable role in an economy that included all three countries as equal partners.

At one point, running out of money, I joined the queue at a hospital in Athens, where you could give blood and be paid in drachmas. The presiding doctor leaped up to welcome the tall red-haired youth, and turned away the two small men who preceded me, judging their blood to be useless. The names of my unsuccessful rivals were Heracles and Dionysus. It was the only sign offered to me during that first visit that these people were descended from the Greeks to whom our civilization is owed.

I have no desire to return to Greece, dreading what the tourists and the property speculators have done to it. But I know that, whatever the changes, it is inconceivable that Greece should have developed in the same way and with the same rhythm as France or Germany. Of course the country has been modernized. Roads have been built and towns expanded. The tourist trade has wiped out the gentle manners of the villagers. Sexual intercourse has begun -- somewhat later than 1963,  which is when Philip Larkin famously dated it, but nevertheless with the same devastating effect on marriage and the family. No doubt the old modes of the folk songs have been forgotten, and no doubt the multinational brands have slapped their logos on shop fronts across the land. But for sure the culture of local obligation has remained. For sure people still regard leisure as more important than work, and debts as less important, the further away the creditor lies in the network of human relations. If you don't know this from visiting Greece, you could learn it easily enough from reading Kazantzakis, Ritzos, Seferis, or any other of the writers in that great moment of literary flourishing which succeeded the collapse of the Ottoman Empire. You could even get it from Louis de Bernières and Captain Corelli's Mandolin. Anybody with his eyes open and his heart in place would know that Greece is the product of a distinctive culture, and that this culture, however it develops, will always take the country in a direction and at a speed of its own.

YET THE ARCHITECTS of the euro did not know this. If they had known it, they would have known also that the effect of imposing a single currency on Greece and Germany would be to encourage Greece to transfer its debts to Germany, on the understanding that the further away the creditor the less the obligation to repay. They would have known that if the Greek political class can use sovereign debt to pay family, friends, and dependents, and to buy the votes needed to stay in office, that that is what the political class will do. They would have recognized that laws, obligations, and sovereignty don't have quite the same meaning in the Mediterranean as they do on the Baltic, and that in a society used to kleptocratic government the fairest way out of an economic crisis is by devaluation--in other words, by stealing equally from everybody.

Why didn't the architects of the euro know those things? The answer is to be found deep within the European project. For it was a project with a secret agenda, and that agenda was to destroy, and meanwhile to deny, the reality of nationhood. And since nations are the carriers of culture, this meant denying that culture matters. Cultural facts were simply imperceivable to the Eurocrats. Allowing themselves to perceive culture would be tantamount to recognizing that their project was an impossible one. This would have mattered less if they had another project with which to replace it. But--like all radical projects--that of the European Union was conceived without a Plan B. Hence it is destined to collapse and, in the course of its collapse, to drag our continent down. An enormous pool of pretense has accumulated at the center of the project, while the political class skirmishes at the edges, in an attempt to fend off the constant assaults of reality. But this pool of pretense is a festering wound at the heart of things, and one day it will burst and swamp us all with poison.

Thus we have to pretend that the long-observed distinctions between the Protestant north of our continent and the Catholic and Orthodox south is of no economic significance. Being a cultural fact it is imperceivable, notwithstanding Weber's attempt to make it central to economic history. The difference between the culture of common law and that of the Code Napoléon, between the Roman and the Ottoman legal legacies, between countries where law is certain and judges incorruptible and places where law is only the last resort in a system of bribes--all these differences have to be put out of mind. Times and speeds of work, and the balance between work and leisure, which go to the heart of every community since they define its relation to time, are to be ignored, or else regimented by a futile edict from the center. And everything is to be brought into line by those frightening courts--the European Court of Justice and the European Court of Human Rights--whose unelected judges never pay the cost of their decisions, and whose agenda of "non-discrimination" and "ever-closer union" is designed to wipe away the traces of local loyalties, family-based morality, and rooted ways of life. Not surprisingly, when you build an empire on such massive pretenses, it very soon becomes unstable.

IT WAS MARX WHO ARGUED that the foundation of social order and the motor of social change resides in economic structures, and that culture is merely the by-product--the assemblage of institutions and ideologies--that rises from the economic foundations and keeps them in place. Hence it was to Marx that we owed that first and disastrous attempt to organize society on economic principles alone, and to assume that culture will look after itself. In fact it is culture that creates economics, and not the other way round, and if any proof of this is needed we need only look at the result of the Marxist experiment. Better still, we might look at the successful economies in the modern world--the American for instance--and note the extent to which they have depended on a respect for law, on honest accounting, and on individual responsibility, the ethic of family life, and the forms of social interaction. To analyze all the strands that have been woven together to form the American capacity for long-term economic probity you would have to trace the culture of this country back to the founding and beyond. You would have to take account of Protestantism, the common law, the tradition of private colleges, and the little platoons of a society of volunteers. You would have to understand the frontier spirit, the deep local loyalties, and the cultural miscegenation that gave rise to jazz, Hollywood, and the Broadway musical.

Of course, I share the belief of many American conservatives that this culture is being lost, and indeed that America has taken fatal steps in the European direction. But this change has itself been initiated at the cultural level. Left to itself the American economy would not have incurred the truly fantastic debts that have been heaped on it by the maladministration of Bush and Obama. In each case cultural factors have driven the leadership to hold the country hostage to ideological goals. And the same is true of Europe. It was not economics but culture that engendered the euro--a culture of a ruling class at war with the people of Europe, wishing to establish trans-national government at all costs, and hoping to wipe away yet another trace of nationhood. By destroying those ancient currencies through which the people of Europe had expressed and managed their apartness, the European elite hoped to make a decisive move toward the goal of Union. Instead they have burdened the continent with new debts, new resentments, and a looming disaster that was not foreseen only because it had been ruled out as impossible. 

