The Extra Element of European Instability: Common Currency

Europe has been a prize of conquest many have sought over the centuries. The Romans, 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. all coveted having complete control over the Continent, despite the inherent difficulty in assembling the mishmash of cultures, economies, resources into a coherent whole. While achieving an early military or political victory is possible, maintaining control once the conquest is over is incredibly difficult to do because it is fundamentally an unbalanced collection of cultures and economies.

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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 strategic interest in common from a historical point of view (both want to avert the rise of an hegemon). Finally, consider that the fundamental necessity for economic, strategic and political competition among European states begins with the simple fact that some European nations are generally agrarian and some are generally industrial and technical powers — and that these differences are dictated by geography, not something one can simply will away through the sheer power of hope.

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 among a patchwork of societal pockets defined generally along the major river basins of Europe which themselves create a web of mutual threats and shifting 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 arises to threaten Europe as a whole the differences of the day are forgotten and the enormous economic and military capacity represented by Europe becomes (generally) united and is turned against the outsiders. Once the continent-sized conflict is concluded the European nations return immediately to plotting on one another as advanced states always do almost by definition.

That this dynamic is reality is undeniable. That it also contradicts the imaginary model of Europe that most of us wish very badly to believe in is also undeniable. The fact remains that if advanced states states did not plot on one another they would eventually fail as states and disappear into history (as many have done). Consider, for example, that one of the goals of many in the pro-E.U. camp is to actually eliminate nationalities entirely. Is it possible to imagine a world where a majority of French parents actually want their ethnically French child to grow up in a non-French France? How about if that non-French France were a Muslim-dominated France entirely void of European style values of liberty?

After the Cold War the general thinking was that military competition could and should be replaced by economic competition. This felt like a very nice idea, as it would be to the overwhelming benefit of everyone involved. The losers would come off indirectly sponsored by the winners and thus be in a much better state than even the victor of a military conflict would have been (no war debt or rebuild). This sounds fine and fair except it is decidedly unnatural. It creates a situation where consistent losers can make a career of losing, and this eventually could become a fatal drain on the consistent winners who would become eager to shed the dead weight. How long could the winners be expected to tolerate the dead-weight losers? After all, the losers would be, by their very nature, so weak as to not pose a military threat even if that were allowed — and they would not have the internal capacity to generate a military (or economic) threat, but the winners would. This creates a fundamentally unbalanced situation.

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 it all. Without putting armies on the march across Europe it seemed unlikely that the average Joe Euro would even noticing the attempt, as it would be wrapped in the popular-sounding phraseology and rhetoric of post-Cold War economic globalism.

Enter the Euro. This single currency links Eurozone States in a way that goes much deeper than simple military conquest. Currencies are 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 both produce technical wealth and servicing capacity which flows from their country to others and therefor tend to have a higher-valued currency. Non-industrialized states tend to remain that way for a combination of geographic (think logistics) and social factors, have very low-value currencies, and find their best path toward development to adopt successful elements of advanced cultures and solicit their labor market and currency situation as a way of attracting economic engagement and investment from the internally industrialized ones.

This setup makes sense and the fluctuations of currencies, when properly managed, contribute to the stability of the economic system. Some currencies can fail, but no single failure is ever enough to squash the entire system at once — failures are isolated by currency, national boundary, and incidentally geographic zone. A failure in one quarter becomes a major opportunity the next (currency collapse often means that what was once expensive is now cheap).

Fespite the media’s ignorant readiness to panic about the state of the U.S. economy, for example, 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, and there will surely be some insane attempts to bolster the perceived value of the Chinese currency through political maneuver at some point in the future, 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. While it is true that war is a shitty experience, it is also true that it is entirely survivable (that I am alive is witness to that) and sometimes necessary.

The problem is that the European population today does not understand how to make the social tradeoff assessment of war, nor are they capable of making a realistic cost/benefit analysis of war due mostly to a profound lack of experience in the current generation. War is terrible, yes, but having your population overrun against their will, having your nation’s sovereignty stripped, and making your people economic slaves to a subsidy scheme that does not even help your own people is much worse (that is a recipe for societal failure and civil war — a dramatically more messy, violent, and difficult to recover situation).

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.

This is precisely what caused 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 then-recent American Revolution. In to complicate matters, states with similar geographies (and therefore aligned economic interests) formed voting cabals in a fundamentally unbalanced version of Congress. 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 among 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 yet live in an American-subsidized security bubble. As is typical for a public, they will likely not notice what is happening until things get either to the level of the central E.U. authority exerting domestic control (affecting daily life in some way) or the “open borders” concept backfiring and flooding the developed states with people from primitive countries who bring their primitive problems along with them. 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 fundamental shifts in the way Europe governs itself, a massive move toward national identity politics, or another long series of European wars (and these are not mutually exclusive). 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 they have temporarily accomplished with a piece of paper what neither Napoleon nor Hitler could by force of arms — but will fail over the long term for some of the same reasons.

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