The Tories Refuse to Take Responsibility for the EU “Fault Lines” They Decry

By William K. Black

The Tory insider and journalist Matthew D’Ancona has written a remarkably disingenuous op ed in the New York Times entitled “Europe’s Dangerous New Fault Line.”

The setting for the op ed is three related crises that D’Ancona’s dogmas have helped create (and a fourth one that is likely in the process of being created).  D’Ancona, of course, ignores causation and his responsibility for the policies that caused each of the crises.  The three crises are the Great Recession, the gratuitous second recession (Second Great Depression in the case of Spain, Greece, and Italy), and the rise of fascist and racist parties in the EU.  The fourth crisis that may be developing is the troika’s austerity policies forcing several EU nations back into a third recession.

D’Ancona is a champion of the anti-regulatory and austerity policies that caused each of the crises, including the electoral successes of the ultra-right parties.  In D’Ancona’s telling, however, each of the crises is the product of a virgin birth – and his dogmas have nothing to do with creating the crises.  D’Ancona’s focus is the rise of ultra-right parties in the EU, but he begins by emphasizing what he terms the “resilient continuities.”

“This Strasbourg assembly continues to be controlled by its center-right bloc; the euro is not on the brink of collapse; negotiations on the all-important free trade agreement between the European Union and the United States proceed. The 28-nation club still has a healthy list of aspirant members knocking on its door: Turkey, Macedonia, Iceland and, of course, Ukraine.

Yet an audit of this sort can readily spawn complacency, and it is decades of complacency that have helped far-right and other extremist parties to make their most conspicuous gains….”

Each aspect of the first paragraph should be a cause for immense concern – not “complacency.”  Yes, the “center-right bloc” of austerians still dominates the European Commission (EC).  That domination of the EC and the resultant self-destructive austerity policies caused the second and third crises and may be causing a fourth crisis.  The euro, because it is not a sovereign currency, is a major cause of the eurozone crisis.  No, “the euro is not on the brink of collapse” – but the economies and politics of a number of Eurozone nations did collapse because of the flawed nature of the euro and the troika’s self-destructive policies.  It would be excellent news if the EU were to drop the euro.  It is terrible news that more nations, particularly on the EU’s vulnerable periphery may adopt the euro.  The “free trade” (sic) agreement between the EU and U.S. is not, remotely, “all important.”  It is highly undesirable for the peoples of the U.S. and the EU.  The fact that D’Ancona thinks that these liabilities are such great assets that they could produce “complacency” is particularly disturbing.

D’Ancona, elliptically, admits that the troika’s economically illiterate austerity demands that forced the eurozone into a gratuitous second recession have enraged scores of millions of Europeans.

“The chasm between citizen and Union never seemed wider than during the euro-zone crisis of 2010 and its aftermath. Youth unemployment reached 25 percent and higher in some regions.

One can argue about the deepest causes of this contagion and the best medicine. But the famously well-padded Brussels bureaucracy was and remains the object of much popular anger.”

We do not have to “argue about the deepest causes” of the crises.  The regulatory race to the bottom, which the City of London “won,” was critical to the creation of the bubbles and epidemics of accounting control fraud that caused financial crisis and the Great Recession.  The Tories and Labour both supported that obscene race to destroy effective financial regulation. The troika (the EC, the ECB, and the IMF) demanded that the periphery adopt the austerity regimes that forced the eurozone back into a gratuitous second recession in 2010.  It is the Tories in the UK and “center-right bloc” of the EC that insisted on that self-destructive austerity.  Italy, Spain, and Greece were forced into Great Depression levels of unemployment.  Youth unemployment did not reach “25 percent and higher” in Italy, Spain, and Greece – it reached one-third to over-half.

Note also that D’Ancona makes it sound like the second crisis – the Second Great Recession throughout the Eurozone and the Second Great Depression in Italy, Spain, and Greece – is over.  That is not true.  Youth unemployment remains at the record rates I have just discussed.  Unemployment exceeds Great Depression levels in Spain and Greece – and is increasing in Italy.  As I explain below, this leads to very large emigration of new university graduates.

Worse, it is possible that the troika’s austerity demands are about to force several eurozone nations back into a third recession.  Finland is formally in recession and the Netherlands, Portugal, and Italy suffered falling GDP in the most recent quarter.

