Jonathan

Collin May at Innocents Abroad points out the grim truth of European economic growth (or lack thereof). He draws a parallel between the EU and the USSR, in that the EU leaders view their nations, as Soviet leaders once saw theirs, as economic competitors of the U.S. The parallel isn’t perfect – especially when you consider that the EU lacks serious military power, not to mention the will to use it, which are what really got the U.S. to pay attention to the Soviet empire. Still, he has a point.

Of course, the USSR eventually collapsed. It’s difficult to imagine the EU nations, relatively open societies whose governments are, at least on the margin, accountable, suffering the same fate without first being forced by voters to reform. But it’s also difficult to see how their stagnant economies can possibly outcompete the relatively low-tax, low-regulation, dynamic U.S. Something eventually will have to give. As Collin puts it,

. . . When are the Europeans going to finally wake up and see that they’re busy rebuilding the Kremlin in the heart of Brussels? Not possessing a crystal ball, that is a question I’ll leave to the Europeans, but maybe the realization will soon sink in as they find that their economies are fast bogging down and their moralizing European empire has nothing but illusions to offer.

The EU is on a collision course with economic reality, and it’s a good bet reality will win. I wouldn’t be surprised if the EU survives in some form, though to do so it may have to narrow the scope of its ambitions. The next few years should be interesting.

UPDATE: Iain Murray is thinking along the same lines as Collin.

UPDATE: Joe Katzman develops the EU-as-incipient-USSR theme at greater length, and includes many links and thoughtful reader comments.

Don Luskin is right about how a “strong” – i.e., appreciating – dollar is not in itself a good thing. But neither is current dollar weakness, because with fiat currency everything that pols and central bankers say takes on excessive, even superstitious significance that can be economically destructive.

There’s no way around it. Any verbal fart by a major official could be the first indication of a policy change. Vague talk by treasury secretaries that weakens the dollar is therefore just as bad in its own way as are deflationary policies that keep the dollar appreciating. Nobody would care what Snow or Greenspan – or James Baker – said, if the U.S. Govt’s established (ideally, legislated) policy had been to maintain the money supply such that the price of gold stayed in a range of, say, $345-355/oz.

Even when a discretionary currency regime seems to work well, there’s a strong risk that eventually the people in charge, being people, will overdo it and screw things up. That’s why investors are not unreasonable to fear that the Bush administration may, in a shortsighted political attempt to aid big-business exporters or otherwise boost the economy before an election, or even to punish Europe, be going overboard in weakening the dollar. Sure, Bush said that he doesn’t want a weaker dollar, but he wouldn’t have said that if there weren’t a problem.

And even in a discretionary-policy environment it’s possible for officials to have enough sense to keep their mouths shut. Clinton and Rubin seemed to understand this, while Bush and Snow apparently do not. That’s reason enough for dollar-holding investors to be nervous.

Currently the dollar seems to be stalled in a range of 1.17-1.19 Euros. We’ll know soon enough whether we’ve seen the bottom.

Steven Den Beste has some thoughts about Blogger and blogging that are worth reading. As a longtime Blogger user I certainly agree with him on most points, though I think Blogger can be adequate if one understands its limitations. For example, it’s true that Blogger sometimes eats posts – which is why I have always composed (and saved) mine in a text editor. But my approach works less well for a group blog, because it’s prohibitively difficult to restore archives using multiple contributors’ saved text files.

Blogger’s rickety archiving system is also a problem, not because it doesn’t work but because it requires a great deal of time and attention to keep it working. Permalinks didn’t function on our blog for a month or two. I thought it was a system-wide Blogger problem and didn’t do anything about it, until Joe Katzman suggested that I rebuild our archives, and suddenly everything worked again. What a relief. But then, the fact that to solve a recurring problem I had to take a particular action, and didn’t know what that action was before someone knowledgeable told me about it, does indicate a system-wide problem.

Fortunately, the situation is probably not as bad as I initially feared, because I’ve got our blog’s archives backed up in HTML format on my computer. Also, Sylvain tells me that he was able to access our archives by figuring out what their URLs should be and entering those URLs directly into his browser. OTOH, I don’t know how stable our archives are on Blogger’s server, and restoring the blog from my saved HTML files would be a big pain in the ass. The bottom line is that it isn’t worth sticking around on Blogger to find out the answers to these questions, and Blogger was a time sink even when it worked properly.

Steven likens Blogger to training wheels. That’s a good comparison. When I think of Blogger I remember what a Russian programmer acquaintance told me, about how it was once common practice in the old country to improvise PC data-backup systems out of VCRs. Sure it works, but you shouldn’t use it if better technology is available. For non-geeks, Blogger was pretty much it a couple of years ago. And Blogger is still safe enough if you back everything up and take the time to practice various defensive rituals to avoid Blogger’s pitfalls. But it isn’t worth it.

We got much more than we paid for out of Blogger, but it’s time to move on.

Last night, Blogger updated its user interface for our account. This morning, Sylvain logged in to post something. Apparently he forgot to sacrifice a goat or say the proper blessing, because the entire contents of the ChicagoBoyz blog, going back to Sept. 2001, disappeared. (The template is still there.) I am not inclined to wait for a resolution of whatever the problem is, so I decided to move the blog to this new site, which we were going to do soon anyway. Unfortunately, I have not yet been able to transfer the old site’s archives, but I am working on it.

I apologize for any inconvenience to readers. I suspect, however, that your ChicagoBoyz blog viewing experience will be smoother on this new site than it was on Blogger. Don’t forget to update your links.

Thanks.