Dithering Europe is heading for the democratic dark ages

A Greek economy run by Brussels will ignore the lessons of history, leading to more misery.

By Boris Johnson

It is one of the tragic delusions of the human race that we believe in the inevitability of progress. We look around us, and we seem to see a glorious affirmation that our ruthless species of homo is getting ever more sapiens. We see ice cream Snickers bars and in vitro babies and beautiful electronic pads on which you can paint with your fingertip and – by heaven – suitcases with wheels! Think of it: we managed to put a man on the moon about 35 years before we came up with wheelie-suitcases; and yet here they are. They have completely displaced the old type of suitcase, the ones with a handle that you used to lug puffing down platforms.

Aren’t they grand? Life seems impossible without them, and soon they will no doubt be joined by so many other improvements – acne cures, electric cars, electric suitcases – that we will be strengthened in our superstition that history is a one-way ratchet, an endless click click click forwards to a nirvana of liberal democratic free-market brotherhood of man. Isn’t that what history teaches us, that humanity is engaged in a remorseless ascent?

On the contrary: history teaches us that the tide can suddenly and inexplicably go out, and that things can lurch backwards into darkness and squalor and appalling violence. The Romans gave us roads and aqueducts and glass and sanitation and all the other benefits famously listed by Monty Python; indeed, they were probably on the verge of discovering the wheely-suitcase when they went into decline and fall in the fifth century AD.

Conservatism Is Not an Ideology

And America is a country, not a creed.

By PATRICK J. BUCHANAN

In introducing his new book, Leo Strauss and the Conservative Movement in America, Paul Gottfried identifies a fundamental divide between neoconservatives and the traditional right. The divide is over the question: What is this nation, America?

Straussians, writes Gottfried, “wish to present the construction of government as an open-ended rationalist process. All children of the Enlightenment, once properly instructed, should be able to carry out this … task.”

For traditional conservatives, before the nation is born, ”ethnic and cultural preconditions” must exist. All “successful constitutional orders,” he writes, “are the expressions of already formed nations and cultures.”

To the old right, America as a nation and a people already existed by 1789. The Constitution was the birth certificate the nation wrote for itself, the charter by which it chose to govern itself. The real America had been born in men’s hearts by the time of Lexington and Concord in 1775.

In a recent issue of Modern Age, Jack Kerwick deals with this divide.

Ministry of [Un]Truth

Stop listening to them Now

By Eric Sprott

Speaking at a Brussels conference back in April 2011, Eurogroup President Jean Claude Juncker notably stated during a panel discussion that "when it becomes serious, you have to lie." He was referring to situations where the act of "pre-indicating" decisions on eurozone policy could fuel speculation that could harm the markets and undermine their policies' effectiveness.¹ Everyone understands that the authorities sometimes lie in order to promote calm in the markets, but it was unexpected to hear such a high-level official actually admit to doing so. They're not supposed to admit that they lie. It is also somewhat disconcerting given the fact that virtually every economic event we have lived through since that time can very easily be described as "serious". Bank runs in Spain and Greece are indeed "serious", as is the weak economic data now emanating from Europe, the US and China. Should we assume that the authorities have been lying more frequently than usual over the past year?

When former Fed Chairman Alan Greenspan denied and down-played the US housing bubble back in 2004 and 2005, the market didn't realize how wrong he was until the bubble burst in 2007-2008. The same applies to the current Fed Chairman, Ben Bernanke, when he famously told US Congress in March of 2007 that "At this juncture… the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained."² They weren't necessarily lying, per se, they just underestimated the seriousness of the problem. At this point in the crisis, however, we are hard pressed to believe anything uttered by a central planner or financial authority figure. How many times have we heard that the eurozone crisis has been solved? And how many times have we heard officials flat out lie while the roof is burning over their heads?

Once there was a stigma to going on the dole

Food Stamp Fiasco

“The Senate refuses to cut $20 billion out of $770 billion”.

By WSJ Editors

The next time someone moans about Washington "austerity," tell them about the Senate's food stamp votes on Tuesday. Democrats and a few Republicans united to block even modest reform in a welfare program that has exploded in the last decade and is set to spend $770 billion in the next 10 years.

Yes, $770 billion on a single program. And you wonder why the U.S. had its credit-rating downgraded?

When the food stamp program began in the 1970s, it was designed to help about 1 of 50 Americans who were in severe financial distress. But thanks to eligibility changes first by President George W. Bush as part of the 2002 farm bill and then by President Obama in the 2008 stimulus, food stamps are becoming the latest middle-class entitlement.

