Roger’s Rules

The euro and EUtopia

If you look up “Deutsche Mark” on the internet, you will find an abundance of definitions like this one from Wikipedia:

The Deutsche Mark … was the official currency of West Germany (1948–1990) and Germany (1990–2002) until the adoption of the euro in 2002.

Generally, Wikipedia is astonishingly quick about updating its entries.  No celebrity can die without the online encyclopedia taking note of the fact within minutes. So I am surprised that the entry for the euro has not been edited to presage its impending demise.

My friend Charles Moore provided the essential news in the headline for his column for the Daily Telegraph yesterday:

The euro’s inevitable failure will be horrendous for all of us

Charles does more than cite the tsunami of debt rolling across the euro zone: we all know about the feckless Greeks, but what about the feckless, spendthrift  Portuguese, Spaniards, and Italians? Will Germany (with some grumbling help from France) pony up to bail them out as well? (Not, of course, that they will call it a bailout, since the treaties that created “Europe” forbid direct bailouts of member states.) The Germans have been struggling for political respectability since 1945: paying off the debts of their profligate neighbors the way Earl of Emsworth paid off his son’s gambling debts was the price of admission.  But is there a limit? Is there a point where the guilt/debt ratio is no longer fiscally, or psychologically, sustainable?

Many people, Charles Moore among them, believe that the line is near, if indeed it has not already been crossed. I am writing from Carcassonne and grumbling over the currency is palpable everywhere. “Il n’y a pas d’amour euro” reads a headline in Le Monde this morning: there is no love of the euro and what, the writer wonders, could make the single currency less unpopular? The fact that, as Charles reports, the  German stock-market website Borsenews has begun  pricing shares in Deutschmarks as well as euros suggests that the game is nearly up.  (For a plausible scenario about how the end might come, see James Bennett’s splendid speculation: “The PIIGS Who Fell to Earth.”)

In the anxiety over the fate of the euro, two larger issues have often been lost sight of.  One is the fact that both friends and foes of the euro have from the beginning understood that it could never prevail absent a vastly increased centralization of European power. The gamble with the euro was that a common currency would inevitably result in a shedding of “outmoded” forms of national identity in favor of the newly (if undemocratically) enfranchised European super state. So far, that hasn’t happened. Will the current economic crisis be the catalyst for the emergence of this Brussels-centric, authoritarian state? Or will it encourage ever greater centrifugal movement, tearing the euro zone apart? (Already there is talk of a “two-tiered” euro: one for the productive north, another for the dependent south. All euros are equal, but some are more equal than others.) My bet is on the second, but who knows?

Part of my uncertainty stems from the second, oft-overlooked issue about the euro: the fact that it was, it is, part of a grand utopian project.  I do not, I hasten to add, mean anything positive by the phrase “grand utopian project.” Quite the reverse. Grand utopian schemes are prescriptions for immiseration and political ruin. Charles Moore cut to the chase at the end of his column:

Again and again in politics, great schemes don’t work – Soviet Communism, for example, and now the euro. Rational people tend to conclude that, because a scheme doesn’t work, it will quickly stop. Unfortunately, rational people are wrong. Bad political schemes are usually given up only when they have been tested literally to destruction. It would be much better for Europe if the euro had never happened, and I long for it somehow to fade away, but the process of destruction will be horrendous, and it is only just beginning.

The question is whether that most uncommon virtue, common sense, will prevail in sufficient force to save Europe from the disaster of testing this bad idea “literally to destruction.” It hasn’t been getting much encouragement from the political elites of Europe or the United States. Fortunately, the political elites and their statist euphoria are wearing increasingly thin among the people they seek to govern. “Europe” won’t go without a fight.  But I predict that we’ll be seeing more and more pushback against the bureaucratic totalitarianism that is Brussels and the European project. It won’t be long, I’d wager, before you find markets conjuring with francs and liras as well as Deutschmarks. And then?