Europe

It Works Until It Doesn’t

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The Euro came into being in 2002, replacing many national European currencies with a common currency. There are 16 members, with the largest economies being the Germans, French, Netherlands, Italy and Spain. The launch of the Euro was done successfully and it brought down transaction costs and financing costs across the Euro area, and was part of a broader movement of labor and services across the region (not as simple as the currency conversion, however).

The Euro was originally at around 80 cents to the dollar; it has gone as high as $1.50 to 1 USD and currently ranges around $1.30 – $1.40. This appreciation has been significant, caused both by policies that weakened the USD and strengthened the Euro.

While the Euro has been a successful currency and has brought benefits to the region’s economies, particularly the weakest economies (like Greece, Spain, Italy, Ireland, and Portugal, the “PIIGS”), recently the region has had difficulty with high budget deficits and the specter of outright default in these weaker countries.

While all parties benefit from having the Euro, some parties benefit more than others, and are “free riders” – particularly the weak Mediterranean countries that would never have such low financing costs and ability to easily raise funds in the bond markets without the implicit backstop of the German, French and Dutch treasuries.

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Applebaum vs Drucker

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In his book The Age of Discontinuity, Peter Drucker–an Austrian who earned his doctorate at the University of Frankfurt–contrasted the European and American systems of higher education. I was reminded of his remarks by a recent column by Anne Applebaum, in which she defends the Ivy League against charges of elitism.

Here’s what Drucker wrote, way back in 1969:

That so much of American education before Sputnik (and still today, I am afraid) was content with mediocrity and rather smug about it, is a real weakness of our knowledge base. By contrast, one strength of American education is the resistance to any elite monopoly. To be sure, we have institutions that enjoy (deservedly or not) high standing and prestige. But we do not, fortunately, discriminate against the men who receive their training elsewhere. The engineer whose degree is from North Idaho A and M does not regard himself as “inferior” or as “not really an engineer”…The Harvard Law School might like to be a Grande Ecole and to claim for its graduates a preferential position. But American society has never been willing to accept this claim.

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It is almost impossible to explain to a European that the strength of American higher education lies in this absence of schools for leaders and schools for followers. It is almost impossible to explain to a European that the engineer with a degree from North Idaho A and M is an engineer and not a draftsman. Yet this is the flexibility that Europe needs in order to overcome the brain drain and to close the technology gap…the European who knows himself competent because he is not accepted as such–because he is not an “Oxbridge” man or because he did not graduate from one of the Grandes Ecoles and become an Inspecteur de Finance in the government service–will continue to emigrate where he will be used according to what he can do rather than according to what he has not done.

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A Note on Communism and Fascism

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In this post, OnParkStreet cited Walter Russell Mead on the similarity between communism and fascism. I totally agree that there is much similarity between these systems–in their theory, in their practical effects, and in the psychology of their supporters. I also believe, however, that there are some significant differences between communism and fascism, and I discussed some of these in the comment thread at OnParkStreet’s post.

Yesterday I picked up a book called Dark Continent: Europe’s Twentieth Century, by Mark Mazower, which contains quite a bit of information and analysis relevant to this discusion.

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“Blogging Through Georgia”

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Communism, it seemed to me then and still seems to me now, is not the opposite of fascism: it is fascism’s blood-brother, its complementary twin. The two live together in a vicious symbiotic relationship; scratch a Red and you’ll find a Brown. Better yet, scratch either one deeply enough and you will find a Black: someone so caught up in the will to power that crimes and atrocities don’t even count anymore.

– Walter Russell Mead (via Instapundit)

Size Matters

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Earlier this decade, it seemed that the French government was doing their best to oppose the United States. Someone asked me why.

So I struggled to come up with a way to explain my impressions concerning the foreign policy of The Fifth Republic at the time, finally settling on describing a child that stomped around in a fury, shrilly shrieking “We used to be a world power!” over and over again.

The reason why this image came to mind was due to the fact that France, like most European countries, had allowed their armed forces to rot away to the point that they had a terrible time projecting force beyond their borders. This loss of military ability corresponds to a loss in influence on the world stage. Instead of biting the bullet and increasing their commitment to building and maintaining a world class force of arms, the French under Jacques Chirac appeared to be determined to browbeat the United States into acting as a proxy branch of their own government.

The point to the overly long diatribe above is that regimes and cultures which have their own interests at stake are not inclined to listen to what you have to say if there are no consequences for refusing to negotiate.

Such dusty history sprang to mind when I spied this news article on the UK Telegraph server. It appears that two new aircraft carriers planned for the Royal Navy might just be the victims of budget shortfalls.

queen elizabeth class future aircraft carrier for great britain

(Picture source.)

The top brass, desperate to save the carrier project, have proposed cutting the British fleet in half!

“In a final appeal to the National Security Council, Navy chiefs yesterday offered to make cuts that would reduce the senior service to its smallest since the time of Henry VIII.”

“The Navy has argued that having two carriers is vital if Britain is to retain its place as a top-rank military power.”

There is nothing quite like an aircraft carrier for getting hostile regimes to sit up and play nice, and it is true that the United Kingdom needs these carriers if they are to retain their present level of influence on the future history of humanity. And yet, reducing the fleet to such anemic levels would make it impossible for Great Britain to meet commitments in other areas.

You could say that the Royal Navy is caught between the devil and the deep blue sea on this issue.

If there is one thing this proves, it is that the United Kingdom is not ready to meekly slide down the slippery slope into insignificance. Let us hope that such resolve is enough.

(Cross posted at Hell in a Handbasket.)