A record 44.7 million people received food stamps in fiscal 2011, up from 28.2 million as recently as 2008. The cost has more than doubled in that same period, to $78 billion, and is on track to account for 78% of farm bill spending over the next decade. One in seven Americans now qualifies.

Once there was a stigma to going on the dole, and it was seen as a last resort. But now the Agriculture Department runs radio and TV ads prodding people to get the free food, as in a recent campaign that says food stamps will help you lose weight. A federal website boasts about strategies that have "increased program participation" with special emphasis on Hispanics because "our data show that many low-income Latinos simply don't apply for [food stamps] even though they're eligible."

In the 1990s Bill Clinton boasted that welfare reform took Americans off the dole. The Obama Administration boasts about how many it has added.

You Can Lose Freedom Only Once

“Europe has crossed its peak.”

By Wolf Richter  

Poor Angela Merkel. The beleaguered German Chancellor just can’t catch a break. She has already committed hundreds of billions of German taxpayer euros to bailing out collapsing Eurozone countries, or at least their bondholders, which would be the ECB, various German and French banks, and the other usual suspects. In return, she wants these countries to live within their means and restructure their economies so that the bailouts would not have to continue ad inifinitum. While the ECB’s printing press—though it’s not supposed to have one—could solve the debt crisis in one fell swoop after the model of the US, Japan, the UK, and Zimbabwe, it would create a host of problems that Germans would rather avoid. Hence bailouts in return for structural reforms and efforts to whittle budget deficits down to some “sustainable level.”

Sounds reasonable. And yet, these laudable efforts have landed her in the company of Axis-of-Evil perpetrators and other maligned characters, according to the British magazine New Statesman, and it doesn’t appear to be, though it reads like, British humor:

Which world leader poses the biggest threat to global order and prosperity? The Iranian President, Mahmoud Ahmadinejad? Wrong. Israel’s Prime Minister, Binyamin Netanyahu? Nope. North Korea’s Kim Jong-un? Wrong again. The answer is a mild-mannered opera fan and former chemist who has been in office for seven years. Yes, step forward, Chancellor Angela Merkel....

And it came with this awesome Terminator-inspired cover art, which does, however, have certain humorous aspects:

Tinker Bell Economics in Europe

Truth is always politically painful after years of illusion

by Gary North

If you have seen the stage version of Peter Pan, you know the scene in which the audience is asked to clap if they want Tinker Bell to live. It's time.

Janet Daley wrote a provocative essay in London's The Telegraph on the day before the Greek election (June 16). She did her best to explain why the eurozone is in crisis. Europe's leaders are living in an illusion of their own making.

She began with what should be obvious to the financial markets by now. By entering into the eurozone, the politicians surrendered control over the money supply.

The problem is not that politicians surrendered control over the money supply. It is that they surrendered it to the European Central Bank. They should have surrendered it to the free market.

The politicians of Europe asserted control over the international money market in 1914, when they abandoned the international gold standard. They set the precedent. Everything that has followed has been one fiat money crisis after another. But only Austrian School economists teach this. In Europe, bureaucratic control over money has run the show ever since 1999.

The economy is now beyond the control of national governments, and therefore outside the remit of democratic politics. It has become truly global, and thus a law unto itself; nation states have gone broke in their attempt to feed its gargantuan appetites for consumption and debt.

Who owns you

Quote for the Day

“The free man owns himself. He can damage himself with either eating or drinking; he can ruin himself with gambling. If he does he is certainly a damn fool, and he might possibly be a damned soul; but if he may not, he is not a free man any more than a dog.”

                                                                  ~G.K. Chesterton

Abandoning Ship

The Eurozone Is Failing At An Accelerating Rate

by Alasdair Macleod

It will be no surprise to readers that the news coming out of the Eurozone just gets worse and worse. The reality is that Ireland, Portugal, Spain, Italy, Belgium, Greece, and France (in no particular order) are all in debt traps from which there is no escape. A debt trap is sprung when bankruptcy becomes the only outcome. With corporations, this usually becomes readily apparent and directors are forced by law to stop trading, but countries conceal this reality by printing money. Otherwise there is no difference in the two cases, despite what politicians and neoclassical economists would have us believe. This is why we are painfully aware that the Eurozone is in trouble, since nation states are unable to cover and conceal their obligations by printing money, having surrendered this role to the European Central Bank (ECB).

The ECB is meant to be independent of politics and political pressures. But the reality facing any central banker is that s/he cannot stand by and let politicians drown in their own mess. The politicians know this, and it's what is behind current attempts to move away from austerity towards Keynesian growth. The plea is exactly the same as that of the spendthrift who tells his bank manager that the only chance he has of getting his money back is to increase the overdraft to allow him to trade his way out of difficulty.

