The Extra Element of European Instability: Common Currency

Europe has been a prize of conquest many have sought over the centuries. The Romans established near control, the Gauls, the Teutons, the Prussians, the Napoleonic French, the English in one way or another, the Germans in World Wars I and II, etc. Everybody seems to want to scoop the mishmash of cultures, economies, resources and states all up for themselves. This is incredibly difficult to do, however, because it is fundamentally an unbalanced collection of cultures and economies.

Consider that the French and Americans have more common international interest than the Germans and French do. Consider further that the British (and even here I am condensing a wide array of cultures) and Americans have far more in common than do the French and Americans. Consider that the Germans and Americans often have more in common from a historically technical point of view. And consider that nearly everyone has competing economic interests which begin with the simple fact that some European nations are generally agrarian and some are generally industrial and technical powers.

The usual situation in European history is for there to exist a certain balance of tensions and pressures across the continent. The tensions and pressures are constantly shifting and exploding into small and localized conflicts, but overall stability is maintained through mutual threat and swings of alliances — somewhat the same way that the Earth is fraught with earthquakes but the general equilibrium is held well enough to support life. Collective European defense against outsiders is always in the common good, so when a common enemy is found the differences of the day are forgotten and all the enormous potential represented by Europe is combined and turned against the outsiders. Once whatever conflict is concluded the Europeans return immediately to plotting on each other as advanced states always do — in opposition to the modern view, if such states did not plot on one another, they would not be advanced but rather disappear into history (as many have done!).

After the Cold War the general idea was that military competition could be replaced by economic competition, and this would be to the overwhelming good of everyone involved, as even the losers would come off indirectly sponsored by the winners and thus be in a much better state even the victor of a military conflict would have been. This sounds fine and fair except it is decidedly unnatural and consistent losers become a drain on the consistent winners who become eager to shed the dead weight. After all, the losers are so weakened as to not pose a military threat even if that were allowed.

Somewhere along the line someone decided that instead of conquering Europe the old-fashioned way (running it over with an army or two), there would be an easier way to subversively conquer all of Europe without anyone noticing the attempt, as it would be wrapped in the popular-sounding phraseology and rhetoric of post-Cold War economic globalism.

The Euro links European countries, be they participants in the E.U. or not, in a way that goes much deeper than simple military conquest. The instrument of financial exchange is valued at varying rates influenced by a myriad of factors, factors which are endlessly studied and panicked over by the national banking institutions of whatever country they are tied to. The problem with the Euro is that there are too many nations with too many different economic interests and systems for a single currency to make sense. This fundamentally links the union members in exactly the same way an armed conflict would have, but does nothing to prevent the minority opinion states from expressing their anger or turning to rebellion against the union — whereas after a war one can occupy and colonize a country and outlaw its native military force to quell rebellion.

Agrarian, exporting states generally have lower-valued currencies. This is also true for externally industrialized states, and by this I mean countries which did not arrive at industrialization on their own, but were prodded toward it by foreign money on the expectation of low labor costs (think Philippines, not England). Internally industrialized states (think England, not Philippines now) have different economic values and a way of developing advanced wealth-generating systems which produce wealth which flows from their country to others and therefor tend to have a higher-valued currency. This setup makes sense and the fluctuations of currencies, when properly managed, contribute to the stability of the economic system. Consider, for example, that despite the media’s ignorant readiness to panic about the state of the U.S. economy, the low dollar (as of April 2008) puts highly desirable American goods at a 20% discount to foreign importers as well as puts American public stock at a similar discount. This is flooding the American economy with foreign investment capital, drawing American investment capital out of Europe and generally ensuring that there really aren’t any problems for the next 5 to 10 years (this is a simplification, of course, there are other fundamental reason why the American economy is bound to continue to plow ahead). Conversely, the artificially priced Chinese currency is running them into a dead-end where they will either be forced to face revolution or exert centralized control by typically Chinese methods (once again a simplification, but at any rate… ouch!).

