Europe

2009

2009-03-22-WP-Murray

Thank God America Isn't Like Europe -- Yet
By Charles Murray
Washington Post, 2009-03-22

2009-07-30-NYT-Ajami-Caldwell-Islam-in-Europe

Strangers in the Land
By FOUAD AJAMI
New York Times, 2009-07-30

Review of:

REFLECTIONS ON THE REVOLUTION IN EUROPE
Immigration, Islam, and the West
By Christopher Caldwell
422 pp. Doubleday. $30

2009-08-09-WP-Berlinski-Caldwell-Islam-in-Europe

Make Way For the New Europeans
By Claire Berlinski
Washington Post, 2009-08-09

Review of:

REFLECTIONS ON THE REVOLUTION IN EUROPE
Immigration, Islam, and the West
By Christopher Caldwell
422 pp. Doubleday. $30

2010

2010-05-19-Eland-Defending-everything-is-defending-nothing

Defending Everything Is Defending Nothing
by Ivan Eland
Antiwar.com, 2010-05-19

Former Secretary of State Madeleine Albright recently led a panel of experts
in coming up with a report, “NATO 2020,” [.pdf]
which will be used to draft a replacement for
NATO’s current strategic concept, adopted in 1999.
The report essentially advocates
a continuation and expansion of
NATO’s quest to be all things to all people.
Unfortunately, this effort resembles the “expand or die” mantra
that was applied to NATO
as its primary mission – countering the Soviet Union –
was tossed into the dustbin of history.
Instead of expanding in territory and mission after the Cold War ended,
NATO probably should have died back then
and may die – or be severely crippled – by its likely loss in Afghanistan.

...

2010-12-03-NYT-Eurozone-and-North-South-divide

Euro Zone Is Imperiled by North-South Divide
By STEVEN ERLANGER
New York Times, 2010-12-03

[This is a good look at an important topic,
one highly relevant to the United States's economy as well as that of Europe,
so it is reprinted here in its entirety.]

LISBON —

[1]
Sara Vale Lima, sales manager at Eical, a Portuguese textile company,
feels suffocated by the euro.
The common currency once meant flush banks and easy credit,
but these days it has laid bare a cold reality:
Portugal shares
the high wages and prices of richer northern European neighbors,
but not their competitiveness.

[2]
The price of a Portuguese roll of cloth, in euros,
often exceeds that of a similar product made in competing countries
outside the euro zone, like Poland or Turkey, by 30 percent.
Britain, once a big importer of Portuguese textiles,
has effectively devalued the pound, and Eical now sells almost nothing there.
“Things are quite difficult,” Ms. Vale Lima said.

[3]
Devaluation is the time-tested prescription for such ailments.
But Portugal is shackled to a currency that seems better suited to
the relative strength of Germany or France
than to southern countries like Portugal, Spain and Greece,
with their inefficient labor markets and tax systems and heavy debt.

[4]
The European Union and the 16 nations that use the euro face two crises.
One is the immediate problem of
too much debt and government spending.
Another is the more fundamental divide, roughly north and south, between
the more competitive export countries like Germany and France and
the uncompetitive, deficit countries that have adopted
the high wages and generous social protections of the north
without the same economic ethos of strict work habits, innovation,
more flexible labor markets and high productivity.

[5]
As Europe grapples with its financial crisis,
the more competitive, wealthier countries
are reluctantly rescuing more profligate economies,
including Greece and Ireland,
from fiscal and bank woes,
while imposing drastic cuts in spending there.

[6]
Yet, even the staunchest defenders of the euro now acknowledge that
the currency union cannot survive
if its weaker members are caught in a perpetual hell
of austerity budgets and declining incomes
while the stronger countries are forced to tap taxpayers for financial rescues.

[7]
As the Continent faces more competition
from emerging rivals, including Brazil, Russia, India and China —
and low-wage Eastern European nations outside the euro —
the problems of the euro’s southern tier threaten to become
a vicious circle that could increase tensions
and make the common currency untenable, some economists say.