So the ECB knows, in its role as bank manager, that the argument is flawed. But unlike spendthrift individuals, politicians have real power, and the ECB has an ultimate responsibility not to upset the apple cart. And that is why the election of a new socialist French president is important. President Hollande is leading the charge away from austerity in Europe, and he has powerful allies, including President Obama in his own election year.

The greenest thing we can do is innovate

The Julian Simon Lecture

By Matt Ridley

It is now 32 years, nearly a third of a century, since Julian Simon nailed his theses to the door of the eco-pessimist church by publishing his famous article in Science magazine: “resources, population, environment: an oversupply of bad news”. It is also 40 years since The Limits to Growth and 50 years since Silent Spring, plenty long enough to reflect on whether the world has conformed to Malthusian pessimism or Simonian optimism.

Before I go on, I want to remind you just how viciously Simon was attacked for saying that he thought the bad news was being exaggerated and the good news downplayed. Verbally at least Simon’s treatment was every bit as rough as Martin Luther’s. Simon was called an imbecile, a moron, silly, ignorant, a flat-earther, a member of the far right, a Marxist. “Could the editors have found someone to review Simon’s manuscript who had to take off his shoes to count to 20?” said Paul Ehrlich.

Erhlich together with John Holdren then launched a blistering critique, accusing Simon of lying about electricity prices having fallen. It turned out they were basing their criticism on a typo in a table, as Simon discovered by calling the table’s author. To which Ehrlich replied: “what scientist would phone the author of a standard source to make sure there were no typos in a series of numbers?”

Answer: one who likes to get his facts right.

Greece Is A Monty Python Skit

Nothing will ever change in Greece

The new Greek cabinet ready for action

By Jeff Harding

It just keeps getting worse in Greece. With the leaders of the eurozone all exhaling after the election of “centrist” Antonis Samaras, thinking that maybe the Greeks will toe the line set by the Germans, they learn who the new Greek finance minister is:

"Antonis Samaras, the Greek centre-right leader, has made a surprise appointment to the post of finance minister, choosing a career public servant with a close knowledge of the country’s finances and a radical leftwing past.

Vassilios Rapanos will take the key finance portfolio and may attend to­day’s Luxembourg meeting of eurozone finance ministers. …

The Master Narrative Nobody Dares Admit

Centralization Has Failed

By Charles Smith

All centralized systems, open and shadow alike, act as heavy taxes on the society and economy. This is why they cannot compete with the forces of networked decentralization.

The primary "news" narrative may be the failure of the euro, but the master narrative is much, much bigger: centralization has failed. The failure of Europe's "ultimate centralization project" is but a symptom of a global failure of centralization.

Though many look at China's command-economy as proof that the model of Elite-controlled centralization is a roaring success, let's check in on China's stability and distribution of prosperity in 2021 before declaring centralization an enduring success. The pressure cooker is already hissing and the flame is being turned up every day.

What's the key driver of this master narrative? Technology, specifically, the Internet. Gatekeepers and centralized authority are no match for decentralized knowledge and decision-making. Once a people don't need to rely on a centralized authority to tell them what to do, the centralized authority becomes a costly impediment, a tax on the entire society and economy.

In a cost-benefit analysis, centralization once paid significant dividends. Now it is a drag that only inhibits growth and progress. The Eurozone is the ultimate attempt to impose an intrinsically inefficient and unproductive centralized authority on disparate economies, and we are witnessing its spectacular implosion.

The moralistic, Malthusian war against fat people

This degraded depiction of human beings is really about morally indicting people for the original sins of eating and breeding

by Frank Furedi 

Sometimes, I hear something on a news programme that catches me unaware and makes me think: ‘Surely this is an Ali G spoof?’

It is early Monday morning and a professor from the London School of Hygiene and Tropical Medicine is on BBC Radio 4’s Today programme, holding forth on the danger that human beings’ weight gain presents to the survival of the planet. ‘Having a heavy body is like driving a Range Rover’, he argues, with passion and conviction. Before you can even catch your breath, he is warning of the catastrophic things that will occur when ‘we are all as fat’ as people in America. After lecturing listeners about the need to factor people’s ‘body mass’ into all debates about the environment, he pauses and then reminds us again that fatness is an ‘ecological not just a health concern’.