Driving in the wrong direction

Erdogan Has Good Reason To Be Crazy

by David P. Goldman 

Turkish Prime Minister Tayyip Erdogan brings to mind the story about the housewife who calls her husband during rush hour. “Be careful driving home on the Beltway, dear,” she advises. “The news says that there’s a maniac driving in the wrong direction.” “What do you mean, ‘a maniac’?,” he replies. “Everybody’s driving in the wrong direction!”

Now that Turkey has threatened Europe with a “freeze in relations” if Cyprus (as planned) assumes the presidency of the European Union in 2012, it must seem to Erdogan that everyone is driving in the wrong direction. Earlier this month Turkey declared “null and void” the United Nations’ Palmer Commission report, which supported Israel’s right to enforce a blockade against Gaza. That was a minor gaffe, because United Nations dicta have the authority of revelation to the liberal media, except, of course, when they support Israel. It’s one thing for Turkey to freeze relations with Israel — we take it for granted these days that everybody hates Israel — but the Europeans? Everybody likes the Europeans, who have replaced their defense ministries with an answering machine that says, “We surrender.” And over Cyprus? Even Russia, Turkey’s key trading partner and the host for millions of Turkish guest workers, is aghast at Erdogan’s tantrum. Russia has strong ties to Cyprus.

The New York Times’ Thomas Friedman blames Israel for not apologizing to the Turks. But one doesn’t want to apologize to Erdogan. You don’t want to talk to him. Don’t make eye contact. We New Yorkers learn that on the subway. It seems mad to take on Washington, Brussels, Moscow, as well as Jerusalem, all in the same week. What is driving the Turkish prime minister round the twist?

The Arab world is in free fall. Leave aside Syria, whose regime continues to massacre its own people, and miserable Yemen, and post-civil war Libya. Egypt is dying. Erdogan’s “triumphal” appearance in Egypt served as a welcome distraction to Egyptians — welcome, because what they think about most of the time is disheartening. What’s on the mind of the Egyptian people these days? According to the Arab-language local media, it’s finding enough calories to get through the day.

Egypt imports half its caloric consumption, the price of its staple wheat remains at an all-time high, and most Egyptians can’t afford to buy it. The government subsidizes bread, but according to the Egyptian news site Youm7 (“The Seventh Day”), the country now faces “an escalating crisis in subsidized flour.” Packages of subsidized flour are not reaching the intended recipients, in part because the Solidarity Ministry hasn’t provided the promised shipments to stores, and in part because subsidized flour and bread are diverted to the black market. A small loaf of government-issue bread costs 5 piasters, or less than one U.S. cent, but it can’t be found in many areas, as the Solidarity Ministry, provincial government, and bakers trade accusations of responsibility for supply problems. Poor Egyptians get ration cards, but flour often is not available to card-holders. Rice, a substitute for wheat, also is in short supply, and the price has risen recently to 5.5 Egyptian pounds per kilo from 3.75 pounds.

Most Egyptians barely eat enough to keep body and soul together, and many are hungry. That is about to get much, much worse: The country is short about $20 billion a year. The central bank reports that the country’s current account deficit in the fiscal year ended July 1 swung from a $3.4 billion surplus in the fiscal year ended July 2010 to a deficit of $9.2 billion in the fiscal year ended July 2011. Almost all of the shift into red ink occurred since February, suggesting an annualized deficit of around $20 billion. Egypt’s reserves fell about $11 billion since the uprising began in February. Who’s going to cough up that kind of money? Not Turkey, whose own balance-of-payment deficit stands at 11% of GDP and whose currency is collapsing, as shown in the chart below:

Not the U.S. Congress, for that matter, nor the hard-pressed Europeans, who have their own problems, nor the Saudis, who can be counted on for a few billion here and there, but not $20 billion a year. I reiterate: Egypt will make Somalia look like a picnic.

It doesn’t occur to liberals that there are problems for which solutions might not exist; the notion that cultures and countries may suffer from tragic flaws does not enter into consideration, because if that were true, there would be no need for liberals. That is why Friedman, the bellwether of liberal opinion, sounds stupider than anyone else when he describes Israel as “alone and adrift at sea.” If only Netanyahu had offered his own peace plan, complains Friedman…to Hamas? A news analysis in the Times meanwhile reports the Obama administration’s consternation that every pillar of its foreign policy is crumbling at once.

If the Obama administration and the New York Times are pulling their hair out over the disintegration of Arab society, consider how Tayyip Erdogan must feel. His economic boom is about to come to a crashing end, and his country is doomed demographically to split up when Kurds outnumber Turks not long from now, as I argued here recently. And his ambitions for Turkish hegemony in the Muslim world have run directly into an existential crisis that is long past solution. That would make anyone crazy. Don’t think of the Turkish leader as an outpatient who lost his meds. In the spirit of political correctness, we might call him “existentially challenged. ”

It would be easy to overestimate just how dangerous Erdogan might become. The estimable David Warren calls him “the man who could trigger a world war.” That seems alarmist. Whom is Erdogan going to fight? Any military provocation would lead to a further collapse of the Turkish currency, and a deep setback for the Turkish economy.