[8]
Business people in the southern countries call it the euro bind.
Oscar Turner, who runs a film company in Portugal, explained,
“The euro’s great if you’re traveling around,
but it’s an absurd idea to have the same currency
in a country like Greece or Portugal
as in Germany, which has totally different habits and culture.”

[9]
The highly indebted countries of the euro zone
“can’t grow their way out of debt,”
Mr. Turner said,
nor can they devalue to make their exports more competitive.
“No one in these countries can make the same product
for a price that competes” with Hungary, let alone Turkey or China.

[10]
Francisco Gaya runs a family ceramics company in eastern Spain
that is trying to survive by making niche products and shedding workers.
But manufacturing is too expensive in southern Europe,
Mr. Gaya said, in part because of
stiff state requirements for benefits, taxes and labor protections.

[11]
“Unions, difficulties created by layoffs, social and financial charges
have been exceedingly heavy,” Mr. Gaya said.
Spain, he said, needs to allow companies
to hire and dismiss workers much more easily.
But
“whoever does it will lose elections and not govern again for many years,”
he said.

[12]
These southern countries, some of them relatively new democracies,
took advantage of the euro to borrow money cheaply.
They lived on a bubble of credit and real estate development
that sent wages and debt soaring.
But they did little to improve their productivity, labor markets or tax systems
and are now paying a steep price in low growth or an actual decline,
with no easy fix.

[13]
Governments have cut spending.
But except for Greece, under the global gun,
significant legal and economic change is still lacking.

The imbalances plaguing the euro zone will not go away
unless the south can cut costs, including wages,
so its companies can compete.
But that process, referred to by economists as internal deflation,
is political poison.

[My opinion: that same problem, and medicine, is relevant to America.]

[14]
Nouriel Roubini, an economist at New York University
and the Cassandra of the economic crisis,
is not optimistic about the euro zone.
The problems of the periphery are essentially two, he said:
“High deficit and debt,
but also low growth driven in part by this competitiveness problem.”
Currency depreciation is impossible and deflation is painful.

[15]
“If you have to reduce prices and wages by 30 percent over the next five years,
deflation is associated with recession,
and no country can accept it,”
he said.
“Doing the German solution of structural reform is going to take a decade,
not fast enough to restore competitiveness.
The only other option is for the euro to weaken sharply.”
But with the German economy so strong and the American deficit so high,
he added, that is also unlikely.

[16]
Economists agree that the biggest test for the euro is Spain,
a country with an economy twice the size of
those of Greece, Portugal and Ireland combined.
“Spain isn’t off the cliff; it’s still a few miles away,
but moving pretty fast,” Mr. Roubini said.
“Can they do enough fiscal adjustments, structural reform,
restoring growth, reducing the unemployment rate, restoring competitiveness
in time to stop falling off the cliff?
I’m not sure.”

[17]
Stéphane Garelli of the IMD business school in Switzerland
studies competitiveness.
He says the main difference
is between countries with trade surpluses or deficits —
between those that export more than they import and those that do the reverse.

[18]
Germany, like the United States, may have high debt,
but no one doubts its ability to pay.
That is not true of southern economies, Mr. Garelli said.
“There was the illusion of economic growth, but it’s built on sand.
You can’t build an economy on real estate, finance and tourism.”

[19]
The World Economic Forum has issued competitiveness ratings for 20 years
based on increasingly sophisticated measures,
including government, law, ethics, infrastructure, technology, debt
and education,
said its lead economist, Jennifer Blanke.
Germany ranks fifth in the world of 139 countries, just after the United States.
The Netherlands is 8th, France 15th, Austria 18th, Belgium 19th.
But the southern economies of the euro zone are a different story.
Ireland comes in at 29, Spain at 42, Portugal at 46, Italy at 48
and Greece at 83.

[20]
One can see the problem clearly in Badalona, an industrial suburb of Barcelona.
Plásticos Juárez S.A. is a family business making decent profits
through sophisticated compression plastics, often lacquered or metal-plated,
for expensive cosmetics and perfume bottles.
The company has three small plants in Badalona.