I look across the breakfast table, and my wife affirms my suspicion that this must indeed be an Ali G moment. But alas, a few minutes later, the twenty-first-century equivalent of a Trollope-like, worldly cleric, the weight-conscious priest Giles Fraser, is on the air to give his ‘thought for the day’. He, too, is morally weighed down by the problem of body mass. His little homily on sustainability is on-message in this Ali G world of ours. When I hear him say that ‘bigger is not always better’, it becomes clear why theology is in trouble. But when he finishes by saying ‘economic growth is like getting fat’, I slowly start to realise that this is more than just a bad joke…

Greece Alone and Broke -- Again

History was never kind to the loud and proud but vulnerable Greeks

By Victor Davis Hanson 

The recent indecisive Greek elections could be summed up by two general themes: Greeks want to stay in, and expect help from, the eurozone. But they still do not want to take the necessary medicine to stop borrowing billions of euros from northern Europeans, who want a radical Greek reform of the tax code, deregulation of labor laws, fiscal discipline, massive cuts in bureaucracy, and greater transparency -- all unlikely given Greek history and contemporary culture.

So what lies in the future for Greece as it is slowly eased out of the eurozone and its civilization goes into reverse?

In theory, with the ability to devalue the drachma and be freed of enormous debts, the Greeks could return to business as it was practiced in the 1970s. In those sleepy days before the massive transfers of northern European money, I lived in a Greece that was a Balkan backwater without advanced surgery, autobahns, suspension bridges, sleek subways or a modern airport. In that era of genteel poverty, Greek divorce, abortion, drug use and crime were rare. Now, all are commonplace. Rural Greece outside Athens was more Middle Eastern than European.

How both right and left have infantilised Greece

The Greek election wasn’t a clash of visions but a competition between alternative forms of responsibility avoidance

by Brendan O’Neill 

Last weekend’s elections in Greece were depicted as a massive ideological punch-up of the sort we no longer see very often in politically bland Europe. On one side there were anti-EU leftists like SYRIZA, railing against Angela Merkel and her stringent bailout plans, and on the other side more right-leaning parties, who insisted that austerity is the only solution for deeply indebted Greece. Meanwhile outside of Greece, everywhere from Berlin to London, there was a seemingly sweeping divide between pro-EU people telling Greece it had to embrace austerity, and anti-EU people suggesting Greece should reject the bailout package and give Brussels the finger.

Yet for all the fantasies about a return of Politics with a capital P, the most striking thing was how much the two sides in the election debate shared in common. Both inside Greece and outside it, on both the right and left, in both the pro- and anti-EU camp, the overriding political instinct among all protagonists and observers was to infantilise Greece, to treat it as a hapless child. The right and the Brussels brigade did it by depicting Greece as an immature entity incapable of governing its economic affairs. And the left and the anti-Brussels brigade did it by painting Greece as the pitiable victim of ‘other people’s hubris’. These alternative forms of national infantilisation reveal a lot about what is wrong with the politics of the EU and with what now passes for being ‘anti-EU’.

In the Brussels set and also among right-wing political observers, there has long been a tendency to denounce Greece as unfit for governance, especially economic governance. The Greeks, in contrast to Germans, are a bit too feckless, emotional and corrupt to do economics properly, we’re told. In the run-up to the elections, one economic magazine reported that German officials and Brussels bigwigs, speaking anonymously, describe Greece as a ‘broken bureaucracy… incapable of implementing decisions taken at the top’. In short, it’s a wilful child, which needs clear rules and occasionally a firm slap from Mother Merkel and other outsiders in order to keep it chugging along.

Krugman’s Greek Temple of Keynesianism

The elephant in the living room

by William L. Anderson

A lot of people have weighed in on the Greek Morality Play, better known as the collapse of Greece's economy, and there is no shortfall of "wisdom" and advice. (For that matter, I made comments myself on the Greek situation during an interview on the RT network last March.)

Not surprisingly, Paul Krugman has weighed in again, and this time he not only claims that the problem is not enough inflation, but also deliberately ignores the real problem behind much of the Greek collapse: Greece's notorious and "bloated" (to use a term from Krugman's employer, the New York Times) bureaucracies led by its militant public employee unions. Instead, Krugman sets up other straw men and then claims that if only – If Only! – the Germans would crank up the monetary printing presses, Greece could be saved.

Before going into specifics, I would like to point out that Krugman is correct when he notes that a single currency union of many states indeed does impose certain fiscal restrictions. The examples he uses for the United States are dishonest, and even when explaining the European currency union, he does not tell the whole story, lapsing, instead, into his usual spate of accusations coupled with his demands for more inflation. (And, yes, I will explain my point later in this piece.)

