Vive la France, and Death to the Euro

“There are significant differences between the American and European version of capitalism. The American traditionally emphasizes the need for limited government, light regulations, low taxes and maximum labor-market flexibility. Its success has been shown above all in the ability to create new jobs, in which it is consistently more successful than Europe.”

― Margaret Thatcher, The Path to Power

Let’s set the record straight, I’m basically boring geek and I am damn proud of it. I was the one who always picked a seat at the front of the class and broke out in a sweat when I didn’t have my homework done. Thus it stands to reason that the one and only time I was kicked out of class sticks out in my memory. It was in fact 20 years ago this summer, spring session during my MBA. I will save the professor the embarrassment of naming him but basically he was a liberal academic who worked as a consultant to government when he was not demonstrating his business prowess to we mortal students. It was our corporate strategy course and he was explaining how government industrial policy was essential to business survival. That night he was pontificating how the European Economic Union and the creation of the Euro was proof of the inevitable death of the nation state and the emergence of a single global economy.

Now growing up in a land of leftist purity I had learned the fine art of sucking up one’s own views in pursuit of good grades, but that night I had had enough. You see, to my thinking the Euro was the personification of socialist utopianism. In theory the Euro was the solution to all of Europe’s ills. However, like that ideology, when faced with reality, it was doomed to come crashing down. He asked how I, a mere student and a conservative at that, could have such an idea. I explained it was simple. When economic challenge meets political reality, politics trumps economics every time. It was fine the Germans would give up the Deutche Mark in the name of European nationalism, but when it came time to elect the members of the German Bundestag, the German people would do what all voters do, vote their pocketbook. While Professor (name withheld to protect the intellectually deficient) seemed to conclude European Economic Union would put a permanent end to the economic cycle, some things like gravity never change.

The southern European countries have always had more socialist economies where cradle to grave social programs took precedence over such mundane business metric such as productivity and innovation. Thus that night I had the nerve to say that when a serious economic crisis forced those tight fisted Germans to suck up higher taxes to bail out some spend happy Europeans nation that threatened the stability of the new Euro, political gravity would take over and disintegration would follow. Now I was not smart enough to call Greece as the culprit, I always thought Italy was the kindling that would start the fire. Yet over the last three years we have seen Europe attempt to defy gravity and preserve the Euro as the nations who failed to meet the European Union’s own deficit targets in the good old days fell through the floor in the face of the current debt crisis. The resulting “Our Pain for Your Gain” is a losing political equation.

While European leaders have done a remarkable job managing to keep their fingers in the crumbling dike, the French Electorate yesterday cast their votes against the painful but responsible package of fiscal restraint created by German Chancellor Angela Merkel and now defeated French President Nicolas Sarkozy will be torn apart by the newly elected socialist president of France. How this plays out over the coming months is as uncertain as the end is inevitable. The Euro is about to go the way of the 8 track and the shock waves will be global. So Professor B, the nation state is not dead, you can always count on the electorate to vote their own interests during difficult times. Yesterday the French did exactly that and while their new Socialist President’s policies are doomed to failure, they are the death of the Euro. So tonight I say the words I never thought I would say, Vive la France, Vive la Libertie. As for my almost forgotten Professor, being right comes from the strength of your convictions and the rightness of your ideals, not tenure.

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Filed under Europe, France, Politics

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