Now let’s consider Europe again. Just because World War II happened and the generation that fought it decided that war was a shitty experience does not mean that the war-naive generation of today which lacks such hard earned experience would adopt the same views. It is highly fashionable to talk trash about “belligerent” nations, particularly when that nation is the United States, and generally the current generation has no clue what they are talking about. Wars are something you watch on TV, tragic stories are things you can wipe away with a tissue, and so long as the cause is sufficiently anti-American (or some other much-hated establishment) violence is perfectly acceptable so long as the rhetoric supporting it is wrapped in the language of peace and freedom.

Europe is a combination of agricultural (Portugal, for example) and internally industrialize states (such as Germany). When Germany makes a new deal with the Americans to sell millions of German cars to the Americans at a certain price, this influences the price of the Euro a bit, as billions of U.S. Dollars are likely to become Euros. This impacts the price of a principal Portuguese export: wool. When the Euro is high, Portuguese wool is nearly unsellable but a Mercedes may still be a viable export — or perhaps not need to be exported at all, as the high Euro can easily afford a lower-cost U.S. Dollar founded factory to be built in the U.S. This causes temporary shifts of wealth between currencies, but ties the collective European nations together without the benefit of a common foreign policy. So a system of trade tariffs can seem to make sense at first as a bulwark against cheap foreign goods. But protective trade practices always have a way of biting smaller participants in the ass because the voting nations with the most power in any union (in this case Germany and France) tend to be the more populous and more highly industrialized ones. This leaves the unfortunate weaker, agrarian members out in the cold.

In a broad sense, this is precisely what cause the American Civil War. States with too much autonomy had been pushing their agendas against the Federal government since the early 1800’s, often using the language of the recent American Revolution. Were they right? Who knows. But the fact is unlimited states rights become breaking factors in any union of states, and an equilibrium of power between central and local levels tends to start with the economics between regions and end with the cultural ties between them. Europe does not have common cultural ties (and anyone who pretends different is wishfully ignorant or ignorantly arrogant) and observes drastically different economic systems which have never been in harmony. In the U.S., the only reason a hugely powerful economy like that of Texas can be connected to such a different economy such as that of Alabama is because the two states internally observe and manage their cultural, geographic and economic differences while the federal level manages the collective foreign policy of the whole. This is what is missing in Europe.

Granting the European Union control over each nation’s foreign policy will open the door to ever-increasing central control over other aspects of national existence, including domestic law. This is not going to suit everyone or be found acceptable to any other than the huge, controlling states such as France and Germany. This would cause a fractious split in the E.U. and pit the central powers against the smaller peripheral states. Another problem with granting the E.U. government any level of domestic or foreign political control over member states is that the average European has little to no direct say as to what gets voted on and how inside the E.U. ruling bodies. There are many layers of insulation between the average Joe Euro and his current and future E.U. government. This will be found unacceptable by nearly everyone and is yet another lesson that can be learned from the American Civil War — back in the early 1800’s the American Senate insulated the government from the public as the Senators were nominated exclusively by the state legislatures, the Executive Branch was insulated from the public by an enhanced electoral control system and the Judiciary was entirely insulated from public influence. Today the Europeans are blissfully ignorant of all but anti-American political maneuvers and live in an American-subsidized security bubble. As is typical for a public, they will likely not notice what is happening until things get to the level of exerting domestic controls they find absolutely unacceptable. Situations such as this historically lead to revolution, secession and war.

Expect to see the Euro tie nations together in ways that were not predicted at the outset of the E.U.’s formation. Expect to eventually see disharmony once the public begins to perceive what logically must be a tighter domestic control by the E.U. over each member state. Expect to see either fundamental shifts in the way Europe governs itself or another long series of European wars. There is far too much cultural and economic inertia inside Europe to be contained by such a flimsy net as the E.U. as it exists today and far too much national ambition for any state to allows a select few to dominate their domestic and foreign agendas forever.

I don’t know who came up with the Euro or the E.U., but that person or group has temporarily accomplished with a piece of paper what Napoleon and Hitler could not by force of arms — and will fail for the same reasons.