Monday, June 18, 2012

Europe will collapse because it resembles Italy

This a translation of an article by Dr. Luigi Marco Bassani which appeared on the Italian newspaper Libero on June 19, 2012.
It seemed interesting to me for the analogy the author sees between the European situation and the financial situation of his own country: Italy.    
Your comments will be greatly appreciated.
Thank you, (special thanks to J.J.P. who reviewed my English text).

Leonardo Pavese

Europe will collapse because it looks exactly like Italy.
By Luigi Marco Bassani. (Translation and adaptation by Leonardo Pavese).

Europe is undoubtedly going through the most serious crisis since the end of the Second World War. A tiny and peripheral nation (Greece) is going to the polls as we speak. Their vote won’t save them or the Euro — but maybe it could just postpone the disaster.
The present crisis is nothing but the final settling of the accounts, on a continental scale, of the Market vs. State conflict, which has afflicted European politics for the last century.
In Europe there is a strong anti-market prejudice, which takes the form of a third-hand, poorly defined, anti-capitalist feeling, the main bearers of which (with varying degrees of virulence) are the political rulers themselves.
While the European political classes dug holes of colossal public debt and jeopardized the well being of living and yet-unborn people, they nevertheless succeeded to convince their foolish bearers of votes that the prosperity of the continent was endangered by “way more menacing things.”
The mission of the European welfare states was nothing else but rescuing their citizens from the “market,” globalized exchanges, “capital” and its inexorable logic based on profit.
The prevailing vision in Europe is still the one held by former Italian Economy & Finance Minister Giulio Tremonti, that is, a market which is only useful if it’s at the service of politics. Unfortunately, it’s painfully evident that this vision doesn’t lead to growth of any kind. And all territorial equilibriums known to us are destined to be challenged by the stalling of economic growth.
As the readers of this paper (Libero) had the chance to observe, a couple of days ago the British newspaper Financial Times showed a map which again proposed the idea of a smaller Europe, as cohesive as the Carolingian Empire of old.

The 11000 Euros check   

In Italy, regions that resemble Greece (with all due respect to the Greeks) co-exist alongside areas which are potentially even more dynamic than Germany; and the border between these realities is purely geographic.
Technically, Calabria, Sicily, Campania and the entire Meridione (that is, the southern part of Italy), should, like Greece, be bankrupt, because public expenditure in these areas is now firmly established above 70% of GDP while, for example, in Lombardy (the region of Milan) this ratio is about 40% of GDP, more or less as it is in Switzerland.
What prevents this bankruptcy from occurring is just one single factor: every worker in Lombardy cuts an 11,000 Euros check, every year, to finance the southern regions. (Workers from other northern regions sign a check too, but for a much lower amount).
Nevertheless, even that, the most savage territorial redistribution of wealth in Italian history, is not enough anymore.
           The rehashing of the map of the Kingdom of Lothar  by the Financial Times illustrates to us a simple fact: faced with this crisis, the European unification process shows signs of weariness and, at the same time, it shows surprising similarities with Italian history.

Europe, in a sense, is like a scaled-up version of Italy with a small difference: the Germans seem to have no intention to play the part of the northern Italian workers. But the secret of the Kingdom of Lothar was precisely political fragmentation, not unity.
The geographic area that goes from Florence to Antwerp, passing through northern Italy, Switzerland, eastern France, south-western Germany, Belgium and Holland, was the motherland of the greatest revolution in the history of humankind: the revolution that created the capitalist market, which in turn produced an unprecedented increase of wealth. But the Europe of those days was like a giant Switzerland, with hundreds of political entities that were not sovereign or fully autonomous, throughout which exchanges and trade were disciplined by a higher authority.  
The glory and the wealth of Europe derive, in preponderant measure, by a political “non-event”: the failed “imperialization” of the continent. Charlemagne, Charles V, Napoleon, Hitler were defeated. Our relative freedom and the enormous well being we enjoyed derive from this fact.
The European Union is nothing but the democratic renewal, so to speak, of an attempt that failed in past centuries.
The Euro was born during a period of stall on the way to political unification. The intention, therefore, was to put politics in check using a tool which was only apparently economic.
And so it was.
The creation of a currency without a state should have been the flywheel to propel the creation of a super-state and to renew the process of unification.
Therefore, the Euro and its inevitable crisis present the European utopia with a fork in the road which can’t be bypassed: formally declaring the bankruptcy of the European idea and of its currency, or continuing towards the edification, once for all, of a super-state Europe, with clear borders and central authorities charged with the collection of taxes of every sort.

Europa. Queen or welfare queen?

Unifying Impulses

What some European rulers are attempting to do is exactly that: to rise above, so to speak, and to erect continental cartels to recapture the markets and bring them back to their natural place, which is to say, under their control.

In their mind, “Europe” is a continental-size welfare state, and it’s the last lifeline for the bloated welfare states created by the great European nations in the last few decades. The project is in tune with the interests of the European ruling classes, which by means of this elephantine continental apparatus hope to manage, without too many shocks, the economic decline of the continent. But the shocks are felt indeed, and it appears they are about to sweep away the plans of the “enlightened” bureaucracies.       

During the second half of the 19th century, the spirit of the time was the spirit of “unification,” of continental consolidation, with the creation of larger and larger political entities. Cavour, Lincoln and Bismark had the wind in their favor and their opponents were swept away.

A century later it sounds like the death knell is ringing for the nation states; but the zeitgeist of this time is pointing to a solution, political fragmentation with economic harmonization, which is very different from a continental mega-structure.

Which is to say: Europe will save itself only by becoming a large confederation (a sort of greater Switzerland), and abandoning the project which it is now pursuing: namely, to turn itself into a super-Italy.        

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