“Eurozone GDP – a country-by-country catch-up

Time for a very brisk recap before we get the overall figure for Eurozone GDP at 10am sharp (and updated inflation data too):

And the big picture is that the eurozone recovery story has taken a battering this morning with only Germany outperforming in the first three months of 2014.

German GDP beat forecasts, growing by 0.8%, thanks to a mild winter and solid demand from home and abroad.

But France’s economy has stalled, with GDP unchanged in the quarter.

Italy is shrinking again, with GDP down 0.1% – ending its short escape from contraction

Portugal has suffered a contraction, down 0.7%.

The Netherlands economy suffered from the warm winter, with GDP shrinking by an alarming 1.4%.

Austria grew by just 0.3%

And Finland is in recession, after GDP fell by 0.4%

Self-inflicted unemployment and the emigration of the best trained young workers as a result of austerity are only two of many major economic traumas inflicted on the eurozone by D’Ancona’s economic dogmas. The EC also enraged Europeans by demanding that the periphery slash its workers’ wages.  The troika dramatically increased inequality.  The troika bailed out the largest banks while doing little for homeowners.  The troika encouraged reduced corporate tax rates.  The troika forced cuts in vital public services when they were most needed.  The troika forced privatization on the periphery.  Europeans have many non-economic complaints against the EC, but the rage arising from the EC’s grotesque economic policies was added to those other complaints and caused a material ultra-right movement to become a huge ultra-right movement.  

D’Ancona’s is so bereft of self-awareness that he wrote this line:

“As euro-skeptics correctly observe, the European Union affects most aspects of day-to-day life. But it is a vast institutional structure without a soul.”

The troika,with its depraved Brussels Consensus modeled on the disastrous Washington Consensus, is “soul[less]” because it follows the soulless policies of austerity, a war on workers’ wages, obeisance to big finance, and privatization that D’Ancona and his fellow Tories demand.  It is telling that D’Ancona’s op ed does not demand that the troika stop throwing tens of millions of Europeans out of work. D’Ancona is one of the most reliable TINA trolls (“there is no alternative” to “bleeding the patient” via austerity). That policy is not simply soulless – it is brainless.

A graphic example of the soulless (and brainless) nature of D’Ancona’s and the Tories’ policies that is enraging Europeans also demonstrates the Tories’ self-blindness.  The context is D’Ancona’s discussion of the surging emigration of young Europeans who live in the periphery.

“Considered with a cool eye, mobility within Europe is an engine of future shared prosperity, not a threat to national traditions or public safety.”

God save us from people who compliment themselves for having a “cool eye” in the midst of tragedy.  I saw this first hand in my visits to Ireland.  University graduates of the nations of the EU periphery now routinely emigrate when they get their degrees because job opportunities in their home countries for young workers are atrocious.  I saw the pain of Irish parents who knew their children would emigrate and that their grandchildren would be born thousands of miles away – often in Australia and Canada.  I was part of a panel for a radio interview sitting next to the Irish government minister discussing the government’s response.  He exemplified the “cool eye” that D’Ancona praises.  The Irish government is working on alerting parents to how to use products like Skype so that they can see pictures of their grandchildren.  Alas, I had a warm eye and responded that this was insane.  Ireland should be using fiscal policy and job programs to spur the Irish recovery and keep as many of its university graduates who wished to live in Ireland.

The old sick joke is that the leading export of Ireland is the Irish.  The Brits let a million of my ancestors die of starvation, disease, and exposure and roughly two million of them sailed on “coffin ships” to other lands to escape that fate.  It is true that this emigration produced “future prosperity” for most of the children of these emigrants – but it certainly did not produce “shared prosperity.”  Ireland’s economy and society suffered catastrophic harm.  The Tories simultaneously state that the development of a highly trained job force is the key to development – and that the periphery will achieve “shared prosperity” by exporting their most highly trained and educated young workers.  The people of the periphery are increasingly resistant to being fooled by this mendacity.

D’Ancona Pines for “Radical Democrats” – While Ignoring their Rise

D’Ancona calls for a new generation of European leaders who will bring radical changes to the EU.

“The founding fathers of this union were peacemakers. Their successors should be radical democrats.

They must also be more courageous than they have been in the past week. These election results are partly the consequence of structural flaws in the European Union’s organization — failures that should be tackled. European voters have suffered grievously from the global downturn, and politicians cannot express contrition too often for the part they played in that.”

