AS MIDNIGHT STRUCKon New Year’s Eve in Spain, revelers bounced huge blue balls painted with the yellow "E" of the new European currency unit. It was hard to look at those images and not think of the balls and hopper used to pick winning Lotto numbers
That seems like a fitting image for the Monopoly money the continent put into circulation on New Year’s Day. Like a broke man blowing the last of his money on lottery tickets and hoping to strike it rich, Euroland has forked over its Drachmas and its D-Marks in hopes of stimulating an economy that has spent decades playing second fiddle to the United States. One can only watch with pity as this project takes its first steps along the path to failure.
The advent of the Euro marks a new triumph of theory and ideology over tradition and good sense. Of course, in the abstract, the theory behind Europe’s new currency is as sound as a nut. Create a zone where goods, services, labor, and capital are completely mobile, et voila the economy in that zone will operate much more efficiently. In America, it’s more than a matter of simple convenience that US dollars are valid from Carolina to California. Such a system makes our country more wealthy. Having a single currency along with a single code of economic regulations allows our nation to put a continent’s worth of resources to use at maximum effectiveness. Under this regime, Americans are free to take jobs in 50 different states. And in a common market, different states can specialize their economies which allows them to become really good at what they do. North Carolina is good at growing tobacco, Wisconsin is good at making cheese, Texas is good at raising livestock; once everyone trades, each part of the country ends up with some great stuff thick t-bone steaks in areas that aren’t suitable for grazing, cheese for ritzy parties in the big cites of the East and West Coasts, and cancer sticks in areas where tobacco won’t grow. That’s the miracle of what’s called the law of comparative advantage.
Europe’s new currency is premised on this idea. About two-thirds of Europe’s trade is conducted with other European nations, so it’s understandable that they would want to take advantage of a basic law of economics in order to make their trade more efficient and their wallets a little fatter along the way.
One big problem, though, is that Europe’s labor market is not suitable to this new system. Europe’s "labor market," in fact, is a collection of dozens of distinct national groups with their own languages, cultures, and histories. While it’s easy to imagine someone moving, say, from California to New Hampshire to take a new job, it’s much harder to envision a German moving to Greece or a Spaniard moving to Ireland for that purpose.
Furthermore, it’s difficult to envision the parochial nations of Europe continuing to cede their cultural and political authority to Brussels for much longer. Are the French ready to accept a deluge of films and wines made in Germany? Is Germany ready to accept the Greenspan-like authority of the European Central Bank? Meanwhile, are Europeans of all stripes ready to shake off their vast welfare states in order to streamline their economies?
All of those things will need to happen in order to make the Euro and the European Common Market work. And it’s not likely that any will happen over the long haul. That’s because, like Jacobinism and Communism before it, Europe’s new technocratic capitalism has failed to account for human nature, for human prejudices, and for human tastes. Such a scheme can end only in failure. It’s just a matter of time till Europeans from Dublin to Athens shake off this cold, faceless new imposition.
The capitalism that Europe aspires to the free market regime enjoyed here in America, and in a few other fortunate parts of the globe works precisely because it is not dictated from on high. Capitalism in its purest form is simply an acknowledgement of how people live their lives already. Even in Cuba, where the Castro regime has placed severe restrictions on "markets" which is to say, restrictions on how people live their daily lives black markets have sprung up in their place, for everything from milk to cigars. That’s because people will always want milk and cigars--no law can change that, not even in Castro’s police state. The same principle will be true in Europe as well. Instead of forfeiting their identity and their livelihood to Eurocrats in Brussels, Europeans will go on living as Germans and Spaniards, and as Frenchmen unless the EU imposes its regime with an Orwellian propaganda machine, or simply with brute force. And even if Brussels resorts to such measures, the human impulse toward tribalism for better or for worse likely will win in the end.
There’s always that one-in-a-million shot that Europe will get lucky and win its Lotto. But like someone watching a blue-collar guy in line at the liquor store, blowing his paycheck in hopes of winning instant riches, one can only sit back and watch helplessly as Europe’s faux capitalism begins its reign. Let’s just hope Europe lucks out or at least comes to its senses sooner rather than later.