[21]
Europe’s economic crisis hit the company hard:
sales to its mostly Spanish and French clients fell 30 percent,
said its current director, Javier Juárez Bernal.
Sales have largely recovered this year, but the company had to shrink.
It reduced its permanent staff and now relies on workers with three-month contracts that can be renewed only once.

[22]
Mr. Juárez would like to hire more contract workers for longer terms,
but says that government labor regulations make that impossible.
Adding to the permanent work force, with strict restrictions on layoffs,
is too risky.

[23]
On the factory floor, Dolores Fortunato Díaz, 24, is glad just to have a job.
“I feel lucky to be working,” she said. “Most of my friends are not.”
Spain has the highest unemployment rate in Europe, nearly 20 percent.

[24]
Another problem for the south is that
big European companies are migrating to
the most competitive parts of the euro zone.
Continental, the German maker of electronic braking systems and tires,
is no longer investing much in the south because wages have risen too high.
It is now building in lower-cost countries like Hungary and Slovakia,
where productivity is higher compared with wages and taxes.

[25]
Ralf Cramer, a member of the company’s executive board, said
Portugal once had production costs about one-quarter to one-fifth
the cost of German production.
“But they caught up more to our level,” Mr. Cramer said.
“So we’re not seeing Spain and Portugal as lower-cost labor.”

[26]
Changing the structure of an economy to make it more competitive
is a far more difficult problem than
establishing a permanent bailout fund,
or even forcing austerity on countries with large deficits.
The south needs a thorough economic transformation,
and at the moment it does not have the growth —
or the support from the north —
to help it achieve that.

[27]
“Europe is divided,” said Mr. Roubini, the economist.
In essence, he said, “a good fraction of the euro zone
is still effectively in recession,
and it’s not even a double dip; they never got out of the first one.”


Maïa de la Baume and Scott Sayare contributed reporting from Paris.

2012

2012-05-16-NYT-Porter-leaving-the-euro-may-be-better-than-the-alternative

A Tempting Rationale for Leaving the Euro
By EDUARDO PORTER
New York Times, 2012-05-16

Some two decades ago, when Europe’s leaders worked out the details of their grand vision to connect the European Union with a single currency, virtually every economist on this side of the Atlantic — and most of those on the other — figured out that the euro would be fatally flawed.

What took economists some time to understand was that Europe’s leaders didn’t much care what they thought.

“The European Commission did invite economists to present their views. It was a Darwinian process,” said Paul De Grauwe, professor of European political economy at the London School of Economics. “I was invited, but when I expressed my doubts I wasn’t invited anymore. In the end only the enthusiasts were left.”

The single currency served an overriding political objective.
Like the single market before, it was conceived primarily as glue to bind Europe more closely together, tie Germany’s prosperity to that of its neighbors and prevent a third world war from the Continent, which had brought us two. A few engineering flaws wouldn’t be allowed to get in the way of such an important project.

A little over a decade since the first euro bills hit the shops in Madrid and Berlin,
the euro’s design flaws have pushed much of the European Union
into a deep economic pit.
And
political imperative is again being deployed
as a major reason to stick to the common currency.
“This enormously important motivation is often underestimated by outsiders,”
argued the Financial Times columnist Martin Wolf,
the most sober analyst of Europe’s economic maelstrom.

Yet for a project intended to draw Europe together, the euro did surprisingly little to build solidarity. German voters endured a recession two decades ago after bringing in their brethren from the Soviet bloc. They now appear unwilling to spend a pfennig to help the Greeks, Spaniards, Portuguese, Irish or Italians.

Conceived as a tool for integration, the euro could, instead, tear Europe apart.

...

Europe would be in much better shape if the euro didn’t exist and each member country had its own currency. Monetary union has shackled together nations with vastly different economies, depriving them of an independent monetary policy that can help them through rough times. The interest rate and exchange rate that serve Germany also have to serve Spain, though that country has more than four times Germany’s joblessness.

The main problem is that while leaders eagerly embraced the monetary bond, they rejected its necessary complement: a central budget that would transfer money from successful regions to underperforming ones, as the United States government sends tax dollars collected in Massachusetts to pay for unemployment benefits in Nevada.