The EU did not simply suffer from a “global downturn.”  Much of the world either never went into recession or recovered quickly because they did not adopt destructive austerity of the kind D’Ancona and his fellow Tories champion.  The U.S. came out of recession years ago through modest stimulus.  The eurozone – and only the eurozone – was hurled back gratuitously into a second Great Recession by economically illiterate austerity.  One-third of the eurozone’s total population suffers Great Depression levels of unemployment.  D’Ancona is the inside chronicler of the Tories.  He, the Tories, and their “center-right bloc” allies that have at all times relevant to the modern crisis dominated the EC are the architects and cheerleaders of austerity.  They refuse to “express contrition” for inflicting austerity.

Instead of contrition, D’Ancona advises Irish parents to get over the loss of their kids and grandkids and bring a “cool eye” (and rose colored glasses) to the subject of widespread emigration.  Cool eyes and rose colored glasses will transform the reality of severe unemployment and dramatically reduced wages into a vision of “shared prosperity.”

D’Ancona and Prime Minister David Cameron are infamous for refusing to express contrition and change their failed policies that led UKIP to become the UK party receiving the greatest number of votes in the recent EC elections.  The most telling critique of D’Ancona’s book about the Tory/Lib-Dem coalition was his glaring lack of self-awareness.

“He sees and yet is blind. He writes a 360-page book on the coalition without noticing the social and economic disaster it has inflicted on the British. It is as if it never happened.”

The same EC elections that led to the ultra-right’s electoral successes also led to great success for “radical democrats” in Greece and Spain.  D’Ancona ignores the successes of the Podemos (“we can”) movement in Spain and the Syriza party in Greece.  As I explained in a prior column, it took a full decade for the failures of the Washington Consensus to radicalize Latin America sufficiently to lead to the election of President Chavez in Venezuela.  We are less than five years from the beginning of the troika’s even more self-destructive Brussels Consensus.  Latin America also saw the election of ultra-right parties, even death squad and torture leaders, in the first decade after the imposition of the Washington Consensus.  Over time, however the Latin American consensus developed to reject the worst aspects of the Washington Consensus.  Podemos and Syriza have as their core platform the rejection of the Brussels Consensus.

It is also telling that the head of state in the EU periphery best known for his opposition to austerity, Prime Minister Matteo Renzi of Italy, was extremely successful in the EC voting.  Naturally, the reaction of the troika to Renzi’s political success and the dismal economic results of austerity in Italy in the most recent quarter (GDP fell and unemployment rose) was “contrition” – they promptly demanded that he inflict ruinous austerity on Italy.  That’s “contrition” troika –style – you were right and we were wrong, so we’re ordering you to do it wrong to ensure that you will never again demonstrate our errors.

D’Ancona ignores the rise in Spain and Greece of the very “radical democrats” he purports to pine for because he actually wants to double-down on the failed economic dogmas that have cause the recurrent European crises.  He wants more austerity, job cuts, privatization, and emigration of the periphery’s university graduates.  He also wants less financial regulation.  He wants the troika to be ever more “soulless” and to develop “cool eyes” that bore through the EU’s ever increasing inequality and focus on “shared prosperity.”

Because he, and the Tories, remain captives of their dogmas D’Ancona ends his op ed with a plea that European leaders develop the “courage” to take “decisive action” that they explain to the people through “plain speaking” – and then demonstrates his  lack the courage to urge any “decisive action” – in a column that never engages in “plain speaking.”

“What separates statesmanship from the routine practice of politics is the courage to take the risks of plain speaking and decisive action when they have to be taken. Europe needs such statesmanship now.”

Of course, it would take great courage for D’Ancona to urge the troika to take the six “decisive actions” in the economic sector that are desperately needed.

  • End austerity and adopt strong programs of fiscal stimulus and jobs programs that would produce full employment
  • Cease the efforts to cut EU wages
  • Use the ECB to fund the stimulus program and fend of the debt vigilantes
  • Replace the financial regulatory race to the bottom with a race to integrity
  • Force the systemically dangerous institutions (SDIs) over the next five years to sizes at which they no longer pose a systemic risk
  • Investigate and vigorously prosecute the senior financial officers that led the major frauds that played such a decisive role in causing the original crisis

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