by Mark Steyn
And she may well be the last. There is absolutely no return on investment, either for her or the Italian taxpayers who funded it. How could there be? A world in which you’re expensively educated till thirty to join a government agency justifying its own expansion by manufacturing welfare fraud is almost too perfect an emblem of the European Union. Francesca will live a worse life than her parents. She will do unpaid traineeships and low-paid short-term contract work because in Europe’s catatonic labor market the young (if one calls twenty-nine “young”) are already paying the price for the lavish salaries and benefits awarded to the unsackable middle-aged. Hence, bamboccioni , Nesthockers, and KIPPERS. There used to be an English expression, “kippers and curtains.” In Europe today, it’s KIPPERS—and curtains. “Hope’n’ change”? To be young in the EU is to live in a land beyond hope.
Debt operates on certain assumptions: if you need $500 and you don’t have it, the bank will lend it to you because they think you’re likely to have 500 bucks in the near future. The older you get, the less likely the bank will assume that. If you’re seventeen and broke, it’s because you haven’t yet got your first foot on the ladder of success. But if you’re sixty-three or seventyeight and you’re broke, it’s because that’s who you are and you’re never not going to be broke. So why should the bank lend you 500 bucks? Where’s it going to come from?
That’s the question the developed world is facing: Where’s it going to come from? A new tax? There’s nothing left to tax. By 2009, Europe was reduced to considering a levy on bovine flatulence.29 You heard that right—not a flat tax but a flatulence tax. Ireland was pondering a tax of 13 euros per cow, while in Denmark it was as high as 80 euros per cow. Is a Danish Holstein six times as flatulent as an Irish Hereford? Beats me. But somewhere in Brussels there’s a Director of the European Flatulence Agency of Regulation and Taxation (EuroFart) who’s got all the graphs. Apparently it’s to offset looming penalties each nation faces from EU legislation to combat “global warming.” The Times of London reported: “EU member states are obliged to cut the emissions from non-ETS sectors by 10 percent overall by 2020. While Romania and Bulgaria will be allowed to increase 30
Even allowing for the regulatory yoke Europe’s cowed citizenry labor under, the bureaucratic logic here is hard to follow. Why is some Bulgar’s Holstein allowed to increase his flatulence while the poor Jutlander’s Polled Hereford has to put a stopper in it? Is there a dearth of flatulence in the Balkans but a Code Red alert over the North Sea? Couldn’t the EU introduce flatulence offsets and let the excessively flatulent Irish trade some of their flatulence to the Carpathians?
Go back to medieval times. The gnarled old peasant is in his hovel, and one day a fellow rides up in the full doublet and hose and says he’s come from the palace to collect His Majesty’s bovine flatulence tax. It’s just three groats per cow, a footling sum of no consequence. Even the medieval simpleton rustic would say, “Aaargh, sire, I dunno. The King’s flatulence tax? That don’t sound right....” When you’re taxing bovine flatulence emissions, there’s nothing left to tax.
Greece, wrote Theodore Dalrymple, is “a cradle not only of democracy but of democratic corruption”31—of electorates who give their votes to leaders who bribe them with baubles purchased by borrowing against a future that can never pay it off. The advanced democracies with their mountains of sovereign debt are the equivalent of old people who’ve blown through their capital and are all out of ideas looking for young people flush enough to bail them out. And the idea that it might be time for the spendthrift geezers to change their ways butts up against their indestructible moral vanity. In 2009, President Sarkozy prissily declared that the G20 summit provided “a once-in-a-lifetime opportunity to give capitalism a conscience.”32 European capitalism may have a conscience. It’s not clear it has a pulse. And, actually, when you’re burning Greek bank clerks to death in defense of your benefits, your “conscience” isn’t much in evidence, either.
This is the first crisis of globalization, and it is a far more existential threat than the Depression. In living beyond its means, its times, and its borders, the developed world has run out of places to pass the buck.