The euro fed the illusion that Greece, Spain and Italy were as creditworthy as Germany or the Netherlands, propelling a decade-long credit boom in Europe’s less-developed periphery. And it was spectacularly ill-designed to deal with the shock when capital flows to those nations suddenly stopped. Weak countries not only had to rely on their own devices; they had to do so without a currency or a monetary policy of their own to absorb the blow.

There was no European budget to help Madrid out when its housing market and economy imploded and its unemployment rolls surged. Spain had no central bank to flood the economy with pesetas — to backstop its banks and to stimulate lending and investing.

The European Central Bank helped some by letting Spanish banks post government bonds as collateral for cheap three-year loans, providing some relief to the banks and leading to lower interest rates. But the central bank and its German paymasters have so far been unwilling to countenance a credit boom and higher inflation in Germany to juice economic growth in its neighbors.

Devaluation to strengthen Spain’s exports was, of course, out of the question. The only thing Spain could do was borrow to pay for unemployment insurance and other safety net programs that have exploded even as tax revenue shrank. When investors would lend it no more at bearable rates, it had to slash public spending, digging itself a bigger economic hole.

Germany’s leaders insist the solution for Spain and other sickly countries is to devalue “internally” to regain competitiveness, essentially, slashing wages to reduce labor costs. Yet it is unlikely that a democracy could sustain such an adjustment for long. Labor costs in Spain are still rising though almost one in four workers does not have a job. How deep would unemployment have to be for wages to start to fall?

Against the punishing austerity demanded by Germany, an exit from the euro — followed by a sharp devaluation — might not seem too bad a proposition.

...

2012-09-27-WP-Irwin-why-europe-is-looking-like-a-mess-again

Why Europe is looking like a mess (again)
By Neil Irwin
Washington Post, 2012-09-27

...

For the nearly three years
that the euro-zone crisis has been underway,
a startlingly reliable pattern has set in.
Whenever the European Central Bank steps up
and deploys its bottomless ability to print euros
to ease the panic on financial markets,
everyone else steps down.
The political leaders in financially troubled southern European nations
see less urgency to the budget-cutting demanded of them
by the ECB, the International Monetary Fund
and other international creditors.
Germany, Finland and other strong Northern European countries
dig in their heels
on what concessions they demand for aid.

Then the ECB steps back,
lets market forces threaten to get out of control again
(specifically, by letting bond yields rise)
and forces the politicians to act in their common interest.
Rinse and repeat.

...

2014

2014-01-16-NYT-a-harder-look-at-welfare-rules-as-europeans-flood-countries-in-search-of-jobs

A Harder Look at Welfare Rules as Europeans Flood Countries in Search of Jobs
By STEPHEN CASTLE
New York Times, 2014-01-16

LONDON —

When she arrived in Britain a decade ago from Poland,
Justyna Mikler worked hard to find cleaning jobs, studied English
and, she says, never even thought of applying for welfare.

Now the director of a cleaning firm,
Ms. Mikler estimates that
about a third of the more than 50 Poles she employs
claim some form of benefits from the British state.

“The system allows them to do it so easily — it’s a nonsense,” she said,
speaking over a late lunch of soup in a cafe at a Polish center in West London.

As part of the 28-nation European Union,
Polish citizens have most of the same welfare rights here as Britons,
under a European Union policy designed to foster European integration
and create a vibrant economic market with mobile workers.

Instead, it seems to be driving Europeans apart.

...

The hottest welfare issue is payments to parents, which can be claimed even if children are living in another European nation. In Britain, Child Benefit, as it is known, is worth 20.30 pounds, or about $33.40, per week for a first child and 13.40 pounds for subsequent ones. According to British figures, in December 2012 there were Child Benefit awards to 24,082 parents for 40,171 children living elsewhere in Europe, including 25,659 children in Poland.

Mr. Cameron wants to reduce or end such benefits for children living abroad, and has suggested limiting the right of migrants to come to Britain if the average income of their home country is far below the European average.

Several other European Union countries have similar benefits for children and therefore share Britain’s worries, or have broader concerns about “welfare tourism,” in which people move abroad to secure payments. Britain says it is working with Germany, Austria, the Netherlands and others on possible changes.

