Before we attempt to dig into question let me be formally introduced to World Watch readers.
“Ladies and gents, welcome James Dellinger who will be writing on Daily World Watch alongside me from now on…on economics and other stuff, but economics surely as my knowledge of the subject is worse than all the PIIGS nations joined together. My erstwhile colleague, former boss, and editor of the now defunct Washington Examiner’s Opinion Zone blog who was not happy with me frivolously running this blog…just decided he would help and guide me…which I happily accepted. So DWW will now be run as Russia’s tandem of Putin/Medvedev…without the seedy undercurrents. Congrats everyone on this milestone… welcome James and cheers! – World Watcher “
Thanks World Watcher, I am glad to join you and give your readers some food for thought on subjects in international political economy. I will do my best to keep my more ideological and meanderingly partisan content over on my Cantankerous Gentlemen perch.
Have you ever heard of the Dahrendorf hypothesis?
If you are American like me, then the answer is likely, no. Most other places around the world will be no as well. Let me back up a bit, as my interest in the work of Ralf Dahrendorf bordered on the freakish as an undergrad in Washington, DC. In those youthful days I was freshly dropped from a future International Affairs major by my poor second year in Russian language and freshly dropped into the History department. I kind of glombed on to a professor set of classes whose specialty was German Colonial history and took all his classes. Being a traditional academic he used a rather open marxist lens of critique, “primacy of economics.” Not the hard ‘M’ Americans are use to, but the softer theoretical academic ‘m.’ I agreed with the primacy of economics as a way to view history, I just did not read Zinn’s “A People’s History” and ever agree 100%, (50% for that matter) with the conclusions even if the original sourcing depth was admirable and impressive.
It took me a while searching to find my lens to analyze history with. Eventually I found it in Ralf Dahrendorf. I dove deep into just about every Dahrendorf written book translated into english I could find or order seeing the much deeper look at multi-class conflicts (not just prols vs. capitalists) and property not be the dividing element inside class, but authority.
I will warn you as well that I am also a small ‘l’ libertarian, but still have a more small ‘c’ conservative vision of America’s power and role in the world (isolationist I am not). I part ways sometimes with my neoliberal brethren when it comes to how some our their universalistic ideas can get garbled in cultural translation (like Dahrendorf).
I will try to do this quickly but if it feels disjointed, my bad it will get better my next time out of the writers stable. Back to that Dahrendorf hypothesis for you, which states, “diversity is desirable in economic policies across time and space according to local needs.” Can you square this with global integration? Yes and no. If you take this to mean autarky as a “net societal good.” Then NO, but if you mean shock absorbers and policy tools are not given away to supra-national bodies because it makes your feel historic and it ends corporate accounts in 17 different currencies and replace it with one, now we are talking.
For the record there are many solid pro-Euro arguments and have at times made then as well, I will just try to make one humble one in the other direction. For your note as well, I have been persuaded since the advent of QEs and LTROs by arguments made by the Popperian acolytes and the Austrian Economics school of thought and away from the traditional manage supply/demand arguments that or more mainstream. However, with the rise of state capitalism and zero-sum neo-mercantilistism inherent in the BRIC states and their corporate cultures. (Just wait until I post about financial planning in this environment, 2008 was a wakeup call for me and hope it was for you.)
Now I am happy that there is some small sense of shared European identity growing (Ryder Cup doesn’t really count), but that does not mean the fluctuating monetary and fiscal needs are in sync anywhere close to the massive dollar currency area. American states must balance their budgets every year and municipalities/ counties can go bankrupt. Not so much in the Eurozone, but then again they don’t currency wide area “Euro bonds,” where as the Treasury prints Tbills and bonds for American’s politicians to do the easy thing every year.
How many years of austerity policies will any one nation take? I get the arguments for when it works (I live in the poster child of it now, Ireland), but even as the can gets kicked just far enough down the road is there really an end game that does not include more write-offs and real panic sparking CDS triggering? Was the Iceland debt solution wrong? Is the fiscal compact worth the paper its signed on?
Could/should certain member states exit the Eurozone? Short answer is I don’t really know anymore. Here is some good historical looks at other malformed currency areas and the likely scenarios for various types of exits by Eurozone member states (read the embedded scrbd pdf in the post).
Then there is David Graeber making an interesting argument for debt relief and creditors taking it on the chin in, “Debt: The First 5,000 Years.” He is the best anarcho-lefty who makes some of the best inversed Timothy P. Carney arguments about power and enterprise in our modern world I have read in quite some time. Debt Jubilee anyone?
On the other hand maybe its a lack of developed bankruptcy law and and culture if you want American like access to debt? I mean, it is hardcoded into the American Constitution you know.
Anyway, I can’t yet tell you if Ralf was right at this point, but I did want to bring you up to speed with some tools to be able to start look at the Greek / PIIGS / (every developed nation’s) public and private debt crisis as it continues to drag on and unfold.
“All this has happened before, and all this will happen again.” -Battlestar Galactica
Till next time World Watchers.
- National News: 25 EU members sign ‘fiscal compact’ (coventrytelegraph.net)
- No Longer Whether But How The Eurozone Ends (economicnoise.com)
- Austerity Pushes Eurozone Unemployment To Highest Level Since Adoption Of The Euro (thinkprogress.org)
- MSI Global Feelgood Index Shows Confidence Building in North America, but Uncertainties in Eurozone Still Pose Threat to Recovery (prweb.com)
- There is an alternative (energybulletin.net)
- A Primer on the Euro Breakup (ritholtz.com)
- Ken Rogoff: Greece Should Be Given A “Sabbatical From The Euro” As Kicking The PIIGS Can Will Just Drag Germany Down (zerohedge.com)
- The Euro Crisis: History repeating itself (politicsontoast.com)