THE KRAUT BONE CONNECTED TO THE YANK BONE
American admirers often talk about the European lifestyle. Alas, it’s all style and no life. If the EU’s deathbed demographics are becoming too obvious for even the dopier media outlets to ignore, you can bet the Chinese and other buyers of western debt are way ahead in their analyses. If you’re an investor and you’re not factoring in demography, more fool you. Tracking GDP versus median age in the world’s major economies is the easiest way to figure out where this story’s heading.
Take a “toxic asset.” What would improve its current pitiful value? That’s easy: more demand. Less supply. An asset is only an asset as long as there’s a buyer willing to buy it. If you’ve got 50 houses and 100 would-be homeowners, that’s good for property prices. If you’ve got 100 houses and 50 would-be homeowners, that’s not so rosy.
Which is the situation much of the West is facing. A bank is a kind of demographic exchange, by which old people with capital lend to young people with ambition and ideas. Who are somewhat thin on the ground in modern consumer societies. Japan, Germany, and Russia are already in net population decline.33 Fifty percent of Japanese women born in the Seventies are childless. Between 1990 and 2000, the percentage of Spanish women childless at the age of thirty almost doubled, from just over 30 percent to just shy of 60 percent.34 In Sweden, Finland, Austria, Switzerland, the Netherlands, and the United Kingdom, 20 percent of 40-year-old women are childless.35 In a recent poll, invited to state the “ideal” number of children, 16.6 percent of Germans answered “None.”36
Well, that’s a woman’s right to choose. But, in the macroeconomic picture, who’s going to be around to buy your assets? Mark Twain commended the purchase of land because “they’re not making any more of it.”37 But, in the fast depopulating eastern half of Germany, they’ve made more than anyone’s going to need for the foreseeable future. Pace the Führer, no country has ever been less in need of lebensraum. America has a milder
Now look at it from a business point of view. In the United States, depending on what line of work you’re in, your sales territory may be your town or your state or the whole of America. But for Germany, Italy, and Japan, their only viable sales territory is the world. When your median age is forty-three and rising, any economic growth is down to exports. Wall Street experts talk about restoring “consumer confidence,” but in much of Europe they won’t restore “confidence” until they restore consumers—that is, figure out a way to generate sufficient numbers of them. Until then, the domestic market is too old and too small (or “inert,” to reprise Martin Wolf ’s line) to support economic revival.
If you’re a German bank, to whom do you lend money? With age distribution on your home turf heading north relentlessly, you don’t have enough young people to grow your business. So you lend farther and farther afield. Not crazy farther, not Sudan or Rwanda. But far enough that you’re operating in markets where your traditional forms of risk analysis don’t apply, even if you were minded to apply them. To western bankers, Eastern Europe didn’t seem that different or dangerous, if you steered clear of the more psychotic oligarchs. Unfortunately, the post-Soviet east is even further down the demographic death spiral than you are. America? By some estimates, Germany’s Landesbanken could have to write off a trillion bucks’ worth of subprime crud from the U.S.
So, from the individual homeowner with no one to sell his home to, and the business that’s run out of domestic market, and the bank frantically loaning to jurisdictions it barely comprehends, nudge it up one last stage—to the state. In recessions, government is enjoined to spend—to go into deficit, ramp up the national debt in order to “stimulate” the economy. Adding to the national debt presupposes that there’ll be someone to pay it off. But what if there isn’t? And do the Chinese and the Saudis already
know
In 2003, the IMF conducted a study of Eurosclerosis and examined the impact on chronic unemployment and other woes if the Eurozone labor market were to be Americanized—increasing participation in the work force, reducing taxes, rolling back job-for-life security, and generally liberalizing the economy.38 They concluded that the changes would be tough, but over the long-term beneficial.
It’s interesting that it never occurred to the IMF that anyone would be loopy enough to try their study the other way around—to examine the impact on America of Europeanization. For that, we had to wait for the election of Barack Obama. You’ve probably heard liberal academics on NPR and the like drooling about “the European model,” and carelessly assumed they were referring to Carla Bruni. If only. Under the European model, state spending accounts for roughly 50 percent of GDP.39 Under the Swedish model, which isn’t half as much fun as it sounds, state spending accounts for 54 percent of GDP. In the United States, it’s already over 40 percent. Ten years ago, it was 34 percent. So we’re trending very Swede-like. And why stop there? In Wales, government spending accounts for just under 72 percent of the economy.40 Fortunately for what’s left of America’s private sector, “the Welsh model” doesn’t have quite the same beguiling ring as “the Swedish model.” But, even so, if Scandinavia really is the natural condition of an advanced democracy, then we’re all doomed.