Socialists Win Absolute Majority

The downward spiral of the French economy is set to continue apace

by Pater Tenebrarum

On the same day the world's attention was focused on Greece, an arguably more important election took place in France. As was already deemed highly likely after the first round of the parliamentary elections a week earlier, Mr. Hollande's socialist party received an absolute majority.

According to Bloomberg: 

„French President Francois Hollande’s Socialist Party and its allies won an absolute majority in the National Assembly, exit polls showed, paving the way for them to pass legislation without the aid of other members of parliament.

The Socialist bloc won 314 out of the 577 seats, pollster CSA said, with 289 needed for a majority. Former President Nicolas Sarkozy’s Union for a Popular Movement party and its allies have 228 seats, CSA said, and the anti-euro National Front won two seats. Turnout in the second and decisive round of legislative elections yesterday was 56 percent.

“The French people have amplified their call for change,” Socialist Party Head Martine Aubry, said on France 2 television.

Disconnecting from Reality

François Hollande on Collision Course with ... France

By Wolf Richter 

During the French presidential election, it became clear that François Hollande, if he were to win the presidency, would try to align other Eurozone countries, particularly Italy and Spain, into a southern front against German Chancellor Angela Merkel and her government—to fix the problems of the Eurozone à la française. Among his ideas: pushing the ECB to buy government bonds of troubled debt-sinner countries and instituting eurobonds—or euro-bills, as he now calls them—that would give any member access once again to cheap unlimited loans. Everyone would benefit, except the German taxpayer, who’d have to foot the bill. Both policies are despised in Germany where budgetary discipline is seen as the solution to the debt crisis—rather than even more debt and monetizing of that debt.

Free Economy and Social Order

Property protects the individual sphere against the government and its ever-present tendency toward omnipotence

by Wilhelm Röpke

Most of us, and all of us most of the time, deal with the market economy as a definite type of economic order, a sort of "economic technique" as opposed to the socialist "technique." For this view, it is significant that we call its constructional principle the "price mechanism." Here we move in the world of prices, of markets, of supply and demand, of competition, of wage rates, of interest rates, of exchange rates, and whatnot.

That is, of course, right and proper — as far as it goes. But there is a great danger of overlooking an important fact: the market economy as an economic order must be correlated to a certain structure of society, and to a definite mental climate which is appropriate to it.

The success of the market economy wherever it has been restored in our time — most conspicuously in western Germany — has resulted, even in some socialist circles, in a tendency to appropriate the market economy as a technical device capable of being built into a society which, in all other respects, is socialist.

The market economy then appears as part of a comprehensive social and political system which, in its conception, is a highly centralized colossal machinery. In that sense, there has always been a sector of market economy also in the Soviet system, but we all realize that this sector is a mere gadget, a technical device, not a living thing. Why? Because the market economy as a field of liberty, spontaneity, and free coordination cannot thrive in a social system which is the very opposite.

Public-Private Partnership

Another Phrase for Fascism

by James E. Miller

The word “privatization” is a loaded term these days.  Unions and big government worshippers scoff at the idea of any public services being in the hands of ruthless, greedy capitalists.  The left has the distorted view that people in the private sector are driven primarily by their desire to cut costs and throw workers out on the street.  To them, government workers are angels sent from heaven to do God’s work like picking up the neighborhood trash or maintaining a public pool filled with the bodily discharges of kids whose derelict parents decided to drop off and go shopping for a few hours.  On the right, conservatives who supposedly hold high regard for market forces and Ronald Reagan’s classic declaration “government is the problem,” typically have a favorable view of privatization schemes.

Good People

A couple of tips

By Eric Peters

What does it mean to be a “good person”?

One hears the term fairly often. So and so is a good person. Or the plural – they’re good people. But what is meant is rarely defined. It is accepted that we’re all talking about the same thing – but if you look at it a little bit, very often we’re not. Because many of us seem to have a view of goodness that is completely at odds with the concept of goodness as defined by others.

The liberal Democrat, for example, thinks of himself as a good person because he expresses concern for others, typically those less well-off than others. He wants to “help” – but his goodness (as he defines it) does not manifest itself via himself personally helping those he believes are in need. He does not invite the homeless into his home (or even his garage). He invites them into your home.

He does not “give” of his own time – or money. Rather, he demands that others be made to “give” of theirs. Which of course does not strike him as oxymoronic – let alone vicious. This good person will not feel bad about demanding that some be enslaved for the benefit of others – so long as the former are “deserving” (as defined by the good person) and the latter are “paying their fair share” (again, as defined by the good person).