The “perks” of the Eurozone.
Wolf here: occasionally I highlight a comment that adds a different flavor or an illustration or more depth to an article published on Wolf Street. This is a comment by “MC” on Don Quijones’ article, Peak Irony in No-Exit Union: As Grexit Chaos Resurges, Lithuania Joins.
There have been two “perks” which made entry into the European Monetary Union palatable to former Warsaw Pact members.
The first is there’s lot of money to be had from Brussels, if you are well connected. Subsidies are usually handed out with a bountiful hand and with very lax oversight. The poster child for this attitude is the frankly insane number of airports which sprang up in the Polish and Spanish countryside, all generously funded by German, Dutch and British taxpayers who will never use them. Nobody actually uses them, but somebody had to build them. People have to be hired to run them. It’s the old pork barrel with an international twist.
The second is that Brussels provides a ready-made excuse to cover the corruption and bumbling incompetence of local ruling castes. “Europe asked us to do it” is the new version of the age old “The dog ate my homework”.
Look at Greece. Yes, the country is bankrupt but it wasn’t the EU which bankrupted it. The whole country spent like a drunken sailor on shore leave for years: everybody, from local kleptocrats getting their cut from Olympics contracts down to ordinary people buying big and expensive German cars, took for granted somebody else would pick the bar tab. And so it happened.
Europe picked up the bar tab instead of leaving the country to face the full strength of the furies it unleashed.
Now everybody bemoans “austerity”, imposed by that evil dictator, the Troika. But compared to what should have happened to Greece, “austerity” is like getting away with bank robbery with little more than a slap on the wrist.
Here you have a country which had the lowest productivity in the EU, no industrial base to speak of, an overgenerous welfare system, an enormous military, etc. living a lifestyle they could never afford for years. The whole country should have been auctioned off to pay creditors, its politicians dragged away in chains to answer for their crimes, those big and shiny German cars repossessed.
Most of all, those French and German banks who turned the other way and made it possible should have been left to face the wrath of their own share and bond holders.
It’s easy for European people, every bit as badly informed if not kept in lies as their American counterparts, to blame “EU-imposed austerity” for all their troubles, but the reality is they brought this all upon themselves.
Real wages in Europe have stagnated or declined since the ’90s, industrial output in all countries bar Germany and Sweden has declined since the ’80s, private non-financial debt has literally skyrocketed since 2002… but these things do not matter. It doesn’t matter year in, year out, the same old snake oil peddlers and Socialist mummies have been voted into office by a population every bit as addicted to central planning as hungry for consumer goods only the hated and maligned free market can provide.
These same people now demand a quick solution, preferably involving lot of central planning since, you know, free markets and accountability are bad and all. I’ve just read about that on my iPhone.
That’s why crackpot populists are popping up all over Europe like mushrooms after an August thunderstorm. They all promise slight variations of the same snake oil elixir, which can be summed up in a short phrase: much more of the same, but with a whole lot more inflation.
There are no dissenting voices to say Europe should get back to work and build a new Wirtschaftswunder. If they existed, they would probably be brandished as “EU-imposed austerity supporters,” “big bank stooges,” or even the old fashioned but always catchy “capitalist pigs.”
Alas, such is the way of the world. By MC, commenting on Peak Irony in No-Exit Union: As Grexit Chaos Resurges, Lithuania Joins.