But the British have special reasons to worry because of the design of the rest of their benefits system. Forged after World War II, the British welfare state is financed mainly from general taxation and is built on the idea that those in need should receive similar amounts, regardless of what they have paid in social security contributions.

Its architect, William Beveridge, sought to eliminate poverty, protecting Britons from the “cradle to the grave,” but he could not have foreseen a Europe with a shifting population of mobile workers.

Benefits available to European immigrants in Britain include tax credits for low-paid workers and housing subsidies. But other European countries base payments on contributions of employees or employers, making them less generous to newly arrived workers. In these “Bismarckian” systems — after the 19th century German chancellor Otto Von Bismarck — benefits are linked to previous earnings, according to a report by the All-Party Parliamentary Group for European Reform.

The report says those who lose jobs in France, Denmark or Germany can expect to receive 40 percent to 90 percent of their net salary for a specified period, much of it financed by compulsory social insurance or employer contributions. In Britain, the jobless receive a maximum 71.70 pounds per week for six months, however much they have paid in contributions.

“By Western European standards the British system is not very generous in terms of the amount you can claim, though of course this is more than in Eastern Europe,” said Stephen Booth, the research director of Open Europe, who helped draft the report, “but it’s very generous in terms of giving access to the benefits.”

...

2014-11-28-pope-francis-tells-no-longer-fertile-europe-to-ensure-the-acceptance-of-immigrants

Pope Francis tells “no longer fertile” Europe
to “ensure the acceptance of immigrants”
by Guillaume Durocher
Occidental Observer, 2014-11-28

...

[I]t is astounding how much the continent’s elites are dedicating their political and cultural energies to
“free trade,” climate change or empowering EU institutions —
these goals being pursued with the fervor of a moral panic,
as though they were panaceas to what ails us.
In contrast, there is little effort to mobilize society to fight against low fertility
so as to avoid
the fundamental, intractable problems associated with it.
All the economic and political fiddling in the world is pointless
if the biological basis of society is collapsing.

[Oh, but many of those problems
will only appear in the future.
For the present,
why not worry about, say, equal pay for women,
which will benefit those alive today.
Who cares about the world their children (if they had any!)
will inherit?]

...

But if [some people's ideals] were to entail
welcoming hundreds or thousands of immigrants from Africa and the Middle East every day,
this is simply not compatible with the continued existence of European nations.

...

2015

2015-07-14-WP-OBrien-greece-has-surrendered-but-europe-has-lost-too

Greece has surrendered, but Europe has lost, too
By Matt O'Brien
Washington Post, 2015-07-14

[A good summary of the political and economic divergence between
Greece and the German-led portion of Europe.]

2015-08-31-Lang-Somkuti-stemming-the-new-volerwaenderung

"Stemming the new Völkerwaenderung" by Balint Somkuti, Ph. D.
by Blaning Somkuti
Patrick Lang's blog, 2015-08-31

Let me start with a some basic observations. There has been a growing disillusionment with the European Union all over the member countries, due to the current state of affairs. This is especially true in the case of the so called newly joined countries, even though some (like Hungary) joined more than 10 years ago in 2004. Without going into details suffice to say that in a number of occasions it was proven that the ex-communist countries are treated as colony lights. Lower quailty products of the same brand sold in eastern EU countries, complete disrespect of local laws etc. There is and there has ever been an agreement that we don’t want wars, and poverty, so we need a Union. But the distance between deeds and promises has become too great to be covered by any kind of verbal magic. The veil of poliitical correctness has been finally lifted and instead of noble ideas pure and cruel interest advancement was found beneath.

Double standards (the favourite tool of the liberals) have become obvious. Collective punishment is forbidden yet the Benes decrees collectively condemning the germans and hungarians were not revoked as of today, minority rights are widely supported with the notable exception of some. Like the more than 3 million hungarians living in Romania, Slovakia and Serbia. And hungarian liberal turned communists have done completely nothing against it apart from almost bankrupting the country way ahead of the crisis in 2006.

...