That was the general thesis of America Alone—that the jig is up for much if not most of the western world. “Alarmist,” pronounced The Economist ,41 reflecting the general consensus of polite society in both Europe and North America. Polite society has spent the years since playing catch-up. So if you don’t want your fin de civilisation analysis from a frothing right-wing loon you can now get it from the house-trained chaps at the New York Times: “Europeans have boasted about their social model, with its generous 42
Protects from what? Right now, Europe mostly needs protection from itself and its worst inclinations: “With low growth, low birth rates and longer life expectancies, Europe can no longer afford its comfortable lifestyle.”
Even in its heyday—the Sixties and Seventies—the good times in Europe were underwritten by the American security guarantee: the only reason why France could get away with being France, Belgium with being Belgium, Sweden with being Sweden is because America was America. For over sixty years America has paid for Europe’s defense. And because the United States Army lives in Germany, that frees up Germany to spend its defense budget on government health care and all the rest. In essence, American taxpayers pay for German entitlements.
And it still isn’t enough.
So the world has deemed Greece “too big to fail,” even though in (what’s the word?) reality it’s too big not to fail. And the rest of us are too big not to follow in its path: “Another reform high on the list is removing the state from the marketplace in crucial sectors like health care, transportation and energy and allowing private investment,” reported the New York Times. “Economists say that the liberalization of trucking routes—where a trucking license can cost up to $90,000—and the health care industry would help bring down prices in these areas, which are among the highest in Europe.”43
Removing the state from health care brings down prices? Who knew? This New York Times is presumably unrelated to the New York Times that spent the previous year arguing for the U.S. government’s annexation of health care as a means of controlling costs. And entirely unrelated to the New York Times whose Nobel Prize-winning economics guru, Paul Krugman, pronounced Europe “the Comeback Continent” in 2008.44
About half the global economy is living beyond not only its means but its diminished number of children’s means. Instead of addressing that fact, countries with government debt of 125 percent of GDP are being “rescued” by countries with government debt of 80 percent of GDP. Good luck with that.
THE YANK BONE CONNECTED TO . . . ?
The day after the 2010 election, I found myself sharing a stage with Howard Dean, former Governor of Vermont and head of the Democratic National Committee.45 Governor Dean mused that the European Union was one of the most interesting experiments in government ever attempted. As “interesting” as the experiment is, most Greeks, Frenchmen, and Germans were not aware that they were signing on as guinea pigs. In the post-war ruins of la gloire de la république, the French created the embryo EU to be a kind of Greater France—as a way of avoiding the truth about their own diminished status. It worked too well, and, when the EU took on many of the calcified qualities of its dominant founder, the elite thought it was time to pass the buck up yet again. The Eurocrats are now in favor of the European Unionization of the world. As Herman van Rompuy put it: “2009 is the first year of global governance.”46
Herman van Hoozee? Well, he’s this curious Belgian bloke who, shortly before uttering the above words, emerged as the first “President” of “Europe.” Nobody elected him as President of Europe, whatever that means. One day he was an obscure Belgian. The next day he was an obscure Belgian with a business card saying “President of Europe.” Just one of those things, could happen to anyone. It’s not just that he’s hardly a household name in the average European household. It’s not clear he’s a household name even in the van Rompuy household. I don’t watch a lot of Belgian TV, so I’m not sure if they have a “Belgian Idol” or “Dancing with the Belgians” over there, but, if so, he’d be knocked out in round one. Like everything in a European
And yet the fact remains that he is “President” of “Europe,” and in that capacity he announced that 2009 was the first year of global governance.
Incidentally, did you get that memo?
Me neither.
Still, I’m always appreciative when a fellow says what he really means. The upgrading of the G20; the plans for planetary-wide financial regulation; the Copenhagen climate-change summit and its (thankfully thwarted) proposals for a transnational bureaucracy to facilitate the multitrillion-dollar shakedown of the advanced democracies: all these are pillars of “global governance,” of the European Unionization of the world—and Copenhagen alone would have been the biggest exercise in punitive liberalism the western democracies had ever been subjected to. Right now, if you don’t like the local grade school, you move to the next town. If you’re sick of Massachusetts taxes, you move to New Hampshire. Where do you move to if you don’t like “global governance”? To what polling station do you go to vote it out?
Greece’s unsustainable spending is propped up by Germany, and Germany’s unsustainable spending is propped up by America. So who’s left to prop up America’s unsustainable spending? Yet Washington is pushing on to Europe’s future when even the Europeans are figuring you can’t make it add up.
As the fog of Obama’s rhetoric lifted and the scale of his debt mountain became clear, the president’s courtiers began to muse about the introduction of an EU-style “VAT.”47 Americans generally translate that as a “national sales tax,” but it actually stands for “value-added tax,” because you’re taxing the value that is added to a product in the course of its path to market. Yet what Europe needs is to add “value” in a more basic sense.
There are two main objections to the wholesale Europeanization of America. The easy one is the economic argument. But the second argument is subtler: the self-extinction of Europe is not just a matter of economics. Advanced social democracies don’t need a value-added tax; they need a value-added life. “The Europe that protects” may protect you from the vicissitudes of fate but it also disconnects you from the primary impulses of life. Government security does not in and of itself make for a satisfying, purposeful life. Studies from the University of Michigan and elsewhere suggest quite the opposite—that welfare makes one unhappier than a modest income honestly earned and used to provide for one’s family.48 “It drains too much of the life from life,” said Charles Murray in a speech in 2009. “And that statement applies as much to the lives of janitors—even more to the lives of janitors—as it does to the liv
es of CEOs.”49 Capitalists sometimes carelessly give the impression that theirs is a materialistic argument. But anti-capitalists do not want for material comforts—you go to the poorest part of town and you see plenty of iPhones and plasma TVs. And Eutopia is distinguished mainly by a lethargic hedonism: shorter working hours, longer vacations, earlier retirements, bigger benefits. What do they do with all that free time? High-school soccer and 4-H at the county fair? No. As we’ve seen, kids not called Mohammed are thin on the ground. God? No. When you worship the state-as-church, you don’t need to bother showing up to Mass anymore. Civic volunteerism? No. All but extinct on the Continent. Do they paint, write, compose? Not so’s you’d notice. Never mind Bach or even Offenbach, these days the French can’t produce a Sacha Distel or the Germans a Bert Kaempfert, the boffo Teuton bandleader who somewhat improbably managed to play a critical role in the careers of the three biggest Anglophone pop acts of the twentieth century—he wrote “Strangers in the Night” for Sinatra, “Wooden Heart” for Elvis, and produced the Beatles’ first recording session. If that sounds like a “Trivial Pursuit” answer, it’s not. Eutopia turned out to be the trivial pursuit; to produce a Bert Kaempfert figure right now would be a major cultural accomplishment Europe can’t quite muster the energy for. Life is a matter of passing the
“In the long run we are all dead”: Keynes’ flippancy disguises his radicalism. For most of human history, functioning societies honor the long run; it’s why millions of people have children, build houses, plant gardens, start businesses, make wills, put up beautiful churches in ordinary villages, fight and if necessary die for king and country.... It’s why extraordinary men create great works of art—or did in the Europe of old. A nation, a society, a community is a compact between past, present, and future, in which the citizens, in Tom Wolfe’s words, “conceive of themselves, however unconsciously, as part of a great biological stream”:Most people, historically, have not lived their lives as if thinking, “I have only one life to live.” Instead they have lived as if they are living their ancestors’ lives and their offspring’s lives and perhaps their neighbors’ lives as well.... The mere fact that you were only going to be here a short time and would be dead soon enough did not give you the license to try to climb out of the stream and change the natural order of things.50
